09 Mar 2016

The depressed commodity prices have adversely affected the minerals sector and the mineral revenue to government, Minerals, Energy and Water Resources minister, Mr Kitso Mokaila, has said.

Mr Mokaila was responding to a question in Parliament from Boteti East MP, Mr Sethomo Lelatisitswe on Monday.

Minerals, Mr Mokaila said continued to contribute substantially to the country’s economy with an average of 24 per cent contribution to GDP during 2015/16, while diamonds contributed about 99 per cent to minerals revenue to government.

However, he said the volatile commodity market had impacted negatively on the current employment levels and government commitment to employment creation in the mining industry. This, he said had resulted in job losses from retrenchments due to closures and staff reductions at operations.

Taking cognisance of the mineral revenue contribution to Botswana economy, the minister said the level of expenditure on projects in the National Development Plan would be constrained due to a fall in mineral revenue to government and this would lead to the deferral of some projects.

Mineral revenues from the sale of diamonds, in particular, Mr Mokaila said were the main foreign exchange earner for Botswana and were a significant contributor to the national reserves. For that reason, he said the reduction in mineral revenues had thus had an adverse impact on the national reserves.

“The world metal prices are at a six year low and very few marginal mines can survive this trend. This level of prices has impacted on most metal producers, such as African Copper near Dukwi who are currently under provisional liquidation. African Copper had two operations at Mowana near Dukwi and Thakadu near Matsitama,” he said.

In February 2015, Minister Mokaila said Discovery Copper Botswana was liquidated and were operating at Boseto Mine near Toteng. Additionally, he said following a slowdown in the diamond market during 2015, Debswana’s Damtshaa Mine near Letlhakane had been placed under care and maintenance. Furthermore, he said as a result of the suppressed diamond markets, since 2012, Firestone’s BK 11 operation near Letlhakane and Lerala Diamond Mine had been under care and maintenance.

“Should the current situation persists for an extended period the base metal mines in particular will be at risk. Other subsectors will also face risks which might necessitate forms of restructuring such as staff reductions,” said Mr Mokaila.

Before closure, he said African Copper Botswana employed 543 people, whilst Discovery Copper Botswana employed 538 people. In Damtshaa mine, he said there were no job losses, as people were redeployed to other sections within Orapa and Letlhakane Mines.

Beyond the job losses, the minister said the current situation had also constrained mineral exploration expenditure and activities on the ground, “thus, compromising the ability to make new mineral findings.”

Mr Lelatisitswe had asked the minister to apprise the House on the performance of the mining sector and related industries in Botswana to date and their contribution to the GDP, taking into consideration the impact on employment and employment creation. Ends