While diamonds remain the leading contributor to the country’s Gross Domestic Product (GDP), the future of Botswana’s mining industry is clouded with uncertainty. Particularly concerning is the projected closure of many diamond mines by 2050, prompting questions about what will succeed diamonds. The answer may lie in local copper industry which has resurged, offering hope due to its robust performance in recent years.
When the BCL Mine closed in 2016, Botswana shifted its focus entirely to the diamond industry, which has been the backbone of the economy since the discovery of diamonds in 1967. Commodity markets show no favouritism, and recently diamonds have been yielding sub-optimal returns amid significant macroeconomic shocks.
The mining industry recently gathered at the Future of Mining Summit in Gaborone, where concerns about the diamond industry dominated discussions amid pervasive uncertainty. Speaking at the summit, Sedireng Serumola, CEO of Diamond Trading Company Botswana (DTCB), noted that the industry is grappling with an extended downturn, with long-term trends indicating a sluggish recovery in diamond demand.
“When you look at rough diamond production for the past 10 years you will realise that production was high during 2004 and 2005, but gradually began to decline in the face of varying macro-economic pressures. “Production has been down for some time and it’s going to take some time to recover,” he said.
A rough diamond production map, from the Kimberly Process showing global production from 2004 to 2023, shows that rough diamond production never fully recovered to pre-2008 levels when the market faced a steep downturn during the global financial crisis when rough diamond production fell by over 60,000 carats.
According to Serumola, the diamond industry’s challenges are compounded by its interconnectedness with the macroeconomy, which has been unstable in recent years. He further stated that navigating these challenges requires DTCB to explore markets beyond those stipulated in the diamond agreement between De Beers and the Government of Botswana.
Despite concerns over the diamond industry’s performance, copper is making a strong comeback with soaring prices year-on-year. A recent report from Botswana’s Economic and Financial Statistics (BEFS) highlighted the robust returns from copper, with exports surpassing P6.9 billion last year.
In the first two months of this year alone, copper exports reached P1.5 billion, surpassing first quarter sales from 2023, totalling P1.4 billion. Following the closure of the BCL Mine in 2016, copper exports amounted to a meagre P41 million, increasing to P2.7 billion in 2019.
Global recovery in copper prices has revitalised the sector, driven by players such as Khoemacau Copper Mining and Premium Nickel Resources Botswana, situated on the Kalahari Copperbelt and at the former BCL site, respectively. Khoemacau commenced its first concentrate production in June 2021 and is already planning a $700 million expansion to double its output to 130,000 tonnes by 2026. The mine recently acquired Discovery Metals’ adjacent processor at Boseto and is planning further capacity expansions.
Other notable producers include Sandfire Resources’ Motheo Copper Mine, developed at $259 million on the Kalahari Copperbelt, and African Copper’s former Mowana Mine, now renamed Kopano Copper after acquisition by new investor Max Power Limited. Between January and November last year, the value of Botswana’s copper exports totalled P3.5 billion, nearly triple the amount exported for the entire year of 2021. The difference between the two years can largely be attributed to Khoemacau, which spent 2022 ramping up to its nameplate output capacity of 65,000 tonnes per annum.
However, the resurgence of mines has left smelting activities lagging, marking the end of aspirations once held for BCL’s smelter and its iconic chimney stack. Many had hoped that combined volumes from old and new mines on the Kalahari Copperbelt would justify a communal smelter.
Despite more cost-effective alternatives like aluminium, copper remains unrivalled in efficiency and effectiveness for numerous critical applications in decarbonisation efforts. From household appliances to electric vehicles and renewable energy infrastructure, copper is indispensable. The average car contains about 65 pounds (29kg) of copper, while a typical household boasts over 400 pounds.
Copper truly shines in the construction of advanced grid systems capable of managing electricity from decentralised renewable sources. Solar and wind farms, spanning vast areas, require more copper per unit of power generated compared to traditional power stations.
Studies have revealed that to meet ambitious net-zero targets by 2035, annual copper demand may need to double to 50 million metric tons, according to industry estimates. Even conservative projections anticipate a one-third increase in demand over the next decade, driven by substantial investments in decarbonisation initiatives by both public and private sectors.
