Diamonds sparkle in mining gloom.
Diamonds still represent Botswana's largest single foreign exchange earner ($1.4bn in 1994 exports) allowing the Central Bank of Botswana over the years to accumulate a massive $4.5bn in reserves, or 40% more than Botswana's neighbouring giant, South Africa.
But with a relatively dormant diamond market today, it seems that for the moment at least, mining in Botswana is simply going to tick over, without any great opportunities for expansion. Perhaps more unnerving for Botswana's Government is that some parts of the non-diamond mining sector might stop ticking altogether. Copper, nickel, and soda ash prices continue to take a battering on the international markets, leaving thousands of Batswana fearful for their jobs.
The mining industry is Botswana's largest private sector employer with some 13,000 people directly involved. Over half are employed by the country's single largest private employer, the De Beers Botswana Mining Company (Debswana), and are therefore relatively immune from redundancies given their essential position in Botswana's diamond production.
However, there are some 1,000 employees currently with Soda Ash Botswana - placed into liquidation in June. Brought on stream a mere four years ago in 1991, the Sua Pan brine deposits at Makgadikgadi have only been able to put through half an annual installed capacity of 300,000 tonnes of soda ash, and less than a sixth of a salt production capacity of 650,000. Initial technical problems had been solved quickly, but with intense competition from a cartel of synthetic soda ash producers in the United States, a declining market in the Southern African region, and calls for a type of soda ash not catered for at Sua Pan, the company has hit hard times.
Jointly owned by South African companies Anglo-American, AECI, and the Botswana Government, it appears that the company has also fallen victim to the politicking of some of its owners on the international mining stage. Anglo-American has been talking of a "major restructuring" of its international interest as a result of domestic mining problems in South Africa, and it was Anglo-American and AECI who decided to pull out of the venture, precipitating the company's liquidation. But with the mine still open, the Botswana Government has announced that it has found a potential partner.
Meanwhile Soda Ash Botswana remains officially under liquidation, and with the Botswana national railway announcing lay-offs of 700 workers, people are understandably jittery, even if the mine is likely to be saved.
Things are not that much better with the Selebi-Phikwe mine run by Botswana Copper Ltd, now jointly owned by the Botswana Government and Anglo-American. Some 5,000 are employed at the mine, and with a another 35,000 dependents living in the purpose-built town, their job security is vital.
While copper and nickel prices improved a little during 1994, the mine's losses of P656m in 1993 leaving total losses at P2bn, and continued depressed wages, have had a knock on effect on the Government's attempts to diversify the local economy in the area away from mining pure and simple.
And here is the dilemma. Without some kind of increase in the revenue that mining affords Government (at 1995 levels some 40% of total revenue), it will be difficult for Government to seriously approach the golden bull of the diversification of the national economy away from mining.
On the other hand, there can be no fear of a mining collapse. Debswana continues to turn a very healthy profit, and although forecasts are that there will be no major upturn in diamond prices on the international market despite the gradual return of diamond consuming countries from recession, the Fourth Stream Project is set to increase Debswana's total output capacity by 1.5m carats to 18m carats a year. Reserves at the three mines of Jwaneng, Orapa, and Letlhakane will last well into the next century and could be extended if underground mining techniques are utilised.
On top of that, the agreement between Russia and the Central Selling Organisation (CSO) to stop the massive leakage of diamonds onto the international market should stabilise the diamond trade further. Although Botswana is unlikely to see the 85% CSO quota (a percentage of normal deliveries which was upped from 75% in 1993) raised in the near future.
While De Beers is actively prospecting in several of its concessions, other, smaller companies are investigating new mining opportunities.
Canada's Botswana Diamondfields Inc spent $1.4m on prospecting in four diamond licence areas in 1994, and have drilled six targets on its Makgadikgadi licence. Anglo-American is evaluating the Phoenix deposit near Selebi-Phikwe, and Canada's Falconbridge has been evaluating the possibility of exploiting the copper deposits at Thakada and Makala. There are deposits of at least 17bn tonnes of coal in the Morupule and Mmamabula bituminous coal fields, but once again, the depressed state of the non-diamond mining sector has dampened prospects of major coal production beyond the already existing Palapye colliery which was recently expanded to produce 1m tonnes a year.
One development that is shining brightly for the future is the growth of diamond cutting and polishing. Debswana's plant in Serowe is expanding and in 1993, in a joint venture with the Botswana Government, the US company Kaplan International opened a new factory in Molepolole.
Nevertheless, with 21% unemployment, the prospect for widescale employment in non-diamond mining remains bleak.
RELATED ARTICLE: BOTSWANA TOWNS
Garborone (Population: 158,000)
Gaborone was purpose-built in the 1960s to be the capital city of a new nation. Neatly planned around its central Mall, it enabled government workers and visitors alike to walk between the various ministries and offices in a matter of minutes.
Now, 30 years later, the Mall is still the city's hub, but Gaborone has grown by leaps and bounds in the last three decades. Whole new residential and shopping areas have sprung up, and where once there was a single industrial area, now there are several.
It was not until the 1980s that Gaborone installed its first set of traffic lights - but since then, these `robots', as they are known in Southern however. have proliferated. Their number has not grown as fast as the number of cars and other vehicles plying the city's streets however. These days, if you have a journey to make in the late afternoon when office workers are leaving, you'll find yourself sitting in a traffic jam.
One local newspaper headlined its traffic story, Gaborone just like Lagos. Although the headline writer has clearly never visited Nigeria's chief city - nonetheless, any traffic jam in Gaborone would have seemed unimaginable only a few years ago.
Served by the Sir Seretse Khama International Airport some 15km from the city centre, Gaborone is able to receive direct long-haul flights from Europe. Avis car-hire services are available at the airport, and more recently, Imperial Car Hire of South Africa has opened an agency in Gaborone.
Public transport from the airport into the city centre, however, is not available. Most visitors solve this problem either by using the minibus airport shuttle offered by all the major hotels or by making prior arrangements with their host to send someone to pick them up.
The city is well supplied with good-quality hotel rooms. Most central to the Mall is the President Hotel. On the south side of the city is the Gaborone Sun, near the National Stadium and a golf course. On the north side is the Gaborone Travel Inn, which on 5 May 1995 ceased to be part of the Sheraton group. On the west side are the Oasis Motel and the Cresta Lodge Hotel, both convenient to the Gaborone Convention Exhibition Centre, with its Boipuso and Ditshupo Halls.
In addition to the hotel restaurants, the capital city has the Taj Restaurant, the Moghul Restaurant, Chatter's and the Bull and Bush.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Botswana: The New Era Begins; Botswana's diamond mining industry|
|Article Type:||Industry Overview|
|Date:||Sep 1, 1995|
|Previous Article:||Foreign jitters yield bargains.|
|Next Article:||The customer rules.|