Tuesday, May 21, 2024

Debswana expansion projects to put strain on national budget

Botswana national budget is likely to experience further stress in the next few years as more money goes towards building a P6 billion worth of new diamond treatment plants across a number of Debswana mines.

This was said by the Debswana Deputy Managing Director, Len Makwinja.

Makwinja said the Debswana shareholders (Botswana government and De Beers) have already approved the projects.

The plants will be built at Orapa and Jwaneng Mines.

He said it is inevitable that less money will flow towards government coffers from Debswana as more of the money is channeled towards expansion projects.

Makwinja said the construction of the new plants also come at the time when it is proving more expensive to extract diamonds from the Debswana mines as a result of increased depths of the pits, now going at an average of 400 metres underground.

Diamonds mined by Debswana Diamond Company contribute close to 70 percent of government national earnings.

He said there is a discussion now going on between government and Debswana to seek ways of minimizing effects on the national budget.

“Money distributed from Debswana to government will definitely go down. But we must stress that this is an investment, and the important thing is to see we can soften the blow on government,” said Makwinja.

The treatment plants to be built are at the Jwaneng and Orapa mines.

In another development, Makwinja said the life of the Letlhakane mine near Orapa could be coming to an end.

He, however, said there is a huge deposit of tails that will augment production there.

He said it is possible that, unlike in the other two mines, at Jwaneng and Orapa, there will be no underground mine in Letlhakane.

“The ore in Letlhakane is proving very tricky. We may not even have an underground mine there,” he said.

To further make up for the losses in production and revenue, Debswana has made a decision to double production at another small mine in Damtshaa, still near Orapa, said Makwinja.

Makwinja also expressed fears if Debswana will be able to have companies big enough to see the projects through, given that there are major projects going on in South Africa as a result of preparations for the FIFA World Cup in 2010.

“In addition to that, we are worried about the fact that we may not be able to get the sufficient commodities that will be needed to see these plants through given that there is a huge demand in commodities in China as well as the coming reconstruction in the Middle East.

This will no doubt put further stress not only on the capacities of companies to finish the projects here in time but also on the availability of commodities like steel,” he said.


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