Cut 9 sets Botswana apart for the next decade and a half
Business
Recently Debswana Diamond Company just unleashed the much anticipated Cut 9 project at the world‘s richest mine by value, Jwaneng mine, amid much expectation and glittering hope. Cut 9 breathes more life or a lifespan going up to 2035 into Botswana’s diamond industry-this will bring more sparkle to the mineral dependant local economy.
Cut 9 comes against the slight threat of synthetic diamond revolution and any unexpected or unprecedented drop in diamond sales, but economists and experts believe natural diamonds will remain dominant for coming years. Debswana chairman Bruce Cleaver has said the Cut 9 project places Botswana as one of the leading diamond producing nation by volume and value.
“The extension of Jwaneng Mine secures Botswana’s rightful place as a leading diamond producing nation for years to come. With global consumer demand for diamonds reaching record levels in 2018, the extension will enable us to continue to meet the needs of our consumers all over the world. We are deeply proud of the central role Jwaneng Mine has played in Botswana’s remarkable development story and of the role this investment will play in its future,” said Cleaver.
Recently, Debswana has decided to extend the life of Jwaneng Mine to 2035 and the mine is expected to yield an estimated 53 million carats of rough diamonds from 44 million tons of treated material. Debswana shareholders have approved the budget for 2019 and have revealed that the company will invest approximately P20 billion over the life of the project. Debswana is a 50/50 joint venture between the Government of the Republic of Botswana and De Beers Group
The Cut 9 project was given to a local contractor Majwe Mining for P15.7 and will offer more than 1000 jobs predominantly to Batswana. Majwe Mining which will provide diamond mining services is billion a joint venture between Bothakga Burrow Botswana and Thiess Botswana. Majwe mining was also involved in Jwaneng’s Cut 8 Phase 2. The P30 billion which began in 2010 Cut 8 contract services included mine scheduling, drilling and blasting, waste removal and limited ore mining.
Local economist Keith Jefferies is confident that increasing the life’s mine will ensure government has more mineral revenue. He hopes the 1000 jobs will increase, with more indirect and direct employment being added into the mining sector. Mining giant Debswana is a significant contributor to Botswana’s economy and Jwaneng Mine contributes approximately 70 percent of Debswana’s total revenue.
Citizen economic empowerment
Debswana managing director Albert Milton has suggested that Cut 8 does not only come with jobs and revenue to Botswana economy but also brings citizen economic empowerment (CEEP). “As we have throughout the history of Jwaneng Mine we remain steadfast in ensuring that all projects are delivered safely and to the benefit of the people of Botswana. We are also committed to delivering on the citizen economic empowerment (CEEP) goals and will focus on training our people, developing their skills and harnessing technology to create further safety and efficiency improvements,” said Milton.
According to Milton, the high-level Social Investment CEEP key performance indicators for the Cut-9 project include the establishment of an Apprentice and Artisan Training Centre, a Component Rebuild Centre which is expected to mature into a self-sustaining business within three years from the launch of the project and additional local business development initiatives.
The future of synthetics as Botswana expands naturally
With the recently unveiled Debswana’s Cut 9 project at the world‘s richest mine by value, Jwaneng mine, extending production of natural diamonds to 16 years economists and experts in the diamond industry believes natural diamond production will remain towering against the production of synthetic diamonds. This is despite fears that natural diamond production will give way for lab manufactured diamonds-but in Botswana natural diamond production remains a mainstay in the mineral industry. However local economist Jefferies believes synthetic diamonds do not pose much of a threat.
International diamond expert Edahn Golan has waged the extent at which the synthetics may threaten naturally produced diamonds. In his latest research, Golan found out that for lab made diamonds not all that glitters is gold as the synthetics continue to take a back-foot in the market when compared to prices of natural diamonds.
“On average, 1-carat lab-grown goods were priced 64% lower than natural diamonds at the end of December, while third-carats were 75% cheaper. If you are wondering why the price gap in retail prices is so much smaller, the answer is simple: retailers are keeping a wider margin,” said Golan. Golan gave an advice to producers like Debswana, saying the natural diamond producing industry should fight hard because it retailers have better margins on synthetics, giving them an incentive to keep promoting them to consumers.
Golan said a quick comparison of retail prices show a price difference of 20-40 percent, depending on the specific goods and the retailers’ branding, market positioning. Wholesale prices behave very differently. In the wholesale market diamonds are priced as a commodity, said Golan. The diamond expert said that makes for a much more accurate way of measuring price changes over time. According to Golan, polished wholesale prices of lab-grown goods are 50-85 percent lower than those of natural diamonds and the depth of the price gap has two general characteristics: first, the smaller the goods, the larger the price difference.
“If diamond companies want to preserve the market they are operating in, they need to wake up now and get going. Otherwise, the demise may be just around the corner. The economics of it are simple: most diamond mines produce a range of goods, from very small low-quality stones to large stunning beauties. But because miners need to sell the entire range to make their operations worthwhile economically, they won’t mine at all if they cannot sell low and mid-range goods. Without the basic goods, hardly anything else will be mined or offered,” advised diamond expert.
Golan is an analyst advising financial institutions, global diamond firms, diamond industry organizations and governmental agencies on topics ranging from provenance of fancy color diamonds to the diamond’s contribution to local economies. Among his clients are diamond firms, miners and the world’s second largest retail metrics firm. He says, “I’m more than happy to make the case for natural diamonds and ethics anytime.”
Business
Grit divests from Letlole La Rona
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.
Business
Stargems Group establishes Training Center in BW
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.
Business
Food import bill slightly declines
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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