Diamond production up in Q1
Anglo American has ramped up diamond production by 8 percent in the first quarter of the year, with the bulk of the production coming from Botswana based operations. The miner revealed this week that the increase in production was in response to improved trading conditions.
The production report shows that Anglo American’s subsidiary, De Beers, increased rough diamond production by 8 percent to 7.4 million carats. Anglo is the main shareholder in De Beers with an 85 percent stake while the Botswana Government owns 15 percent of De Beers. Furthermore, De Beers and Botswana own Debswana in a 50 percent joint venture.
The report shows that Debswana’s production decreased marginally to 5.2 million carats, a 3 percent reduction from 2016’s first quarter and also 4 percent lower than figures for the 2016 fourth quarter. Debswana operates the Jwaneng, Orapa, Letlhakane and Damtshaa diamond mines. Jwaneng, the leading mine by value and the second largest mine in the world, was the biggest contributor in terms of carats mined although production decreased by 8 percent due to expected lower grades. However this was partly offset by Orapa and Letlhakane mines, which increased by 5 percent and 4 percent. On the other hand, production at Damtshaa mine is still on hold after the mine was put under care and maintenance in January last year.
Production at Namdeb Holdings, another joint venture between the Namibian government and De Beers, increased by 6 percent to 0.5 million carats due to marginally higher grade at Namdeb. In DBCM (South Africa), production increased by 19% to 1.1 million carats largely as a result of higher grades at Venetia. Production in Canada increased by 290 percent to 0.6 million carats due to the contribution of Gahcho Kué, which reached commercial production on 2 March 2017.
The report also revealed that total rough diamond sales volumes in the first quarter of the year were 14.1 million carats (13.7 million carats on a consolidated basis) from three Sights, compared with 8.1 million carats (7.6 million carats on a consolidated basis) from two Sights in Q1 2016. Consolidated sales volumes exclude De Beers’ JV partners’ 50 percent proportionate share of sales to entities outside the De Bees Group of Companies from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume.
The mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to the top 85 customers who buy the diamond packages at a price determined by De Beers. In 2016, the diamond behemoth sold as much as $4.9 billion worth of diamonds in its ten Sightholder sales. In the first quarter of this year, De Beers’ value of rough diamond sales amount to $1.86 billion, following strong opening to the year.
The world’s biggest diamond producer by value sold $720 million in its first sale of the year, a 70 percent increase from the last sale in December. The January figures are also 32 percent higher than the previous corresponding period when it sold $545 million. The surge in the value of diamonds sold in the first circle of the year was helped in part by a longer period between the final sight of 2016 and the first sight of the year.
De Beers then followed with a second sales cycle of 2017, amounting to $553 million, a lower figure compared with the $617 million value of the corresponding cycle of 2016. The provisional figures for the third cycle sales of the year show that De Beers sold rough diamonds worth $580 million, 12.9 percent lower than 2016’s third cycle sales.
Anglo American has added that their diamond production forecast for 2017 remains unchanged at 31-33 million carats, subject to trading conditions. In 2016, total rough diamond sales volumes increased by 55 percent to 32.0 million carats, as a result of the improved trading conditions from those experienced in 2015. However, the average realised price of $187 per carat was 10 percent lower than in 2015, reflecting the lower average rough price index, which was down 13 percent, partially offset by a stronger sales mix.
Meanwhile, on Tuesday at the annual Debswana stakeholder engagement session, it was announced that production has now begun from the Cut-8 project, an extension of the Jwaneng mine that was made at an investment of P24 billion. According to De Beers records, Cut-8 will become the main source of ore for Botswana’s Jwaneng mine in 2018 and extend the life of one of the world’s richest diamond mines by value to at least 2035.
It is called Cut-8 because it is the eighth cut, or expansion, of the mine. It will increase the depth of the mine from 400 metres to 650 metres, making the pit 2.7km long and 1.8km wide. The expansion will catapult Jwaneng mine to ‘super-pit’ status, becoming one of the largest open pit mines in the world.
The new mine will provide access to an estimated 93 million carats of mainly high-quality diamonds from about 84 million tonnes of ore mined. But before a single diamond can be found, about 500 million tonnes of rock surrounding the diamond-bearing ore must be removed. Debswana Managing Director Balisi Bonyongo said 88 percent of an estimated 500 million tonnes of waste above diamond bearing ore had been stripped away by the end of March.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.