Diamonds lifespan extended to 2050
Brian Benza | Friday June 20, 2014 18:35
Diamonds have carried Botswana’s economic development for the past five decades but lack of diversification both within and outside the mining industry has posed a significant threat to future revenue streams.
Speaking to Rapaport news during his recent visit to the USA, the Minister of Minerals Energy and Water Resources said the life span of Botswana diamonds mines would be extended by another 20 years.
“The country’s diamond mining resource will extend to around 2050, well beyond the initial 2030 projection,” Mokaila was quoted saying.
Debswana, which is an equal partnership between De Beers and the Botswana government, has the bulk of production yielding about 22 million carats a year from its four mines – Orapa, Letlhakane, Damtshaa and Jwaneng.
The extension of the resource lifespan is to give government more room to step up diversification efforts which observers said has progressed at a slow pace.
Diamonds currently contribute around one-third of GDP, and about 80 percent of foreign earnings. Roughly four out of every five Pulas generated by the Debswana partnership is contributing to government revenues.
Earlier forecast had estimated the lifespan of Jwaneng, which is the most valuable of the country mines, contributing 60-70% of Debswana output, to stretch only until 2028.
The country’s second largest mine Orapa, which is likely to go underground in the near future was also seen in previous projections to exhaust it resource by 2030.
Efforts to get specific detail about the mines lifespan projections from Debswana did not bear fruit. “Regrettably, we are not in a position to discuss production and mine life projections with the media beyond what was communicated by Minister Mokaila who was speaking in his capacity as a Debswana shareholder,” said Debswana group public and corporate affairs manager Esther Kanaimba-Senai in a response to Business Week enquiries.
Previously, Debswana has said that they were undertaking Jwaneng and Orapa Resource Extension Projects.
Jwaneng recently undertook a stay in the business project prolonging the mines lifespan from 2017 to 2028. Dubbed Cut 8, the project involved the stripping away of 713 million tonnes of waste in order to expose a further 75 million tonnes of ore and 100 million carats at Jwaneng Mine. The current mining operation is expected to have depleted its ore by 2017, thus Cut 8 will add another seven years of mine life at 10 million tonnes of ore processed every year.
Capital costs for the project have been pegged at US$500 million (P4.5 billion) while all project stages from feasibility, design and equipment to mining operations will require an investment of US$3 billion (P23 billion) over the next 15 years.
After 2024, Cut 8 will deplete its ore, posing technical challenges for Debswana. With Jwaneng Mine’s diamond bearing rock extending to 1,000 metres, analysts expect the diamond giant could initiate Cut 9 - another waste mining operation - to unlock value.
But options, which include underground mining, will be subject to full feasibility studies, including recovery cost and revenue analysis. Recovery costs tend to jump the deeper a mining project goes, meaning that mineral prices and potential revenues may rule out certain options.
Apart from the Debswana stable, independent diamond producers in the country include Lucara’s Karowe diamond the mothballed Lerala Mine. Later this year, another mine, Ghaghoo is set to open in the CKGR producing an initial 100,000 carats a year.