Thursday, May 23, 2024

Debswana’s “CUTS” is the deepest on Gov’t coffers

Shareholders of Debswana Mining Company ÔÇô the Botswana government and De Beers Mining Company are expected to “forfeit” their shares of profit to fund two key projects – Jwaneng Cut 9 and Orapa Cut 3.

While it is not yet clear how much each shareholder will pay towards the two projects, the Botswana government has hinted on an amount just over P4 billion.

The government has since made a downward revision to its 2018/19 total revenue projections attributing the downward revision to the financing of the two key mining projects.

According to the government Budget Strategy Paper (BSP) for 2019 which was released earlier this week, the revised budget for the 2018/19 financial year pegs total revenue and grants to P58.11 billion, representing 10.5 percent decrease from the figure in the original budget of P64.94 billion.

The BSP further shows a decline of the expected Mineral revenue from P24.59 billion to P20.29 billion during the period under review signalling that the P4.3 billion difference would go towards the two projects.

“The decision by Debswana to commence the implementation of Cut 9 project at its Jwaneng Mine and Cut 3 at Orapa mine during 2018/19, funded through shareholders share of profits, necessited the downward revision of the amount of Mineral revenue due to government”, reads part of the BSP.

On the other hand, De Beers has not yet made any specific declaration in terms of its costs towards the two projects.

The Mining giant which is currently is in talks with government over the sales and marketing of Botswana diamonds, largely funded the Cut 8 project at the Jwaneng mine. The project involved stripping 500 million tons of waste to expose an ore body containing an estimated 100 million carats that are expected to be mined until 2024, when output is expected to start from the Cut 9 project.

According to Debswana, the Cut 9 project will extend the Jwaneng mine’s life by 11 years, to 2035, and allow the extraction of a further 50 million carats. At the same time, Cut 3 is anticipated to extend the life of Orapa mine beyond 2030. According to information from the company website, a detailed design study is underway to extend the life of the mine beyond the current open pit (Cut 2). Debswana has already indicated that studies are at pre-feasibility stage and will inform the various parameters for Cut-3.


Read this week's paper