Botswana Diamonds (BoD) announces its audited annual results for the year ended 30 June 2024. A diamond is forever. That phrase came to mind as BoD watched recently a beautiful Indian bride take her vows while laden down with beautiful real diamonds. The diamonds sparkled, glittered and flashed as she walked around a small circle seven times as part of the ceremony.

BoD observed and marvelled that some, if not all of the stones, were up to 2,500 million years old! An Indian belief was that diamonds came down from the Gods in a meteorite. Lab-grown diamonds – no matter how good they are – are simply that, grown in a laboratory. A genuine real, natural diamond is a rarity to be cherished, minded and handed down through the generations.

The ceremony clarified my thinking and reinforced by belief to carry on exploring for The Real Thing. As you will see in this commentary, we have made very significant progress in Botswana in identifying kimberlite anomalies that have never before been reported. This was achieved in a remarkably short time, using AI on our vast database of historical data which covers over 375,000 kilometres and comes from decades of geological work previously undertaken in Botswana.

Before reviewing our ongoing projects, let me refer again to the current upheaval in the international Diamond Market. There are two major factors adversely affecting the diamond market, one Cyclical and the other Structural. Luxury goods go through Cycles.

Low interest rates help consumer confidence. Confidence can lead to Exuberance and Euphoria. Consumers and retailers think the “Good Times” will never stop. Interest rates rise, fear replaces greed, luxury consumption growth slows or declines.  Retailers are overstocked. Carrying costs rise. They cut back buying which gets exacerbated as they rise through the chain.

Prices fall, sometimes dramatically and production is cut back. This has been the case with the diamond market for the past two years. But think for a moment; a 10% cut in retail demand ignores the fact that 90% of the demand remains. Inventories decline. Interest rates decline and credit loosens. This is where the diamond market is now. Green shoots begin to appear.

“We have confidence in the future of the diamond industry. Three billion people worldwide will enter the middle class in the coming generation. They will want the things that many in the West have, including diamonds. We already see this happening in the demand for diamonds in China and India” said John Teeling, Chairman-BoD.

The Structural Effect of Lab Grown Diamonds (LGD) will wipe out a percentage of the diamond market previously held by miners. How serious the loss will be has yet to be estimated but the LGD sector has its own problems. Low cost of entry and low marginal cost of production have led to vicious price cutting which is likely to continue until retail prices reach toward the marginal cost of production.

What will happen? The diamond industry is splitting into two markets: the Real Diamond Market and the LGD sector. Again, reflecting on India. Perfectly good cars can be bought new for under $10,000, yet India is also one of the world’s largest markets for high-end, luxury cars. Incidentally India is one of the world’s largest LGD producers and also the second largest market for Real Diamonds.

I really do not believe that a 3 carat LGD stone, beautiful as it is, can compete with the Dreams, Romance, Mystery and History of a 3 carat Real Diamond which has lain undiscovered under the Kalahari sand for 2,500 million years and which has eluded efforts of discovery by hundreds, if not thousands, of men (and increasingly by women) over many decades, with fire in their eyes and hopes of riches in their hearts. Lest you think I exaggerate about Romance and Mystery.

Diamonds are formed some 280 kilometres toward the centre of the earth. Molten lava flows through the diamond zone and carries the stones in a pipe, the kimberlite, to the surface where it explodes into the atmosphere as a small volcano.