The Index of Mining Production (IMP) in the second quarter of 2014 stood at stood at 106.6 showing a negative year on year growth of 4.5 percent, the latest release by Statistics Botswana has revealed.
The Indices of the Physical Volume of Mining Production second quarter 2014 report showed that main contributors to the decline in growth of mining production came from Copper-Nickel-Cobalt matte, which declined by 3.0 percentage points followed by Diamonds, which declined by 1.3 percentage points and Gold, with a decline of 0.3 percentage points.
Soda Ash and Coal brought some resilience to the overall mining production fall, increasing by 0.2 and 0.1 percentage points respectively during the second quarter of 2014.
Amidst this negative growth, it can be observed that the index of the physical volume of mining production grew by10.8 percent from 96.2 in the first quarter of 2014 to 106.6 in the second quarter of the same year.
“Despite the major plant maintenance carried out together with the impact of the clean-up of the Jwaneng Mine slope in 2013, Diamond production declined by 1.5 percent between the second quarter of 2014 and the same quarter in the previous year, 2013,” the report noted.
Copper-Nickel-Cobalt matte production declined by 34.7 percent between the second quarter of 2014 and the same quarter of the previous year. The report has attributed the decline to the disruptions in production due to the inefficiency of the smelter waste boiler tube.
Also, copper in concentrates production declined for the second time since its inception in 2010, decreasing 0.7 percent between the second quarter of 2014 and the same quarter of 2013, after increasing by more than fourfold between the second quarter of 2013 and the same quarter in 2012.
“The decrease in 2014 is attributed to ineffectiveness of the crushers which subsequently broke down, and the lower than expected copper recoveries from the ore” stated the report.
Meanwhile Gold production fell by 24.6 between the second quarter of 2014 and the same quarter of the previous year. This follows a decline of 17.8 percent between the same quarters of 2013 and 2012. The changes recorded between second quarter of 2014 and that of 2013 was attributable to ore shortages and lower than expected Gold recoveries from the ore.
Soda Ash production recorded an increase of 29.8 percent during the same period. This follows four consecutive declines as shown in. The substantial increase in production is mainly attributed to the effectiveness of the plant following its maintenance.
Salt production decreased by 13.7 percent between the second quarter of 2014 and that of the previous year, as compared to an increase of 49.3 percent registered between the second quarter of 2013 and the similar quarter of 2012. The decrease in salt production is said to be mainly due to the planned plant maintenance conducted at the mine which resulted in production stoppages during the course of the second quarter.
Silver production recorded yet another decline since its inception in 2013, falling 25.1 percent between the second quarter of 2014 and that of the previous year. The decline was largely due to crusher breakdown.
Nonetheless coal production recorded a growth of 66.1 percent between second quarters of 2014 and 2013. This follows three consecutive declines. The growth is credited to the increased demand for coal following optimal usage of the Morupule B Power generators during the second quarter of 2014.
The report is the second to be published by Statistics Botswana and is a product of Industry Statistics Section. This report uses 2013 as a reference year. Data used in this publication is sourced from the Department of Mines at Ministry of Minerals, Energy and Water Resources.
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”