Timely delivery essential for cut 8 success

MBONGENI MGUNI
Staff Writer | Monday December 13, 2010 00:00

 

The project involves stripping 713 million tonnes of waste at a rate of 110 million tonnes per year in order to expose a further 75 million tonnes of ore and 95 million carats. Cut 8, which is essentially a deeper and wider layer of mineral recovery, will extend the life of Jwaneng Mine by seven years, maintaining a minimum throughput of 10 million tonnes of ore between 2017 and 2024.

At the launch of Cut 8 on Friday, senior government, Debswana and De Beers officials underlined the importance of ensuring that the project comes on line before the absolute depletion of Cuts 6 and 7, which Jwaneng Mine is presently tapping into.

The launch was performed by President Ian Khama and was graced by Debswana Chair Nicky Oppenheimer, cabinet ministers, the Attorney General Athaliah Molokomme, the Member of Parliament for Ngwaketse West Mephato Reatile as well as other senior government and Debswana officials.

Outgoing Debswana MD, Blackie Marole, outlined the consequences of a delay in the Cut 8 project. 'Cut 8 will come into production after Cut 6 and 7 have been exhausted,' Marole said. '(But) because it's coming after them, it must be ready before they are depleted. This is extremely critical.

'This P24 billion will look like nothing if we do not complete the project on time. If we fail and have to go for weeks or months without production, both shareholders and Batswana will face a very difficult time. This project must be completed six months before we deplete the resources at Cut 7.'

Shareholders' 'difficult time' includes making good on commercial borrowings sourced for Cut 8 while keeping panicky creditors at bay. For Botswana, a delay in Cut 8 and a break in diamond production would wreak havoc on public finances and international confidence in the country's economic stability.

Marole praised the courage of the Debswana board in approving the gargantuan project at a time when the recession had stunted cash flows. 'The shareholders have been very brave in signing on this project in a year when it was difficult to commit to anything,' he said. 'We thought that because of the project's size, we should hold this launch with the President and the board members present for them to show their commitment, which was very brave.'

Demonstrating government's commitment to Cut 8, President Khama said the project was in line with the country's stated policy of turning diamonds into socio-economic development for Batswana.

'As a diamond-producing country, Botswana has and will continue to benefit from job creation, physical and social infrastructure such as roads, water supply, electricity, telecommunications, healthcare facilities, schools and human capital development,' he said. 'Therefore, Jwaneng Cut 8 will further make it possible for us to turn diamond dreams into lasting reality.' Khama noted that Cut 8 had already created 1, 700 jobs of which 1, 500 are held by Batswana, while the project is visible in various initiatives and investments, including the P2.2 million expansion of Jwaneng Mine Hospital.

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.

Options, which include underground mining, will however be subject to full feasibility studies, including recovery cost to revenue analyses. Recovery costs tend to jump the deeper a mining project goes, meaning that mineral prices and potential revenues may rule out certain options going in that direction.