Botswana’s Million Carat Diamond Auction Ends Without a Sale
Botswana’s attempt to raise urgent funds through the diamond market has ended in disappointment after Okavango Diamond Company (ODC) failed to sell a single stone in a closed auction of one million carats. The unprecedented tender, held outside of ODC’s usual calendar and structured differently from its registered-buyer auctions, was meant to generate much-needed revenue for a government heavily reliant on diamond exports. Diamonds account for around 80 per cent of Botswana’s exports and nearly a third of state income, making the outcome a significant setback.
No sales were made as the reserve prices were not met. ODC spokesperson Dennis Tlaang explained that the company would not sell at levels that might have a negative impact on the wider market. He added that such a decision was not unusual in the industry and reflected ODC’s determination to protect the long-term value of its product.
The failed sale highlights the depth of the crisis gripping the diamond industry, which Bloomberg has described as one of its worst downturns in decades. Demand has been hit by a slowing global economy and a collapse in Chinese consumption, while the rise of lab-grown stones has intensified competition. In the United States, tariffs on Indian goods, including a 50 per cent levy on diamonds polished in the country that handles 90 per cent of the world’s rough, have further unsettled trade.
For Botswana, the implications extend far beyond a missed auction. The country’s economy is expected to contract for a second consecutive year in 2025, according to S&P Global Ratings, which recently downgraded its sovereign credit rating. Data released last week showed that gross domestic product fell 5.3 per cent in the second quarter compared with the previous year. Alongside weaker prices, diamond output has also fallen sharply. Statistics Botswana reported a 43 per cent year-on-year decline in production during the same quarter, the steepest drop since the pandemic. Prolonged maintenance at a key mine and deliberate efforts to match supply with lower demand were cited as contributing factors.
Debswana, the joint venture between Botswana and De Beers, has already scaled back production and ODC, which is allocated 30 per cent of Debswana’s stones, has cancelled sales before when conditions turned unfavourable. Yet the collapse of this million-carat tender underscores just how fragile demand has become.
Despite the setback, ODC has expressed cautious optimism. The company expects renewed interest at future auctions and is preparing to adapt its sales strategy. Under a new agreement with De Beers, ODC will begin selling up to 40 per cent of its allocation through long-term contracts, offering more stable revenue and reducing reliance on volatile spot auctions.
The failure of this tender is more than a missed commercial opportunity. It reflects the vulnerability of Botswana’s diamond-dependent economy and the difficult balance the industry faces between protecting long-term value and reigniting demand. Whether the market can recover enough to restore confidence in upcoming sales remains uncertain, but the episode is a stark reminder that even the strongest diamond producers are exposed to global shocks.
Image Credits: Trans Atlantic Gem Sales
