Botswana’s diamond stockpile has reached nearly twice its targeted inventory levels due to ongoing depressed prices, limiting the country’s capacity to increase gem production in the short term as an economic stimulus, according to the finance ministry.
The ministry reported that Botswana’s economy is projected to contract by almost 1% in 2025, following a 3% decline the previous year. This downturn is primarily attributed to the sharp fall in diamond prices, driven by competition from lab-grown gemstones and subdued global demand.
In response to the price slump, Debswana—Botswana’s joint venture with De Beers, which is responsible for approximately 90% of the nation’s diamond sales—was compelled to temporarily suspend operations at certain mines last year.
According to the Kimberley Process Certification Scheme, Botswana produced 18 million carats of diamonds in 2024, ranking second globally after Russia. By the end of December 2025, the country’s stockpile stood at 12 million carats, based on figures from the finance ministry’s 2026/27 Budget Strategy Paper reviewed by Reuters. This volume is nearly double the government’s maximum allowable inventory of 6.5 million carats.
The budget document indicated that, in the near term, production is expected to remain largely stable until inventories are reduced closer to minimum thresholds, at which point further production increases may be considered. The limited potential for additional output could constrain the economy unless the non-mining sector demonstrates robust performance.
Diamonds typically account for around one-third of Botswana’s national revenues and about three-quarters of its foreign exchange earnings. However, exports to the United States, including diamonds, are now subject to a 15% tariff. Further, higher tariffs applied to major diamond markets such as India may extend the period of lower prices and exert pressure on profit margins, the ministry cautioned.
The document also noted that mining activity slowdowns may impact fiscal revenues: “This may ripple through to mining operations. A slowdown in mining activity would reduce government’s fiscal revenues from the sector,” it stated.
For 2025/26, Botswana’s mineral revenues are projected at 10.3 billion pula ($729.24 million), significantly below the historical annual average of 25.3 billion pula, reflecting weaker diamond sales.
