Debswana shuts down mine due to market downturn

> Mpho Tebele

Gaborone- Botswana’s diamond mining giant, Debswana has revealed that it will close operations at one of its diamond mines called Damtshaa, and scale down production at Orapa No.1 Mine for the next three years due to continued downturn in the  global diamond market.

The company which is a 50/50 joint venture between De Beers and the Botswana Government had forecast production of 22 million carats for 2015 but in October the company said the figure had since been revised to 21 million.

The company’s spokesperson Esther Kanaimba-Senai said the Damtshaa Mine will go into a care and maintenance programme for up to three years.

“Debswana Diamond Company is to place Damtshaa Mine, which is part of the Orapa, Letlhakane and Damtshaa mines, into a care and maintenance programme for up to three years as part of the company’s response to the downturn in the diamond market,” she said

Kanaimba-Senai said Orapa Mine Plant 1 will run at a reduced production level of approximately one million carats per year in order to maintain plant readiness to ramp up production quickly should it be required.

“As a result Debswana has revised its production for 2016 to 20 million carats to match expected levels of demand for rough diamonds,” she said.

Kanaimba-Senai said during this period, Debswana will produce more from Jwaneng Mine which is a high value, low cost asset and reduce production from Orapa, Letlhakane and Damtshaa Mines (OLDM).

Jwaneng Mine will produce an average of 12 million carats per year while production at OLDM will average 8 million carats per year.

She added that all efforts are being made to preserve jobs by re-deploying affected employees to other parts of the business, adding that at this juncture, they do not anticipate any job losses.

Since the second quarter of 2015, Debswana has been experiencing a significant reduction in the sale of rough diamonds due to weak demand as a result of a global macro- economic slowdown and the strengthening of the US dollar which have put liquidity pressures on cutting and polishing centres.

“This is an unprecedented situation which has impacted the entire diamond pipeline from rough producers, cutting and polishing companies and the retail sector,” she said.

Kanaimba-Senai said Debswana will continue its focus on Zero Harm, especially as “we are compelled to implement our business plans in a manner that is different to a business as usual environment”.

Sluggish sentiment in the market has also seen sales for both of Debswana’s clients, De Beers and state run Okavango Diamond Company (ODC), falling by over 20 percent in the first half of the year.

Government gets 80 thebe from every pula worth of diamonds that Debswana sells to De Beers and ODC.

De Beers group chief financial officer, Gareth Mostyn recently told Mmegi newspaper that this particular festive period would be key to the rebound in production and upstream activities across the group.

“We feel that with a successful peak selling season and with strong demand from consumers, this will be a platform to bounce back,” he was quoted as saying on the side-lines of a recent De Beers/Chatham House conference in Gaborone.

“We do feel that the indigestion in the pipeline from high inventories will normalise, helping rough diamonds to recover, but stimulating demand through our marketing is critical.”

December 2015
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