Thursday, October 29, 2020

Botswana’s mining decade low deep

While it might not come as a shock given the disruptions caused by Covid-19 containment measures, mining activity in Botswana had its biggest decline in more than a decade.

According to the physical volume of mining production in the second quarter of 2020, the index of mining production retreated to 30, reflecting a quarterly decrease of 64.6 percent and a year-on-year decline of 65.1 percent from the index of 85.9 registered during the second quarter of 2019.

This was the biggest decline ever recorded in the mining activity since the decline of 91.6 percent recorded in the first quarter of 2009, when diamond registered zero production due to the economic recession.

“The current decline came as a result of the Covid-19 pandemic and nationwide lockdown regulations (2nd April to 18th May 2020) which affected the operations of the business community at large,” said Statistician General Dr. Burton Mguni.

The economy’s mainstay, diamond production, plunged by 67 percent during the second quarter of 2020 compared to the same quarter of the previous year.

Similarly, the quarter-on-quarter analysis shows that production fell by 66.4 percent from the preceding quarter. The substantial decline resulted mainly from planned strategy to reduce bulky production in order to align production with trading conditions.

“The Covid-19 pandemic contributed to the weak demand for diamonds as it forced countries to impose travel restrictions thereby resulting in sight holders being unable to purchase and sell the commodity,” said Dr. Mguni.

The second biggest contraction was in coal production, down by 40.7 percent compared to the corresponding second quarter of 2019. Output also declined by 36.6 percent from the year’s first quarter. The decline was attributed to Covid-19 protocols imposed by the government as public safety measures. Additionally, Morupule B Power station’s remedial works on boilers are still on-going, as a result, leading to low uptake of the commodity as only one boiler is operating at Morupule B power station.

Any shortfalls that could have been experienced during the lockdown period were offset by stock piling that was undertaken in the previous quarters, according to the Statistics Botswana report.

Gold production decreased by 34.5 percent compared to the same quarter of the previous year. At the same time, quarter-on-quarter analysis reflects a decrease of 16.5 percent. The decline was as a result of Covid-19 protocols which slowed down the mining activities and market demands.

On the bright spot, Soda Ash production was buoyant, increasing by 32.7 percent in the second quarter compared to last year’s corresponding period. On a quarterly comparison, the production slightly advanced by 5.5 percent. The increase resulted from the strategy to defer halting operations for care and maintenance in response to Covid-19 pandemic, in turn the mine was compelled to increase production so as to meet the demand as well as stockpiling for future use.

“Despite the lockdown, trade in Soda Ash with the Southern Africa region continued, due to its use in the manufacturing of essential products such as soap and detergents,” said Dr. Mguni.

Salt production was up 15.9 percent during the second quarter comparted to 2019’s same quarter. However, between the two quarters of 2020, salt production declined by 12 percent during the period under review. The decline is linked to the reduced mining operations owing to the response to the Covid-19 pandemic during the period under review.

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