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Mining industry turbulent in 2017

Botswana’s mining industry went through troubled times during 2017, especially with the closures of several mines in the preceding years.

Having experienced effects of the domestic economic contraction, the industry was dealt a severe blow by the closure of the BCL Mine in October of the prior year.

According to the 2017 budget speech, the negative growth of the economy was mainly due to weak performance of the mining sector, as a result of the reduction in diamond and copper production.

With the closure of BCL, which has been facing challenges mainly due to the depressed commodity prices on the international market, there have been ripple effects, not only in Selebi-Phikwe and surrounding areas, but the whole economy of Botswana.

Francistown was affected even more as Tati Nickel Mine, a subsidiary of BCL also closed. Palapye and surrounding areas also felt the pinch as the Morupule Coal Mine was affected given that BCL was the major consumer of the Morupule coal.

The negative multiplier effects have been severe throughout 2017 and had long lasting effects on the whole economy at large.

The closure of BCL had come at a time when the nation was still recovering from the closure of Boseto, owned by Discovery Metals Limited, and African Copper mines rendering many workers jobless. Boseto has since been sold to a company called Khoemacau in 2015.

Kimberly Diamonds saw its Lerala Mine being closed and placed under care and maintenance in April this year. Liquidation process for this mine is ongoing and 151 jobs have since been lost.

On the other hand, Mowana Copper Mine, which had been closed in December 2015, came back on full time production following completion of the first blast in April and a successful trial period.

The revival of the mine was envisaged to boost the country’s economy following the closure of both BCL and Tati.

However, all was not lost in the mining sector during the year as the diamond industry continued to show signs of recovery.

Debswana’s production jumped by a significant 33% to 6.1 million carats in the third quarter of this year setting the company on course to produce the highest output in three years and boost mineral revenues.

Production figures released by parent company, Anglo American showed that in the period, Orapa’s production increased by 60% mainly driven by the ramp-up of Plant 1, which was previously on partial care and maintenance in response to trading conditions in late 2015.

Jwaneng’s production also

increased by 23% as a result of planned increases in feed to plant.

Early this year, the diamond company indicated that it would produce 20.5 million carats this year, but later revised the production target upwards to 22 million carats on robust demand.

Indicative of the improved demand in 2017, Debswana has produced 17.1 million carats in the first nine months of the year, a 14% rise from the 15 million produced in the same period last year.

On the coal and energy front, Tlou Energy Limited recently told investors that it has now completed the first two core holes at its ongoing programme at its coal bed methane projects in Botswana.

The first two holes were drilled at the Lesedi project, and the third hole is being drilled in the Mamba area and it is expected to be completed in early 2018.

Mauritius founded and Botswana based Shumba Energy Limited announced a mega transaction after the company clinched a major trading deal with a regional coal consumer.

The Botswana Stock Exchange (BSE) listed coal exploration and extraction company will supply the consumer with over 20,000 tonnes of washed coal as per the said three-year contract, which has already been signed.

According to a statement released by Shumba Energy dated November 21, 2017, Shumba Coal Trading Limited will commence some tangible and significant work as a relatively first major client has been identified and agreed with.

The deal comes after another major milestone in the company’s growth and operation in April this year when Shumba Energy signed an option to acquire 75% of the Morupule South project from Hodges Resources.

The Morupule South Coal Project is located within the central eastern district of Botswana, directly to the south of the Morupule Colliery.

On the other hand, African Energy Resources resolved to delist the company’s shares from the BSE.

In a public announcement, the company, which had a dual listing on the BSE and the Australian Securities Exchange (ASX), stated that its two million shares currently held on the Botswana register will be transferred to the ASX register.

The power project developer, which owns 100% of the Sese Coal and Power Project in northern Botswana, had also stated that it will undertake an on-market share buy-back of up to four percent of its total share capital over the next 12 months.




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