Debswana Letlhakane Mine Tailings Resource Treatment Project (LMTRTP) commissioned last year to extend the lifespan of DK1, as the Letlhakane mine is popularly known, last week unearthed its first significant carats.
According to information from Debswana, this followed first introduction of the tailing feed to plant crushing and reprocessing. The Letlhakane Tailings project concluded its final commissioning stage last year following depletion of current explored resources after over 40 years of mining.
Letlhakane Mine started operation in 1975. Debswana Chief Executive Officer, Balisi Bonyongo last year announced that the company spent over 2 billion pula on the Letlhakane tailing resources treatment plant. The tailings project basically recovers small precious stones from stock piles that were not recoverable during the normal conventional treatment process
Information from Debswana signals commendable progress on the side of the project management team. Senior Executive team member of the Project Commissioning team, Kirby Motsumi says Debswana was delighted with the achievement which was in line with the mine strategic goals.
“We thank our team and business partners for working tirelessly and safely in the delivery of this key milestone. The focus is now on preparing for the continuous running of the plant. This means working to deliver per the strategic blueprint we have in place and ensuring efficient and sustainable efforts,” he said.
“It prepared for the final stage of commissioning that is achievement of nameplate design which saw the process plant as a whole operating at design production capacity over a specific time. Debswana Corporate Affairs Manager, Naledi Dikgomo-Goulden noted that the idea behind the project was to extend the life of Letlhakane mine and reserve jobs of those who worked at the mine. Dikgomo-Goulden observed that the objective was also to ensure that the mine continues to generate revenue for Debswana as the company was one of the key contributing vehicles to government fiscals.
The new Letlhakane tailing plant is expected to produce around 800 000 carats per annum for the next 20 years. The plant is a world-class facility specifically designed and constituted with mining and treatment solutions that ensure optimal economic recovery of diamonds.
The technology used includes the high pressure roll crushers conventional for crushing smaller stones similar to the one used in Orapa No 2 plant as well Voorspoed, Kimberley and Jagersontein mines in South Africa â€¨Diamonds are the anchor of Botswana’s economy contributing more that 30 % to the country’s Gross Domestic Product, also the diamonds sector is the largest contributor to the country‘s mineral revenue and consequently the largest foreign income earner. However Botswana‘s economic future is persistently labelled blur as far as national income generation and provision of sustainable jobs is concerned.
Currently the mixed structured open economy is largely dependent on mineral revenue mainly from the Diamond sector for foreign income generation and the government dominates, coordinates and regulates almost every sector of the middle income economy that Botswana is. This current setup in which the diamond sector alone is responsible for a quarter of the national treasury and is the largest single private sector employer is constantly viewed as an economic danger looming.
Already prospected and explored kimberlitic and precious deposits at the world’s largest diamond mine by value , Jwaneng Mine place the mine not beyond 2034(Cut8) with Cut 9 collectively with Orapa Mine likely to take the entire Debswana Mines not beyond 2052.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”