Thursday, November 30, 2023

Germ Diamonds edges closer to extracting first diamonds from Botswana

For all the difficult logistical issues the company has had to go through as it started its operations at a diamond mine inside the Central Kalahari Game Reserve, Germ Diamonds Botswana has said they expect to start selling its first batch of diamonds mid 2013.

This comes after the company started its operations at the site last year.

Speaking to Sunday Standard, the Managing Director of Germ Diamonds, Haile Mphusu, said the operations have moved significantly ahead towards extracting the diamonds from the ground.

The company operates an underground mining shaft. He said since the operations started last year, they have now moved 50 meters underground through the sand of the Kalahari, and are expected to reach close to a kilometer before reaching the kimberlite pipe.

Mphusu said the company decided to go underground after it became clear that with the open pit the amount of sand that would otherwise have to be removed before reaching the pipe was going to raise capital expenditure significantly higher.

“If we had decided to go open pit, the capital expenditure would have been in the region of US$ 500 million. But going underground has reduced the costs significantly to US$ 85 million,” said Mphusu.
Perhaps not surprisingly because the mine is in the middle of the desert, he said compared to existing mines in Botswana, the operation by Germ Diamonds has proved to have most tonnage of sand that had to be removed before reaching basalt and ultimately the diamond pipe itself.

Narrating the challenges his company has had to go through, Mphusu says the sand cover has proved by far the most difficult part. There is also the logistical nightmare of moving equipment inside the CKGR, which is arguably the most difficult terrain in Botswana.

There is also the element of electricity. The operation is not connected to the national grid.
Connecting the operation to the main power grid has proved prohibitively expensive, not least because the nearest point of the national grid is 160 kilometers away from the mine.

And to make matters worse, the mine is situated inside a Game Reserve, which has been the centre of political as well as social controversy.

For over twenty years, Basarwa of the CKGR have fought a lengthy and bruising battle with the Government of Botswana over their right to be allowed to stay inside the Reserve.

The issue was only resolved a few years ago after the courts determined that Basarwa be allowed to remain in the Reserve. But by then the atmosphere and attendant relations had been poisoned not least by the then prevailing narrative that Basarwa were being moved to make way for a diamond mine ÔÇô an assertion that was manifestly untrue since the diamond deposits were found well over a hundred kilometers away from the nearest human settlement.

Germ Diamonds and Mphusu in particular are well aware of the history and what a lightning rod of controversy starting a mine inside the CKGR has been for all involved.

He acknowledges that the place where they are now about to extract diamonds has been unique.

This dynamic has meant that the company had to go in with extra caution as well as paying attention to the sensibilities of the culture of all those involved and affected by the new operation.

Unlike, say in Orapa, Jwaneng and Letlhakane where permanent townships have sprawled around the mines, for Germ Diamonds, establishing a permanent township inside the Reserve has not been an option.

Instead, there has been built a temporary camp which houses the workers who work and stay there under a rotating two-week shift.

“The mine is inside the CKGR. We did not want to mushroom a town from in there as that would have collided with the Reserve. Employees will not stay permanently inside the Reserve. Instead they will work for two weeks before spending a week outside with their families.”

Perhaps abnormally conscious of the potentially explosive politics surrounding operating a mine inside the CKGR, Germ Diamonds has had to put money aside for corporate responsibility initiatives well ahead of making any money themselves.

While the company has not yet sold a single diamond they have already set money aside as part of their capital expenditure to sink boreholes for residents of the CKGR.

One reason for doing this, says Mphusu, is that it would not have been right to have water for mine workers while “our neighbours” had nothing to drink. He says the upshot of leaving residents of the CKGR without water would have led them moving towards the mine where they could access drinking water.

“It is a unique situation that we are working under, but we are determined to get the diamonds out of the ground,” said Mphusu.

More corporate responsibility initiatives are planned to take care of the residents beyond the lifespan of the mine.

Although the company has for now elected to go underground, the Managing Director is of the view that going the route of open pit is not out of the cards, so to speak.

“It is possible we could later on go open pit. The current dynamics rely on what information we have. It may change altogether which would be a pleasant thing for all involved.”

Under the mining rate currently adopted by Germ Diamonds, the life span of the mine is expected to go 31 years.

But just what is the grade of the diamonds that will be reaching the surface sometime next year?
“Under the scheme of things, this is a very reasonable grade. It is certainly neither Jwaneng nor Orapa, but it is among the best,” said Mphusu.

Germ Diamonds Botswana bought the deposits at Gope from De Be Beers who had decided to sell off because they felt the deposits were too small for their operations.

But Germ Diamonds remains buoyant that the picture painted at the time could altogether change for the better because of the latest improvements and advances in technology well as changes in the world supply/demand chain.

“We are also confident that with latest technology we will be able to recover more diamonds than could have been imagined at the time. Also when you look at the future, there is likelihood that there will be a shortage in diamond supply. That on its own gives us confidence that this is a viable mine. With the development of a Diamond Hub, Botswana is much more determined to be the Antwerp of the future. That puts us at the right place, at the right time. More crucially there is yet another pipe close by, which potentially holds very good news for the company.”

As a parting shot, Mphusu says while it may today be proving exceedingly difficult to move their equipment to reach Gope because of the excessively difficult terrain, there is likelihood that could change in the future as infrastructure development towards that area could drive down the costs of extracting diamonds from the Ghaghoo Diamond Mine as the new operation is now called.


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