Botswana's diamond stockpile swells as gem price slump persists

Botswana's economy was expected to shrink by almost 1% in 2025 following a 3% contraction the year before, largely due to the collapse of diamond prices under pressure from lab-grown gems and weak global demand.

The price slump forced miner Debswana, Botswana's joint venture with De Beers which accounts for 90% of the country's diamond sales, to temporarily suspend production at some of its mines last year.

Botswana produced 18-million carats of diamonds in 2024, only second to Russia, according to the Kimberley Process Certification Scheme.

It had a stockpile of 12-million carats at the end of December 2025, according to the finance ministry's 2026/27 Budget Strategy Paper seen by Reuters on Tuesday, nearly double the government's allowable inventory level of 6.5-million carats.

"This suggests that, over the short term, production is expected to remain broadly unchanged, until the level of inventories is drawn down closer to minimum allowable levels, creating room for additional production," the ministry said in the budget document.

Limited scope for increased output will constrain the economy, unless the non-mining sector performs strongly, it added.

Diamonds normally contribute around one-third of Botswana's national revenues and three-quarters of its foreign exchange receipts.

Botswana's exports to the U.S., including diamonds, now face a 15% tariff. Higher tariffs imposed on major diamond consuming markets such as India could prolong lower gem prices and squeeze profit margins, the ministry added.

"This may ripple through to mining operations. A slowdown in mining activity would reduce government's fiscal revenues from the sector," it said.

Botswana's mineral revenues are estimated to reach 10.3 billion pula ($729.24-million) in 2025/26, compared to a historical annual average of 25.3 billion pula, reflecting lower diamond sales.