Despite slight decrease in Debswana’s total production in 2019, owing to trimmed output in Orapa, Botswana’s flagship mining company continued to rubberstamp its position in Global rough diamond production.
The over 50 years old mining giant accounted for more than 75 % of De Beers’s global diamond production for the year 2019. A year that was characterized by some of the worst global market challenges since 2008/9 global financial crises. This information is contained in Anglo American PLC’s 2019 full year financial report released this week; Anglo is De Beers Group parent company. According to figures highlighted in the report, De Beers’s production closed the year at just over 30.7 million carats, a significant decline from the 35.2 million carats achieved in 2018.
Much of De Beers total production decline during the year was attributable to 59 % decrease of production at South Africa’s Venetia Mine, which is currently on transition from open pit to underground mining. Of the 30.8 million carat output, Debswana brought to the table over 23.25 million carats. Though this is a slight decline from the 24.13 million carats achieved in 2018, significant yearend decline in South Africa and other De Beers operations in Namibia and Canada translated into Botswana’s production accounting for over 75.4 % of the De Beers Group total global output for the year.
This mirrored a significant increase in Botswana’s percentage contribution into De Beers global basket when compared to 68 .36 % in 2018 where Debswana brought in over 24 million carats of the 35.2 million carats Group total output. However output at Debswana itself declined by 4 % to 23.3 million carats from 24.1 million carats in 2018. This slight decrease in Debswana production is attributable to 12% decline at Orapa which came as a result of delay in infrastructure project and expected lower grades.
Orapa which produces some of the world’s best industrial diamonds slowed down to 10.8 million carats compared to 12.2 million carats achieved in 2018. The decline at Orapa regime which comprises of the Orapa ,Letlhakane & Damtshaa Mines, was however partly offset by 5 % increase at Jwaneng Mine, the world‘s richest by value.The “Prince of Mines” as popularly known in the corridors of the lucrative diamond mining business roared to a staggering 12.5 million carats beating the previous year end of 11.9 million carats.
OTHER DE BEERS MINES
In the overall, De Beers Rough diamond production decreased by 13% primarily driven by the reduction in South Africa. While trading conditions have improved somewhat since the third quarter of the year, production was lower in response to softer rough diamond demand conditions compared with 2018. Production decreased by 59% to 1.9 million carats from 4.7 million carats as the mining sequence at the Venetia open pit had a higher waste to ore ratio as it moves into its final years, prior to the transition to underground.
Production at Voorspoed ceased following the operation being placed onto care and maintenance in the final quarter of 2018. In Canada, production decreased by 13% to 3.9 million carats against 4.5 million carats as Victor reached the end of its life during the second quarter of 2019, resulting in a 55% decrease in output to 0.4 million carats against 0.9 million carats achieved in 2018. Gahcho Kué output remained flat at 3.5 million carats against the same in the prior year, with a planned grade reduction offset by strong plant performance.
Next door in Namibia where De Beers runs similar shareholding operation like Botswana arrangement, production decreased by 15% to 1.7 million carats from 2.0 million carats in 2018. Output from the marine operation under DebMarine outfit declined by 10% owing to routine planned maintenance for the Mafuta vessel.
NamDeb‘s inland operations production decreased by 29% to 0.4 million carats from 0.6 million carats registered in 2018. This was predominately as a result of placing Elizabeth Bay onto care and maintenance in December 2018. In September 2019, the sale of Elizabeth Bay was announced.
De Beers total revenue decreased by 24% to $4.6 billion from $6.1 billion in 2018. This was attributable to rough diamond sales falling by 26% to $4.0 billion from 2018’s sales figure of $5.4 billion, Significantly this was due to 8% decrease in consolidated rough diamond sales volumes to 29.2 million carats from 31.7 million carats and a 20% reduction in average realised price to $137 per carat from $171 per carat in 2018.
Anglo reports that the reduction in realised price was driven by a 6% decline in the average rough price index and from a lower value mix of diamonds sold, in response to the weaker demand for higher value diamonds. In response to the challenging midstream trading environment, De Beers offered increased supply flexibility to Sightholders and sold a lower value and volume of rough diamonds to the midstream, while increasing marketing expenditure to $178 million from $166 million in 2018, to further drive consumer demand for diamond jewellery.
Underlying Earnings Before Interest , Tax , Depreciation and Amortisation( EBITDA) decreased by 55% to $558 million from $1,245 million owing to lower sales volumes, a lower value sales mix which curtailed mining margins, and the lower rough price index which reduced margins in the trading business. However Anglo says profitability in the mining business was supported by improved efficiencies and cost savings.
“Although there was a 13% decline in production in response to weaker demand, with the business being impacted by mining cost inflation in southern Africa, unit cost increases were limited to 5%” Of the $558 million EBITDA, Botswana alone brought in $385 million with rough diamonds from Debswana having sold at $139 per carat on average. De Beers Group owns 50 % Of Debswana, and Diamond Trading Company Botswana (DTCB).
De Beers Group’s other worldwide interest spans into the lucrative midstream and downstream space with business such as Foevermark, the Group’s jewelry retail outfit, ElementSix, the industrial technology and manufacturing company, as well as LightBox the newly established synthetic diamonds brand operating from United States. Botswana Government owns 15 % of De Beers Group, the remaining 85 % is owned by Anglo American PLC.
In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?
Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.
This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.
Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.
Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.
Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.
At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.
With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.
Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services
Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.
In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.
Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.
The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.
On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.
The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.
Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.
The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.
The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.
Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.
All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.
Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.
During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. βHowever, firmsβ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bankβs 3 β 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,β reads the survey report in part.
However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.
In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.
On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.
Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.