16 Mar 2015

The Minister of Minerals, Energy and Water Resources, Mr Kitso Mokaila says he is optimistic challenges facing the mining sector would abate. 

Answering a question in Parliament on March 13, Mr Mokaila said it was sad that a lot of people had lost employment due to challenges in the mining sector.  Discovery Metals Limited (DML), operators of Boseto mine, closed their copper mine recently forcing about 400 employees into the streets. 

Diesel Power Botswana also cut down 100 to 150 jobs while the closure of diamond cutting and polishing companies, Teemane and Gabane Diamond Cutting Company also resulted with loss of employment. 

Selebi Phikwe West MP, Mr Dithapelo Keorapetse had asked the minister if the government would intervene given the huge number of people who have lost employment.  Minister Mokaila said with respect to DML, several factors led to its closure, amongst them the model of business they opted for. 

He said at the time the company started mining, copper prices were high but they have since dipped. and supported by De Beers.  He said De Beers sold it to an experienced company, but the issue was the location as it was far from Gaborone. 

The company also faced high prices of rough diamonds which limited margins for polished diamonds. Mr Mokaila said the company also wanted flexibility to export. The current scenario is that only 20 per cent of rough diamonds are to be exported, but Teemane owners wanted to export all the diamonds and return only 20 per cent for local polishing. 

He said the company also talked about low productivity, saying Botswana, unlike India, had less working days in a calendar year.  The company also faced limited outsourcing opportunities and had huge transportation costs between Serowe and Gaborone. 

Another factor was that banks were no longer offering 100 per cent, but 75 per cent after they realised the diamond polishing companies did not use profits on their businesses. 

The same factor, the minister said, affected local companies. He said as some face challenges, others were willing to do business in Botswana. 

Minister Mokaila said given the free market principle, the diamond industry regulates its prices, adding that the rough diamond prices had stabilised during the last De Beers sight, an indication the industry was headed to correction. 

He also said he was concerned but would not say it was a crisis as other investors were willing to purchase DML mine. BOPA