Mmegi Online :: Gloves off at Karowe Mine
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Last Updated
Wednesday 15 August 2018, 15:48 pm.
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Gloves off at Karowe Mine

At least 450 miners are set to lose their jobs next week at Karowe Mine when Lucara Diamond Company terminates its half a billion rand a year contract with South African contract mining services firm, Eqstra Limited.
By Brian Benza Tue 06 Dec 2016, 18:00 pm (GMT +2)
Mmegi Online :: Gloves off at Karowe Mine








Triggered by a dispute reportedly centred on differences over volumes of ore mined by the contractor, Lucara has told Eqstra that the contract will be terminated on December13, 2016. The contract was due to end in December 2020.

Following the termination, Eqstra yesterday said it will seek to recoup damages from Lucara Diamond over the premature termination of the opencast mining contract.

Eqstra, which is a subsidiary of JSE-listed Extract, says on November 29, 2016, it was advised by Lucara of its intention to terminate the opencast mining contract and to cease mining operations on December 13, 2016.

The South African contactor employed 450 workers at Karowe mine, who are now set to lose their jobs by next week.

Lucara, according to Eqstra, further intends to withhold payment due for work performed in October and November, as a result of irreconcilable differences with regard to volumes mined. “The company categorically denies and refutes any allegations of improper conduct relating to the performance of its contractual obligations. “The company can assure its shareholders that it made all reasonable efforts to resolve the issue in order to progress the partnership in a mutually beneficial way.

“Eqstra Botswana will seek to recoup its damages, in terms of the contract, which was to endure to December 2020,” Eqstra states.

The South African mining contractor also says discussions are ongoing to minimise job losses.

A soon to be appointed new mining contractor at Karowe Mine is expected to employ part of Eqstra workers. From the contract value of approximately R500 million per annum of revenue Eqstra says the contract’s profit after taxation per annum contribution stood at

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R8.5 million. However, the company says the Botswana operations are ring-fenced to the local entity and will not affect Extract’s plans in bringing efficiencies to its balance sheet and operating model. Lucara on the other hand, confirmed the contract termination and has moved to assure shareholders that 2016 throughput will not be affected by the latest development.

 At Karowe, Lucara targets producing over 350,000 carats of diamonds in 2016 with ore mined between three and 3.5 million tonnes and waste mined expected to be between 13 and 14 million tonnes.

“While the performance of Eqstra under the contract remains a subject of discussion between the parties, an orderly transition to a new mining contractor is underway.

Operations on site continue with the plant being fed with stockpiled material from the South Lobe. The change in mining contractor is not expected to have any material impact on production,” Lucara said. The job losses at Karowe will add to an already grim situation in the mining industry where over 7,000 jobs have already been lost at Mowana, BCL, Tati and Majwe. Lucara carved its name in the history books last year when it unearthed the Lesedi La Rona diamond. The 1,109 carat Lesedi La Rona diamond is the largest since the Cullinan diamond was discovered in 1905. Last week, Lucara announced that it targets to produce between 2.2 and 2.5 million tonnes of ore producing between 290,000 and 310,000 carats from Karowe in 2017. The company sees revenues of between $200m and $220m for the 2017 financial year excluding proceeds from the sale of Lesedi La Rona.

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