This shift is part of the Southern African nation's strategy of diversifying its economy beyond reliance on mere diamond production. To further this goal, the government of Botswana developed the Okavango Diamond Trading Company and plans to begin sales this year. Meanwhile, businesses throughout the diamond pipeline, from cutting and polishing to financing and freight, are flocking to this emerging diamond hub.
An increase in diamond demand in 2011 prompted Debswana to restart its Damtshaa mine. The company announced that production resumed in January 2012 after two years of suspended operations.
In the same quarter, Firestone Diamonds (LSE:FDI) suspended operations at its BK 11 mine in Northern Botswana “due to a combination of operational challenges and current weakness in the diamond market.”
Lucara Diamond (TSX:LUC) on a more positive note, became a producer as it brought the Karowe mine online.Events in Botswana, however, could not overshadow those in India, which managed to be a headline act in 2012. Most of the attention was due to policy decisions. Early on, the government decided to impose a 2-percent duty on polished diamonds and to hike duties on precious metals. Following that came an announcement of duties on unbranded jewelry and refined gold that prompted a month-long protest. The nation's weak rupee served as a significant drag for the diamond industry as it presented challenges to those within the trade and weighed on domestic demand. The government aggravated the situation with another unwelcome policy that requires Indians to convert half of their foreign currency. Weakness in India was complemented by weakness in China's diamond market, where economic conditions and uncertainty weighed on confidence and demand. Hong Kong, also feeling the effects of China's economic weakness, suffered further from from the seemingly growing trend of Chinese tourists increasing their diamond purchases in Europe. Though the year began with much focus on the growing importance of the east in the diamond trade, it was the US that kept the market afloat.