Wednesday, December 8, 2021

Mining sector in tenterhooks as commodity prices fall

Due to low commodity prices, Botswana’s mining sector faces 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. China’s economy is also on red alert, which has resulted in commodity prices tumbling, impacting negatively on the profit margins of local copper/nickel producers like BCL and Tati Nickel.

Because China is also an emerging diamond consumer, a slump in its economy has dampened the outlook for the diamond industry. Motswedi Securities Head Researcher, Garry Juma summed it up when he said: “Botswana’s mining industry is in trouble, and it’s not looking good. There are also fears that any appreciation of the Dollar will have a negative impact on commodity prices.” 

Already, there are fears that copper mining outfit BCL and Tati Nickel will fold if government does not come up with a bail-out plan soon.

“We are currently selling at very low prices which is not good for business,” said TNMC Public Relations Manager, Tebogo Rapitsenyane in an interview.                                                                                                                                                                        Third quarter production figures in the latest mining report from Statistics Botswana indicate that production in 2015 was at 66 percent, resulting in a negative year-on-year growth of 37.6 percent. The decline was largely influenced by the year-on-year percentage change of diamonds (33.4 percent) as the mineral constitutes 82.5 percent of the total weight of the index.
“Diamond production declined for the fourth consecutive quarter reflecting a decrease of 33.4 percent in the third quarter of 2015 as compared to the third quarter of 2014. The continued decline was as a result of the weakening demand for diamonds in the global market,” said the report.

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