Growing Diamonds

Botswana has deposits of diamond, copper, nickel and silver and mining plays an important role in the country’s economy, accounting for 22.9 per cent of the country’s GDP in 2014. The diamond mining industry is export oriented and rough diamonds contributed approximately 70 per cent of the country’s total exports revenue, valued around US$1.7 billion in the first six months of 2015, says research reports.Botswana had the world’s third-largest diamond reserves at the end of 2014, with 130 million carats (Mct) or 17.8 per cent of the global total. Significant diamond reserves are found in the Central and Kgalagadi districts.

Major Rough Diamond Producers in Botswana

De Beers
De Beers has a portfolio of four companies in Botswana – De Beers Holdings, Debswana, Diamond Trading Company Botswana and De Beers Global Sightholder Sales.

Their companies in Botswana are experts in the rough diamond chain and operate in close partnership with the Government of the Republic of Botswana, an unparalleled partnership that has lasted since the country’s independence 50 years ago.

The Government is De Beers’ most important partner, and Botswana is the company’s biggest producer country.

The Botswana and De Beers partnership makes a significant contribution to GDP and jobs – through direct employment, contractor work (indirect) and the jobs created in the supply chain (induced). See the figure below for more detail*:

Debswana is the largest private sector e mployer in Botswana, with more than 4000 staff members. These are mainly found on mining sites, along with just over 5000 fixed-term contractors and a small staff complement at the Debswana Corporate Centre in Gaborone, Botswana’s capital. Diamond mining operations are located at Orapa, Letlhakane, Damtshaa (OLDM) and Jwaneng. These four mines have contributed significantly to the economic growth of Botswana, as well as producing revenues responsible for lifting the country from one of Africa’s least developed to an international development success story. Botswana is now a middle-income country independent in means as well as name.

Debswana also owns and operates the Morupule Coal Mine. Debswana is a key player in the national economy of Botswana. In 2014, diamond exports accounted for about half of government revenues and a third of GDP.

Lucara Diamond’s key asset is the Karowe Mine in Botswana. The 100 per cent owned Karowe Mine is a newly constructed state-of-the-art mine which was fully commissioned in Q2 2012. The Karowe Mine is a large scale asset with tonnage and throughput upside and production has consistently included large, Type IIA stones. Lucara is a member of the Lundin Group of Companies and is listed on the TSX Exchange, Nasdaq Stockholm and the Botswana Stock Exchange under the symbol “LUC”. The mine was completed in 2012 on time and within a budget of US$120 million and today generates revenues greater than US$230 million per year. In 2017 the Company will pay an annual dividend of CA$0.10, paid on a quarterly basis.

Gem Diamonds Ltd

Gem Diamonds Limited owns 70 per cent of the Letšeng Diamond Mine, with the Government of the Kingdom of Lesotho owning the remaining 30 per cent. Letšeng is the highest average dollar per carat kimberlite diamond mine in the world. At an average elevation of 3100 metres (10000 feet) above sea level, it is one of the highest diamond mines in the world. Since Gem Diamonds acquired the mine in 2006, Letšeng has produced four of the 20 largest white gem quality diamonds ever recovered.

Letšeng processes ore from two kimberlite pipes, Main and Satellite. It however, is renowned for its regular production of large, top colour, exceptional white diamonds.To this day, Letšeng continues to deliver exceptional returns for its shareholders, with annual production rising since the takeover from 55000 carats in 2006 to averaging over 100000 carats annually.

Owned 100 per cent by Gem Diamonds, the Ghaghoo mine is situated in the south-east portion of the Central Kalahari Game Reserve. Gem Diamonds is developing Ghaghoo in three phases. The first was aimed at confirming diamond grades and prices and testing different processing techniques. In the second phase, the focus will be on ramping up to the nameplate capacity of 720000 tonnes per annum. In the third phase, attention will be given to achieving a steady state of mine production.

In 2013, De Beers moved its sorting and sales operations from London to Gaborone making Botswana the core location of its business. The Government of Botswana owns 15 per cent of De Beers group outright and 50 per cent of Debswana, the De Beers/Botswana joint venture.

De Beers’ two primary mines in Botswana, Jwaneng and Orapa, represent 92 per cent of the nation’s diamond output by value. Jwaneng is reportedly the most valuable diamond mine in the world, and De Beers just recently began accessing ore from the new Cut-8 expansion portion of the mine’s ore body. The $2.2M, 7-year expansion project will extend the mine’s life to beyond 2040. Jwaneng’s diamonds are worth on average ~$200/ct, which compares to an average price of ~$150/ct for diamonds from Jubilee, ALROSA’s most prolific mine, and a global-mine average of $110/ct. (courtesy: paulziminsky.com) According to a report by Paul Zimnisky published on mining.com, Lucara’s (TSX: LUC) Karowe mine ranks as the third largest diamond mine in Botswana by value produced. The mine is only estimated to produce 300,000 carats this year, but at an average price-per-carat of almost $700/ct making Karowe’s diamonds the second most valuable in the world on an average price-per-carat basis not including alluvial mines. Gem Diamonds’ (LSE: GEMD) Letšeng mine in Lesotho is estimated to produce just over 100,000 carats at $1,800/ct, and Lucapa Diamonds’ Lulo alluvial mine in Angola is estimated to produce diamonds with an average price-per-carat of $2,400/ ct in 2017.

This year Lucara will continue to mine the South Lobe portion of the Karowe ore body which produced the Lesedi La Rona in 2015, which is second-largest rough gem-diamond ever produced is expected to sell for $70-85M this year.

Diamond Mining

In 2013, De Beers moved its sorting and sales operations from London to Gaborone making Botswana the core location of its business. The Government of Botswana owns 15 per cent of De Beers group outright and 50 per cent of Debswana, the De Beers/Botswana joint venture.De Beers’ two primary mines in Botswana, Jwaneng and Orapa, represent 92 per cent of the nation’s diamond output by value. Jwaneng is reportedly the most valuable diamond mine in the world, and De Beers just recently began accessing ore from the new Cut-8 expansion portion of the mine’s ore body. The $2.2M, 7-year expansion project will extend the mine’s life to beyond 2040. Jwaneng’s diamonds are worth on average ~$200/ct, which compares to an average price of ~$150/ct for diamonds from Jubilee, ALROSA’s most prolific mine, and a global-mine average of $110/ct. (courtesy: paulziminsky.com)

According to a report by Paul Zimnisky published on mining.com, Lucara’s (TSX: LUC) Karowe mine ranks as the third largest diamond mine in Botswana by value produced. The mine is only estimated to produce 300,000 carats this year, but at an average price-per-carat of almost $700/ct making Karowe’s diamonds the second most valuable in the world on an average price-per-carat basis not including alluvial mines. Gem Diamonds’ (LSE: GEMD) Letšeng mine in Lesotho is estimated to produce just over 100,000 carats at $1,800/ct, and Lucapa Diamonds’ Lulo alluvial mine in Angola is estimated to produce diamonds with an average price-per-carat of $2,400/ ct in 2017.Governing Bodies

The country’s mining industry is governed by the Ministry of Mineral, Energy and Water Resources (MMEWR), and sub-departments such as the Department of Geological Survey (DGS), the Department of Water Affairs (DWA) and the Department of Mines (DoM).