GABORONE (Reuters) - World demand for diamonds has improved "significantly" since the start of the year and prices began to recover a few weeks ago, producer Debswana said on Wednesday 9 September.

However, Managing Director Blackie Marole said Debswana, a joint venture between the world's top diamond producer De Beers and the Botswana government, would only produce 20 million carats of diamonds this year compared with normal annual output of around 33 million.

"This year, I believe it is only prudent to produce about 20 million carats," Marole told Reuters in an interview at the company's headquarters in the capital, Gaborone.

Despite a rise in rough diamond prices in the last few weeks, Marole said it was too soon to tell whether this represented new-found confidence among Western consumers, or the diamond and jewellery industries replenishing stocks.

"In America, yes, we are seeing demand, but we won't know until after Christmas maybe whether it's final consumer demand of simply restocking demand," he said.

Hammered by the collapse in demand for the precious stones that followed last year's financial crisis, Debswana was forced to close some of its mines for several months at the beginning of this year as part of a cost-cutting drive.

Marole said the company, which employs more than 5,000 people in the southern African nation, was on track to hit a 25 percent cost-cutting target for this year.