Mining in Botswana is sadly the sector most sensitive to shocks. By nature, mining represents intensive and long-term investments in a mineral whose value oscillates according to global demand and supply variables. New investors in mining often carry losses for several years, while waiting for commercial production. Established miners suffer financial shocks, with only the mineral's intrinsic value standing between them and ruin. This was the harsh reality that players in the Botswana mining industry were faced with at the dawn of 2009, when the global recession reached local shores. Prior to this, local mining had been bullish for several years, as evidenced by the eight percent jump in total commercial bank loans to the sector between 2007 and 2008. Additionally, production across all major minerals was steady to high, with 32.6 million carats in diamonds being produced in 2008, compared to 33.8 million in 2007. Botswana Ash produced 280,000 tonnes of soda ash in 2008 compared to 279,625 in 2007, while coal production for 2008 was pegged at 909,511 tonnes compared to 828,164 tonnes the previous years. Minerals such as gold, salt, nickel, copper and cobalt, all enjoyed higher production figures for the year, giving rise to optimism in the industry about 2009 figures.
However, when mines, their suppliers, investors and other stakeholders opened in 2009 after the industrial shutdown, all bullish projections were rapidly replaced with despair and consequently, a stampede for survival. For diamonds, the first sign of trouble was the October 30, 2007 auction of 10,612 carats by debutant producer, DiamonEx, from its Lerala mine. While two independent consultants valued the stones at $48 per carat, they fetched $20 per carat, putting Lerala mine on the road to financial ruin. In November and December, Debswana mines recorded 'very low sales' forcing the company to shut down for four weeks beginning in mid-December as a cost-cutting measure. The source of the trouble was the depressed diamond market, particularly in the USA - as the effects of the sub-prime housing crisis shook global financial entities. America is the world's single biggest diamond market.
