Debswana Diamond Mining Company re-affirmed its ambition to inject P 24 billion into the development of Jwaneng Cut 8 but warned that the future outlook on diamond prices was still tricky.
Speaking at the first ever Town Hall diamond meeting in Botswana last week, De Beers’ Managing Director, Gareth Penny, said shareholders of Debswana will inject US $ 500 million (about P 3 billion) in the development of Cut 8 that is scheduled to start next year.
The development of Cut 8 is expected to give Jwaneng ÔÇô the world biggest producer of diamonds by value – an edge against its international rivals.
“We will invest US $ 500 million and a further US 300 million over the next 15 years,” he said, adding that this will be biggest investment by Debswana shareholders since 1982 when the mine was found.
According to Debswana managing director, Blackie Marole, the Cut 8 should generate about 1000 jobs during the construction phase and further added to the support of the citizen economic empowerment.
“The construction phase, most of it will be about moving country rock to where you want it to be,” he said.
However, Marole explained that Damtshaa mine will remain closed for the rest of 2010, but will be readied to bounce back into production if the prices of diamonds significantly improve in the coming year.
Debswana operates, Damtshaa, Jwaneng, Letlhakane and Orapa mine and all the produce is sold through Diamond Trading Company.
The Jwaneng mine, which is being readied for expansion, is expected to draw some assistance from South America where it has contracted some Chileans to come and give guidance in terms of large scale mining operations.
The move is part of a plan aimed at giving the shining star in the Debswana stable of mines a life-line by a further six years to 2024 making one of the international legion in high value diamond production.
The project will deliver a couple of things, most significantly continuity of production. This is important because it extends the life of the mine and uninterrupted flow of revenue into the coffers of Debswana shareholders.
Jwaneng Mine is the richest mine among the Debswana stable of mines and boosts of low production cost against its peers across the world. The cost per ton in Botswana is about US $ 8 per tonne while in other major diamond producing countries, such as Russia, it costs about US $ 45 per tonne.
Further, the mine produced 15.6 million carats in 2006ÔÇöahead of the global economic recession.
In September last year, the mine’s General Manager, Balisi Bonyongo, told a breakfast seminar that they are further looking at going beyond cut eight.
“The question is: can we go beyond cut eight?
“Beyond 2024, we will still be having the resource to mine, but the thing is whether it is going to be open pit or underground,” he said.
The extension of the mine to cut eight will bring business opportunities to the township but the mine will be faced with a raft of challenges that will have to be confronted before 2010.
The mine’s technical manager, Rodger Thusi, had said some of the challenges that they will have to deal with include the expansion of existing infrastructure, schools, regional electricity shortages, global tires shortage, the need for more water and the building of new roads.
The expansion project is expected to see the number of earthmoving equipment going up fourfold.
“If we do not do anything, we will run out of ore by 2017. There is going to be a lot of mining waste around 2010,” Thusi, who is in charge of the cut eight expansion project, said.
Jwaneng is the world’s richest mine and any move to go underground soon will have some adverse impact on the global diamond industry as there are very few mines in the world with gem quality that it has. Further, it would change the landscape in the diamond business where Botswana has always been regarded as the low cost diamond mining production to a high cost operation.
De Beers and Botswana government are 50/50 partners in Debswana.