GABORONE (AFP) – Botswana, the world's largest diamond producer, will slash its output by more than half this year due to plummeting demand for the gems, the main diamond company announced Friday.

Diamonds are sorted at the new Diamond Trading Company in Botswana in Gaborone (AFP/File/Alexander Joe)

Debswana, jointly owned by the Botswana government and De Beers, said in a statement that the country was going to produce 15 million carats of diamonds, this year, against 33.6 million carats last year.

"As it stands now, the Diamond Trading Company Botswana (DTCB) have indicated that they might only be able to sell between 18 million carats and 20 million carats," corporate affairs manager Esther Kanaimba said.

"This year hence our decision to cut production to such levels as we also have some inventory left from the bad sales in December and November last year."

"If there are indications that demand will improve quickly, then we will increase production," she added.

DTCB was launched last year by Botswana's former president Festus Mogae in a move designed to boost local business and create jobs for citizens.

The creation of the DTCB, an equal joint venture between De Beers and the Botswana government, aimed at ending the practice of sending diamonds mined in Botswana to De Beers' London-based main Diamond Trading Company for sorting and marketing.

Most diamond mining in Botswana has been suspended since December, due to a significant drop in world diamond sales, triggered by the global economic crisis.

Debswana resumed production at its three mines of Jwaneng, Orapa and Letlhakane this week. However two other mines will remain closed for the rest of the year, the statement said.

The mining industry in Botswana has cut 4,500 jobs as global demand for the precious stones has plummeted.

A report issued by De Beers indicated that production from Debswana had already declined four percent last year.

De Beers announced a 6.9-billion-dollar profit last year, up 0.8 percent, owing to buoyant demands for rough diamonds in the first nine months of 2008. But in the last quarter, the company said demand plummeted around the world.

Botswana is the world's largest producer of diamonds by value and by volume, earning more than two billion dollars a year.

Debswana produces about 22 percent of the world's output. It employs some 6,300 workers, about 95 percent of them Botswana.

Rough diamonds are Botswana's largest industry, contributing 50 percent of public revenue, 33 percent of gross domestic product and 70 percent of foreign exchange earnings.

The global crisis has hurt economies across Africa, many of which depend on exports of raw materials as the mainstay of their economies.

Mining firms have shed thousands of jobs and production from Zambia to South Africa, as global demand for raw materials has plunged following the global slowdown.

Prices have also taken a beating, with many metals now trading at less than half what they would have earned one year ago.