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Diamonds are Botswana's best friend.

Botswana has been blessed with a lucrative natural source of wealth - diamonds. Investment to upgrade mines' technology and transport is boosting production and will reap rich rewards for the country by the millennium.

Botswana produces more diamonds by value than any other country in the world. In 1996, 17.71m carats were recovered and output will grow again this year following the introduction of continuous, or round-the-clock, mining.

Today, the top seven diamond-producing countries accounting for more than 80% of the world's rough diamond supply are Botswana, Russia, South Africa, Angola, Namibia, Australia and the Republic of the Congo. Botswana has been producing diamonds since the early 1970s.

Debswana Diamond Company is 50-50 jointly owned by De Beers Centenary and the Botswana Government. Debswana operates the Orapa, Letlhakane and Jwaneng mines.

De Beers's Central Selling Organisation has been marketing diamonds for more than 50 years and the CSO/Debswana selling arrangement has ensured the long-term average price of Debswana diamonds is not subjected to short-term fluctuations in the demand and supply balance.

This is of paramount importance in the budgeting process of Botswana, whose income is derived mainly from diamond revenues. Debswana's foreign exchange earnings and economic development are also intrinsically tied up with the diamond pipeline.

Around 5,250 people are employed on the Debswana mines and localisation programmes are well established with Botswana citizens now comprising more than 91% of the workforce.

The Orapa mine in Botswana's semi-arid desert conditions is undergoing a major P1.58bn ($350m) development programme which will double its treatment capacity and should culminate in annual output rising from about 6m carats to about 12m in 2000. In 1996 Orapa produced 5,644,375 carats.

The increased plant volume throughput roughly halves the life of the open pit (surface) operation to 32 years from 61 years. But after the pit reaches a depth of 500m there will be sufficient reserves underground to prolong the life of Orapa for at least another 25 years. With this level of mining expansion at Orapa, manpower levels will rise from about 2,200 to 2,500. Orapa was originally designed to produce about 2.5m carats a year and went into production in 1971.

Recently the Orapa mining lease was renewed to 2017 and the Debswana sales contract with De Beers' Central Selling Organisation has also been reinstated for a further five years.

Debswana was established back in 1969 to develop the Orapa mine which was discovered by De Beers geologists in 1967 after a 12-year search and the exploration continues today.

Recently, detailed prospecting in the Orapa area resulted in the discovery by De Beers of further new kimberlites. Although most of these are small and not considered to have economic potential, some are of sufficient interest to warrant further testing. The Botswana government has granted a mining lease to a new subsidiary of De Beers Prospecting Botswana, Tswapong Mining, in which the government has a 15% interest for the exploiting of five small kimberlites at Martins Drift in eastern Botswana. A small-scale mining operation will commence shortly.

Switching back to Debswana's state of the art diamond mines in Botswana, the Letlhakane diamondiferous pipe was discovered 40km south-east of Orapa and it came into production in 1977 at a rate of 300,000 carats a year, which had more than tripled to l m carats by 1994. Last year some 896,798 carats were produced from Letlhakane. Both the Orapa and Letlhakane mines experienced heavy rainfall in the first quarter of 1996 which caused flooding of various areas of the plant and pit and resulted in production interruptions.

At Letlhakane it took some three and a half months to pump out the pit sump which contained about 500,000 cubic metres of water.

At Letlhakane approval was given to commence with a process control upgrade of the plant, infrastructure relocation and procurement of larger, more productive earthmoving equipment for increased waste stripping (removal) from 1997 onwards.

Jwaneng mine is the jewel in Debswana's diamond-encrusted crown because the diamond carat yield from this mine is so prolific and valuable. In 1996 some 11,165,889 carats were recovered against 10,468,689 in 1995.

In 1973 De Beers geologists discovered the Jwaneng diamondiferous pipe. Following an agreement with the government in 1978 on the development of the mine by Debswana, Jwaneng started production in 1982. In 1990 a re-crush plant was commissioned introducing an additional diamond recovery stage and in 1995 a fourth stream expansion project to increase ore treatment by one-third and carat output by more than 20% was completed.

Five 177-tonne haul trucks entered service at Jwaneng in the first quarter of 1996. These diesel-electric vehicles carry double the amount of ore that the previous $5-tonne fleet was capable of moving. The new fleet will contain the cost of production as the depth of the pit increases.

The electric motor option raises the possibility in the future of overhead cables to power the trucks up steep inclines. Such a development could herald the way for the introduction of 220-tonne trucks in the future.

Today Botswana is at the frontier of high-technology diamond mining and computers are making their mark on production efficiencies at the vast open pits of Debswana's Jwaneng and Orapa mines.

Vehicle monitoring systems, programmable logic controllers and remote diagnostic systems are all playing a crucial role to maximise efficiency and to increase the security of the product.

Currently Debswana accounts for all of the diamond production of Botswana. At a value of $350m the expansion at Orapa represents the biggest single mining project ever undertaken in Botswana. This is a 110% expansion and on completion of the project in January 2000 nearly 12m carats a year are expected to be recovered, more than doubling the current production of nearly 6m carats. At an average price of $50 a carat, the 6m carats a year add up to an additional U$$300m. Over and above Orapa there is the fourth stream project at Jwaneng which should result in a 500,000 carats production surge but Jwaneng diamonds are more valuable at $130 a carat, which puts an additional value of $65m on the government's diamond revenue account from Jwaneng. So by the year 2000 Botswana's government should be enjoying an additional $365m income from Orapa and Jwaneng.

The sales contract between the CSO and Debswana was renewed from January 1996 for five years and with this future increase in diamond income on the development schedule, it looks as though there is no reason for the sales contract not to be renewed again.
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Title Annotation:Botswana - Dawn of a New Era
Author:Ross, Priscilla
Publication:African Business
Date:Sep 1, 1997
Words:1098
Previous Article:Now is the time to invest.
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