Botswana and De Beers, the two shareholders of Debswana Diamond Company are just about to begin negotiations for the diamond production and sales agreement, two years before the current one expires. This came into the open this week during the annual diamond conference in Gaborone.
However, Mineral Resources, Green Technology and Energy Security Minister, Eric Molale and De Beers Chief Executive, Bruce Cleaver were this week not ready to give more specific details on imminent meetings which happen behind closed doors, often in luxurious and secluded locations in Gaborone, Johannesburg and London.
The current ten year diamond sales and mining agreement was signed in September 2011 and will end in 2021.Botswana government will be represented by members of the Minerals Policy Committee (MPC) which comprises Finance and Economic Development Permanent Secretary, Solomon Sekwakwa, his peer at the Minerals Ministry, Cornelius Dekop, Bank of Botswana Governor, Moses Pelaelo, and Attorney General Advocate Abraham Keetshabe. The team will be led by Molale himself.
It will be for the third time Molale becomes part of the arduous, but equally important negotiations with outcomes that are as important to the country as the diamonds themselves. Without letting off much, Molale told the press that, at this point they are crafting heads of agreement which will form the agenda for the upcoming meetings.
“We don’t want to work under pressure (hence they have started early),” said Molale. In addition, Botswana Government often involves high end corporate lawyers to back their team. Cleaver, who was also involved in the previous negotiations, told the media the partnership between De Beers and Botswana will continue.
“We all want a win-win situation,” he said. Earlier when giving the keynote address, President Dr Mokgweetsi Masisi likened the partnership to a marriage. He added the negotiations are just like ‘renewal of vows’. “Through our partnership with De Beers, there has been over the years, increased participation in the diamond pipeline from prospecting through to cutting and polishing,” said the President before leaving for Addis Ababa, Ethiopia for the African Union meetings.
Commentators in the diamond sector have hailed the current sales agreement. Under the deal, Botswana negotiators succeeded in having De Beers relocate its diamond sales and distribution function from London to Gaborone. As things stand, all diamonds produced from De Beers mines in Botswana, South Africa, Canada and Namibia are aggregated locally before being sold into the international market.
Botswana Guardian also understands Team Botswana also pushed for the establishment of an independent pricing method away from the one which is currently being used by De Beers. This led to the establishment of Okavango Diamond Company (ODC), a Botswana-owned rough diamonds seller.
The company led by Marcus Ter Haar, sells about 10 percent of Debswana produced diamonds. Meanwhile, Masisi has told the conference that, there is need to move up the pipeline to jewelry manufacturing and retail. “Participation at these up market levels, however small, will go a long way in promoting the development of Gaborone as a diamond city,” said Masisi.
This week, De Beer’s jewellery unit, Forevermark opened its first shop at Sir Seretse Khama International Airport. Cleaver was upbeat the luxury shop will be successful. The latest round of diamond mining negotiations between the two long term partners come at a time when more has changed in the landscape and there are important decisions to make. Synthetic diamonds are threatening natural diamonds market, although Cleaver dismisses the fear.
There is no new diamond deposit the size of Jwaneng discovered by the parties in recent times, and surely not in the two decade or so. There are more capital intensive projects coming their way such as Jwaneng, Orapa and Venetia expansion. All these projects will force shareholders to dig deeper into their pockets to fund them amidst volatile diamond sales.
Debswana, the country’s largest rough diamond producer is embarking on an ambitious project to expand the lifespan of the Orapa mine by an additional 35 years.
Orapa mine is the 9th biggest diamond mine in the world and is set to get even bigger through the Cut 3 project which is currently at pre-feasibility stage. “Cut 3 is the next big push at Orapa, where we will be expanding the mine. At Orapa, mining is currently at Cut-2 while Cut-3 is at pre-feasibility stage; we are working towards the next push back. Cut 3 is a big expansion,” said Orapa, Letlhakane and Damtshaa mines general manager, Bakani Motlhabane recently. He was addressing local newspapers and radio editors who visited the mine.
According to information from the company website, a detailed design study is underway to extend the life of the mine beyond the current open pit (Cut 2). Studies are at pre-feasibility stage and will inform the various parameters for Cut-3, said Debswana which is owned by De Beers and Botswana Government on an equal basis. The current Life of Mine, which only includes Cut-2, extends to 2030.
Motlhabane, who was giving an overview of the mine said, “We are excited about Cut 3 because it is going to transform this place. It is going to make Orapa different.” The GM did not go into details regarding the costs but maintained that this is not a little expansion on the sides it is about “overhauling this place.” Orapa, which is the oldest operating mine in the country, is currently mining at a depth of 250 metres and is expected to reach 450 metres by 2026.
Said Motlhabane, “We aspire to become a global benchmark diamond business. That is really our drive, everything that we do we want to be amongst the best if we are not amongst the best we must be the ones setting the benchmark. “We are focusing in the future, in future we are going to have expansions; there are projects that we are busy with that are coming in the future that will keep us going.” Cut 3 will involve stripping away waste at the bottom of the mine, as well as widening and deepening the pit. The mine is expected to increase its fleet of trucks from the current 23 to 58. Orapa which currently has a staff
complement of over 2000 employees will need an extra 500 for Cut 3 with additional houses. The envisaged extension of the mine comes after President Mokgweetsi Masisi has indicated that, negotiation on new diamond sales agreement with De Beers is just about to start. “We have had a wonderful relationship with De Beers and we expect that relationship to be even more cemented,” Masisi said in an interview with Bloomberg. “There is a way of actually achieving a win-win for both, and that’s what we desire.”
On a related matter, Debswana has also announced plans to further expand Jwaneng mine, a sister operation to Orapa through a project known as Cut 9.
Former Botswana Telecommunications Corporation Limited Board chairman, Leonard Makwinja has been appointed the Chief Executive Officer of Botswana Railways, effective July 1st 2017.
Minister of Transport and Communications Kitso Mokaila confirmed on Tuesday that the railway parastatal has hired Makwinja on a three-year contract. “At the end of his contract, we are positive that BR would be in a different state, it will be turned around. We looked at his experience and found that he is the right man for the post,” said Mokaila.
Makwinja is replacing former chief executive, Dominic Ntwaagae who quit his plum post in February 24th this year, a month before his term ended in March.
More often than not, the government parastatals recycle Chief Executive Officers and Board of Directors, which is now becoming a worrying trend to the ordinary man.
The Minister could not share details of the shortlisted candidates and what influenced them to settle for Makwinja, an almost retired if not fully retired individual than to have a new and fresh face. Close sources say from the 18 applicants, Makwinja came third in the top three. Alex Masie was the second runner-up, with the BR Director Business Development who is also current Acting CEO, Stephen Makuke leading the pack.
Makwinja formerly worked for Debswana Diamond company and has served as BTCL Board chairman since 2006, where he left in 2014 to join the BancABC Board.When he stepped into the BTCL Board chairmanship, the telecommunication company was not in a good financial position and was going through serious billing challenges.
Through his headship, BTCL strived for cost efficiencies whilst building an advanced converged portfolio of products supported by world class IT and network infrastructure to help boost digital inclusiveness.
This saw the company in 2008/09 financial reporting period recording profit and in the next period recording the billion-mark for the first time. Makwinja holds a Master of Science Degree in Industrial and Administration Sciences from City University, UK, and a Bachelor of Science in Mineral Exploration (Honours) from the University of Cardiff, UK. He first attained his first Degree in 1976 following a sponsorship by Anglo American.
China and India are two key markets which are expected to lead demand for diamonds in the short to medium term, an industry expert with more than 30 years in the diamond business told a conference this week.
De Beers Vice President, Marketing and, also Forevermark Chief Executive Stephen Lussier said the two leading economies which currently control just more than 20 percent will grow at much faster rates due to a number of factors. The current market share can even double by 2022.
“We expect demand from these countries to pick up in the next five to ten years largely due to urbanisation and strong economic growths,” said Lussier who is based in London ‘but rarely there’ as he travels the world over in search of new markets for the world’s most precious stone. As more and more people migrate to cities and towns for economic opportunities, ‘there will also be corresponding increase in income status’ enabling more people to afford diamond products such as jewellery. Lussier was speaking at the diamond conference organised by Botswana and De Beers.
The two are owners of rough diamond producer, Debswana Diamond Company. The Forevermark boss also pins his hopes on rising population in the two markets, stating it will boost sales. India, which is part of BRICS nations has strong middle class families ranging between 250 and 300 million. China’s population is well over 1, 3 billion, far much more than the current biggest market for diamonds by any measure, United States of America. On the other hand, India grew by 7, 6 percent in the year 2015/6, signaling better times for the economy and the diamond industry.
In the same vein, China the world’s second biggest economy saw its Gross Domestic Product (GDP) jumping by 6, 7 percent year on year up to June 2016. These are just some of the reasons that make Lussier upbeat that diamonds will now find more comfort in New Dehli and Beijing. Despite being bullish, Lussier is also aware of the current economic challenges and commodities price crash that has affected most economies, China and India included. The current difficulties have affected diamond demand. Last year alone, producers and suppliers in the diamond trade experienced a decline in revenue of as much as 30 percent. De Beers and Alrosa remain the biggest market players.
Meanwhile, Dr. Mignon Reykene, a consultant and senior lecturer at GIBS told delegates that, marketers of diamonds should also tap into other platforms for selling the product. She said the new generation of diamond buyers, which she termed ‘millennial’ are complex and different compared to those of the past. “They need right platforms such as online buying,” stressed Reykene who is also an independent consultant. About 6 percent of the world’s global diamond sales are done through online platforms.
Debswana answered in grand style an invitation by BOT50 secretariat to be part of the float procession during last week’s Golden Jubilee celebrations by doing the unthinkable – a public display of their gigantic Caterpillar 785 Dump truck.
This has never ever been done in the company’s 47-year old history. BOT50 had invited Debswana given the role that diamonds have played in the Botswana economy since 1969. The original request was for Debswana to build models of key features such as plants and earth moving machinery during the float, but they decided against the idea as they realised it was not going to have the impact they desired.
Debswana Corporate Affairs Manager, Matshidiso Kamona revealed that they identified the Caterpillar 785 Dump truck as the most viable option because it would be easier to transport from Jwaneng to Gaborone. That did the trick.The many Batswana who packed the national stadium and those watching on television both at home and at the fan parks were thrilled as some were physically seeing the truck for the first time.
To add ambience, Debswana provided 100 employees to parade as the truck entered the stadium during the opening of the celebrations on Independence Eve. About 80 of these miners were employees born in 1966. To ensure safety of all as well as safe delivery of the heavy duty machinery, Debswana engaged their reputable business partners to assist in bringing the gigantic machine to Gaborone
Kamona explained that Debswana and Barloworld equipment, which are responsible for maintenance and repairs of the Caterpillar truck, reached an agreement to mobilise the transportation of the vehicle from Jwaneng. Barloworld was responsible for all the technical aspects of the truck, including the necessary servicing and mechanical works. The truck was taken out of the production line and checked into the Barloworld workshop for all the necessary works including cleaning up, painting and tyre replacements.
Barloworld coordinated a 100-tonne crane used to remove the bowl from the chassis. To transport the chassis and the bowl from Jwaneng required ultra-heavy duty haulage equipment and for that VTH was identified as a partner to carry out the job. Two massive flatbed trucks were mobilised from Gaborone to collect the truck from Jwaneng. They had to arrive a day earlier to ensure that the drivers and everybody involved are taken through the necessary health, safety and security checks before beginning the work.
The two flatbed trucks left Jwaneng Mine on 24 September at around 08h00 for a four hour drive to Gaborone through Ranaka as there were some road works around the Moshupa area-there was only one lane available and it was going to be impossible for the truck to manoeuvre. With each carrying over 100 tonnes of equipment it had to be a very slow and carefully coordinated movement by the VTH staff, escorted by the Botswana Police. The trucks arrived safely at the grounds behind the national stadium and were kept under the stern surveillance of Botswana Police and the Botswana Defence Force. On 26th September the 100 tonne crane by Hoisting Solutions arrived from Jwaneng Mine to carry out the reassembling of the bowl on the chassis, coordinated by Barloworld Equipment. Once the bowl was safely in place the Barloworld team completed the necessary checks on the truck to ensure it was safe and ready to join the float.
The person to operate it safely inside the stadium was one of the seasoned 785 operators, Lister Boleseng from Jwaneng Mine who would be confident and skilled enough to manoeuvre the tight entrances and corners. “We had to walk the route that the truck would take into and out of the stadium a few times with all relevant stakeholders to pick out any possible obstacles and safety hazards and have them attended to as early as possible. When dealing with a piece of moving equipment weighing a whopping 250,000kg with a height of over 5m and a width of about 6.2m, nothing is left to chance,” said Kamona.
Debswana diamond company has announced that one employee contracted at its Jwaneng Mine died last night following an accident on site.
Onkabetse Ramooki, was an employee of Shoba Steel, a contractor at Debswana Jwaneng Mine. Debswana Corporate Affairs Manager, Matshidiso Kamona said in a statement that Ramooki, 26, was injured while undertaking maintenance work with other colleagues at the Recrush Plant.
A statement from the company says the maintenance crew was removing a T-piece pipe section, which fell and struck Ramooki behind the head. First Aid was applied and the employee was immediately rushed to Jwaneng Mine Hospital where he was stabilized. He was then transferred to Bokamoso Private Hospital in Gaborone for further attention.
“Unfortunately, Ramooki’s condition deteriorated during the course of the afternoon and regrettably he succumbed to his injuries,” reads the statement. Kamona said the company will continue to update as developments continue to unfold.
It has been four years since Debswana Diamond company financed a project to build a shelter for Barolong Tribal Administration in Goodhope but to date no structure is in place, Botswana Guardian can reveal.
The Barolong Tribal Administration which had approached the diamond company in 2012 seeking funding to upgrade the existing infrastructure in Goodhope Main Kgotla, later went back to Debswana for more but was rejected. Some close sources allege that authorities have misappropriated the money hence the failure of the project to take off. In an inquiry by this publication on the matter, Debswana’s Corporate Affairs Manager, Matshidiso Kamona confirmed that indeed in 2012, Debswana received a proposal from Barolong Tribal Administration to upgrade the existing infrastructure at the Main Kgotla. Debswana disclosed that the cost of the proposal was P400 000 which was approved and the funds remitted to the Tribal Administration.
Two years later, in February 2014, Debswana received yet another letter from the Barolong tribal administration office indicating a delay in the project due to their inability to fundraise for the project from Barolong across Botswana as they had hoped. Kamona’s response to the inquiry explains that, “The letter was requesting for an additional P1 million, which request Debswana declined due to unavailability of resources. The feedback we are getting from the beneficiary is that the project has not started yet because of insufficient funds. However, they have embarked on efforts to escalate fundraising efforts in cities and towns.”
Debswana has been making follow-ups on the project and has been assured that the Barolong Tribal Administration is still committed to the project and is still hoping to raise funds for it. “We have also been assured that our funds are secure,” she said, adding that the diamond company is in constant engagement with the project steering committee from the beneficiary’s side to encourage them to kick-start the project with the available funds.
Botswana Guardian established that, the project was to have started in 2013 subject to contributions from Barolong across Botswana and financial contributions from other potential funders. Some of the members of the project steering committee are Kgosi Motshegare (Ex-officio member), Mr Dithuso Phetlhu, Ms Bosilong (Good Hope Branch Chairman), Dr Patrick Molutsi (Gaborone Branch Chairman), Dr Mothusi, Mr Motang, Dr Ntseane, Ms Beauty Selabe and Mr Duncan Marumolwa.
Botswana Guardian visited Goodhope to engage Kgosi Botiki Motshegare on the matter. Kgosi Motshegare rubbished claims that the money has been misappropriated, “Ga re a ja madi….the money is still in the bank account and is still far from reaching what we want. I will not disclose the name of the bank. It has not been spent like what people allege.” He said the reason they went back to Debswana was to ask for more money. He conceded that they had underestimated the total cost of the project when they embarked on it. “However, we have since decided that we will refurbish the existing structure with the budget (P400 000.00) that we currently have. Our current structure has a capacity of 200 and we are looking to extend to at least 300-400 people,” Kgosi Motshegare said.
He said they had benchmarked from other main kgotlas such as the Batlokwa Tribal Admin and the Ngwaketse Tribal Admin, which motivated them to work on similar structures. At the time of this interview in July, Kgosi Motshegare said that they were shopping for quotations and remained hopeful that the project would be completed before end of the year 2016.
Botswana Guardian has learnt that, the structure for the Ngwaketse Tribal Administration in Kanye cost around P1.4million covering roofing, public address system, refurbishment of heritage house, conference room and new ablution block. The project is also a beneficiary of Debswana. Meanwhile, when asked on other projects funded by the company that could have proved unsuccessful at the end, Kamona said, “we are not in a position to share information on partnerships we have with our beneficiaries whose projects are still pending.” She however indicated that they continuously work with their beneficiaries to ensure that projects funded by Debswana are concluded and are of benefit to the communities.