Lerala Village dealt huge blow as mine closes again

CALISTUS KOLANTSHO
Correspondent | Thursday August 2, 2012 00:00

Lerala Mine technical and operations director, Michael Brennan told Mmegi Business in an interview yesterday that the rapidly deteriorating prices of rough diamonds and worsening economic climate have meant that the mine is no longer receiving enough income as originally envisaged.

He said that the outlook for diamond prices in the short-term remains poor and therefore the company believes that it is better to 'leave the diamonds in the ground than sell at low prices' that do not help cover costs.

The global diamond market is in the doldrums, with prices falling and demand slowing in key markets and Botswana, the biggest producer of the gem stones in the world by value, is being hit hard by the downturn as government revenues take a tumble while small miners shut down operations.

Lerala is the second mine to mothball this year, after Firestone's BK11 mine shut down in April. 'The mine will be re-opened once economic conditions permit and will be in the mean time placed on an effective care and maintenance basis in order to ensure that it is properly maintained and well placed to resume production as quickly as possible,' said Brennan. He noted that in the short-term the mine would continue to process stockpiles. He also explained that the mine has had to retrench 96 employees, retaining only 44 of the workforce.

For his part, the village's councillor Kabo Ketshogile said as the village leadership they had not been officially informed about the suspension of production at the mine. He said mine manager informed them about the latest developments only upon enquiries.

Ketshogile said it is not the first time Lerala mine has been closed. He pointed that De Beers Diamond Company first operated the mine for five years before DiamonEx took over. He noted that DiamonEx was forced to close down the mine due to world economic recession. When the mine ceased operating in 2009, 285 workers lost their jobs. Apart from private and institutional investors, the government also loaned the company some money and it had taken 25, 000 diamond carats as security.

'The decision to close the mine is a big blow not only to Lerala but to the entire country. Many people are going to lose their jobs.

The economy of the village is going to collapse because the buying power will now go down. Many mine workers had rented houses in the villages so landlords will lose their sources of income,' he said.

Ketshogile observed that many businesses that had sprung up in the village because of mine operations are also going to close down. The councillor also raised concern that youth unemployment in the village will escalate.