Saturday, October 24, 2020

GDP shrank 1.9% in 2015 as mining sector woes continues

Latest figures released by the government statistics agency shows that on a year-on-year basis, gross domestic product (GDP) shrank 1.9 percent compared to a 3.9 percent contraction in 2014. The decline on an annual basis has been attributed to a fall in mining output, which slipped 30.5 percent in the fourth quarter. 

Due to low commodity prices, Botswana’s mining sector continue to face depressed sales, which has resulted in mines operating at a firm loss and heightened fears of job losses. Surviving mining companies and sub-contractors are desperately seeking cash injection to stay afloat.

Statistics Botswana says the real mining value added also decreased significantly in the third quarter of 2015 by 40.6 percent. The decline in the value added is attributed to the continued weak recovery in the global markets, particularly in the major markets for diamonds. In the quarter under review, copper and diamond production decreased by 59.7 and 20.4 percent respectively. During the fourth quarter of 2015, Mowana and Thakadu copper mines were on provisional liquidation while there was also a plant shutdown at the BCL copper mine during the months of August, September and October 2015. All other industries recorded positive growth with the exception of Mining, Manufacturing and Agriculture which decreased by 30.5, 1.9 and 0.7 percent respectively. 

Botswana mining sector is expected to shed thousands of jobs in a massive hemorrhage that runs across the sector, from copper to diamonds.

The hardest hit, however  is state-owned BCL, Botswana’s biggest copper miner, which is expected to cut as many as 2,000 of its 6,000 workforce as it streamlines operations in the face of weak copper prices, currently at six-year lows. London-listed Gem Diamond expects diamond production at its Ghaghoo mine in central Botswana to fall by more than half this year due to depressed demand for diamonds globally. It may have to lay off more than two-thirds of its workforce as it restructures to cope with the weak market. 

Meanwhile the quarterly data also shows that the domestic economy grew 4.9 percent quarter-on-quarters in the three months to end-December. This is a revised 3.5 percent contraction in the third quarter of 2015.

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