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Orapa mine scapegoated as Debswana production slumps

Debswana, the world's leading diamond producer by value and the largest rough diamond producer, is placed on top of the reason why De Beers’ rough diamond production decreased by 14 percent to 7.7 million carats.

Debswana’s South African counterpart De Beers Consolidated Mines (DBCM) is also said to be equally to blame for the decline as rough diamond production continue to plummet. When commenting on Anglo American’s Production Report for the second quarter ended 30 June 2019, Chief Executive Mark Cutifani praised the company’s other products like the iron ore “successful ramp-up” at Minas-Rio Brazil which contributed to the  mining giant’s production going up by 2 percent, nothing positive could be said about diamonds.

According to Cutifani, a “strong performance” at Metallurgical Coal following the longwall moves and plant upgrade work in Q1. Also, the Anglo American CEO said Kumba Iron Ore continues to improve following Q1 production challenges. For De Beers, the 50/50 partner with Botswana government in the Debswana venture, it was not hunky dory in the second quarter of 2019 as production fell. Cutifani’s reason is that, “De Beers, in view of prevailing market conditions, will continue to produce to market demand for the year. “

According to Anglo American, production guidance has been revised downwards to 31 million carats as a careful response to weaker trading conditions. However for Debswana, the main culprit pointed out is the Orapa mine whose plummet in production, “was driven by a decrease at Orapa of 23 percent to 2.5 million carats following a planned plant shut down brought forward from H2 2019, which impacted production in late Q1 and early Q2,” according to Anglo American’s latest production report.

Debswana production decreased by 9 percent to 5.7 million carats and this was due to a decrease at Orapa’s production of 23 percent to 2.5 million carats. In the second quarter of 2018 the whole production for Debswana was 6279 million carats compared to the 5718 million carats of the just ended second quarter of 2019. When pitting the two second quarters head-to-head, a 9 percent decline is realised.

During the beginning of the year, that is the first quarter of 2019, Debswana production was at 5,950 million carats when contrasted to the 5718 million carats recorded in the second quarter of the same year, a shy decline of 4 percent between the two quarters. As if that was not enough, when diving the production into year halves, Debswana recorded 11,668 million carats in this year’s just ended first half compared to the  12,087 million carats scored in the first half of 2018, a  3 percent decline between the two corresponding halves.

A zoom into Orapa, the main culprit of the fall

According to Anglo American, Orapa’s downfall is due to a planned plant shut down brought forward from the second half of 2019, which has impacted production in late first quarter of 2019 and early second quarter of 2019. Orapa constitutes the Orapa Regime which includes Orapa, Letlhakane and Damtshaa.

In 2018, Orapa production fluctuated recording 3254 million carats in the second quarter before hitting a level below of garnering 2556 million carats in the third quarter of the same year. The last quarter of 2018, closing the year down, Orapa recorded an increase from the third quarter of 3,602 million carats.

But 2019 followed with a dim picture as production at Orapa as the mine offering dropped from the previous year, with the first quarter of this year making 2,614 million carats. Orapa mine production continued to fall into the second quarter of the just ended half of 2019 by 2495 million carats, a reflection of 5 percent slump.

When comparing the second quarter of 2018 to this year’s, Orapa mine registered a 23 percent decline. After garnering 3,254 million carats in last year’s second quarter the mine went down in production to 2495 million carats. When coinciding the 2019 first half with the first half of last year, production decreased by 16 percent from 6078 million carats in 2018 first half against 5109 million carats in 2019.  

Jwaneng mine is productive

According to Anglo American, from the second quarter of 2018 production at Jwaneng increased by 7 percent to 3.2 million carats, driven by an increase in tonnes treated. When comparing halves of year 2019 and 2018, production at Jwaneng mine ballooned slightly by 9 percent. In the first half of 2018 the mine registered 6009 million carats before going up in production with 6559 million carats.

Recently, the richest diamond mine in the world, Jwaneng, has been beating its sister mine in terms of production. However a slight decrease of 3 percent was registered from the first quarter of 2019 to the second quarter of the same year, from 3336 million carats in the first quarter of this year to 3223 million carats in the just ended quarter of the same year.

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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