The African country struggling to sell its diamonds as stockpiles continue to grow

Botswana's diamond stockpile is nearly double its target inventory levels amid persistent low prices, severely limiting the country's ability to increase gem production and boost its economy, the finance ministry has stated.

The nation's economy is projected to shrink by almost 1 per cent in 2025, after a 3 per cent contraction the previous year.

This decline stems from collapsing diamond prices, driven by lab-grown gems and weak global demand.

The price slump forced Debswana, the joint venture with De Beers responsible for 90 per cent of Botswana's diamond sales, to temporarily suspend production at some mines last year.

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

However, a finance ministry paper seen by Reuters revealed a 12 million carat stockpile by December 2025 – nearly double the government's 6.5 million carat allowable inventory.

"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 US, including diamonds, now face a 15 per cent 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.