Poor market keeps BK11 closed

Almost a year after it shut down, indications are that BK11 mine is unlikely to re-open soon, BG Business has established.Firestone Diamonds which owns the diamond mine halted operations last year citing poor market performance, which rendered the mine ”unsustainable to operate’. The board of the company promised to review its decision basing on market performance.

On Wednesday, Firestone Group Exploration Manager Polite Khutjwe told BG Business that exactly ten months after the closure of the mine, there has not been any major improvement in the global diamond market motivating them to resume operations.

The diamond industry has been faced with hurdles, thanks to the Euro zone crisis and a subdued growth in the US-the biggest consumer of Botswana diamonds. Khutjwe added that, if the diamond market could recover anytime soon, the mine would review possibilities of re-opening during the 2013 mid-year.

However his hopes are likely to be crushed by the latest Business Expectations Survey conducted by the Bank of Botswana, which shows negative growth of the mining sector in 2013. The survey has predicted a fall in global output from 4.1 percent in 2012 to 3.6 percent in 2013.

Latest data from Statistics Botswana showed a major decline in mining output during the 2012 third quarter (Q3). The sector’s contribution to the GDP fell by nearly half a billion, to only contribute P4.8 billion, from the P6.32 billion contribution in the prior corresponding period.

Despite this, Firestone is keeping an eye on the market. “We are continuously monitoring the situation of the market performance, we have a team of expert analysts who are assessing the market, and reporting back to the board,” Khutjwe added. Meanwhile care and maintenance for BK11 mine located in Boteti is starting to eat into the company’s balance sheet. So far the company spends P780 000 on monthly basis for maintenance.

This means the company has spent about P10 million ever since the mine was closed. Khutjwe said maintenance is necessary to ensure the plants are in good conditions should production resume.

Last modified on Wednesday, 31 July 2013 16:21

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