Botswana which is regarded as the world’s leading diamond producer by value and the second largest producer by volume after Russia has come to a realisation that gems will not last forever.
The country’s Minerals, Energy and Water Resources minister Ponatshego Kedikilwe said time had now come for the southern African nation to look for other minerals that will assist diamonds to propel its economic fortunes to a crescendo.
A local economic analyst Keith Jefferies recently told the Botswana Resource Sector Conference that new mining projects that can be considered when thinking of diversification included base metals (copper, nickel, cobalt, lead, zinc and silver), uranium coal and coal-bed methane.
Problems with diamonds
Before we zero-in on these alternatives it is of paramount importance for us to look at why the southern African nation was now worried of continued over-reliance on diamonds as a major source of government revenue.
Diamonds contributed over 30 percent to the country’s GDP and over 50 percent to the government’s revenue.
The global economic crisis of 2008/2009 saw the country’s budget deficit blew up to 15 percent of GDP.
Botswana was forced to seek an emergency $1.5 billion loan from the African Development Bank to sustain its operations.
Buyers tend to shun diamonds (a luxury) whenever they are feeling financially squeezed.
Some mines in Botswana were shut down, while others were placed under care and maintenance.
The country’s diamond output also plummeted to 17,7 million carats in 2009 from 32,6 million in 2008.
Although the global economy recovered from the ills of 2008/2009, the diamond industry is again under threat as the world economy is currently limping.
A recent Reuters poll showed that Botswana’s GDP would only expand 4.1 percent this year from 5.1 percent last year.
The country’s economy shrank 5.8 percent on a quarter-on-quarter basis at the end of 2011, as mining output contracted sharply.
The Bank of Botswana also noted recently that the country's rough and polished diamond exports dropped to $173.8 million in April after a huge leap the previous month when it earned $411.3 million.
April's exports figure was seven percent lower than that of the same period last year although higher than $109 million recorded last January.
However, latest data from the Central Statistics Office showed that the economy was expected to grow slightly for the year, keeping a lid on growth that reached 7 percent in 2010.
Although projections on Botswana’s economic growth this year vary, the clarion call for diversification was growing louder and clear.
Coal
With this background in mind, we can now have a look at the minerals that had the potential to drive the economy of Botswana, starting with coal.
Minister Kedikilwe said Botswana had coal reserves of 200 billion tones, while Capital Resources put the reserves at 212 billion tones, of which 7.1 billion tones were measured resources.
Much of the coal is close to the surface and suitable for open pit mining.
Analysts said that coal presented a major growth opportunity for Botswana and a route to diversification, thereby reducing overreliance on diamonds.
The country had the capacity and potential to produce up to 90 million tonnes of seaborne thermal coal per annum for export markets.
Its main export markets would be Asia, in particular India and China.
Capital Resources said that the direct export of coal had not been considered economically feasible until recently due to Botswana’s infrastructure, being land locked and with insufficient rail network.
Botswana had closely pursued two infrastructure projects, the Trans Kalahari Railway line, which would link Botswana to Namibia’s Walvis Bay and the option of linking Botswana to the Indian Ocean, via Zimbabwe to Southern Mozambique.
Both projects had environmental and political implications.
A decision in favour of one of these two projects has become even more urgent with Maputo withdrawing the offer for Botswana to use Maputo Port to export some of its coal due to their own increased coal exports.
A memorandum of understanding was also signed between the Namibian and Botswana governments in 2009 with regards to the construction of the Trans Kalahari Railway Line (TKR).
Gold
There had been intermittent gold mining activity over a long period in north-east Botswana. However, in 1998, Gallery Gold discovered a one million ounce gold resource at Mupane. Production commenced in late 2004, and quickly reached the rated capacity of 100,000 oz per annum, said Capital Resources.
In March 2006 Gallery Gold was taken over by IAMGold, which later sold Mupane gold mine for $34 million to Galane Gold.
Gold production at Mupane was slightly lower in 2011 from 1.77 tonnes in 2010 to 1.56 tonnes in 2011.
With Mupane’s expected life of mine almost at an end, the focus is on exploration of adjacent kimberlites.
Galane Gold, through its subsidiary Mupane Gold Mining acquired Northern Lights Exploration in April 2012, which gives the company additional prospecting licenses in the Tati Greenstone Belt. Access to these tenements combined with the tenements already held by Mupane Gold give Galane over 1,200 km² of prospecting ground in the Tati Greenstone Belt.
Uranium
In December 2007 A-Cap Resources produced Botswana’s first uranium resource at its Letlhakane project site.
In 2011, a 65 percent resource increase from 158 million pounds of uranium oxide to 261 million pounds (at 150 ppm) was announced.
Letlhakane is the 12th largest unexplored uranium deposit in the world.
Capital resources said A-Cap is currently undertaking a bankable feasibility study which covers both primary and secondary ore at Lethlakane to be completed in 2012.
Production at Botswana’s first uranium mine is expected to start in 2013/2014.
In late 2009, a new surface, secondary mineralization was discovered at Lethlakane. This secondary mineralization represents the most profitable ore due to its high grades and metallurgical characteristics and its closeness to the surface.
Impact Minerals is the largest ground holder for radioactive mineral rights in Botswana and holds prospecting licenses covering 26,000 km² and containing significant strike extensions to the host rocks found at the nearby A-Cap’s Letlhakane Uranium site.
Impact’s Lekabolo deposit is at an advanced exploration stage. The site holds an estimated 5 million pounds of uranium oxide (at 150 ppm).
In addition Impact has discovered a large alteration system at its Red Hills prospect, a first to be reported in Botswana.
Further drilling at the site is planned for mid-2012.
African Energy Resources is also active in uranium exploration.
Copper/Silver
Discovery Metals Limited continued with its expansive copper-mineral exploration (Boseto Copper Silver Project) in north western Botswana.
The metallurgical plant, according capital Resources, is almost finished and copper/silver production was expected from June 2012.
Mining of ore already started in December 2011 with the ore being stockpiled.
Expected annual mine output will be about 1.1 million ounces of silver and 36,400 tonnes of copper concentrate.
The mine will have a minimum life span of 15 years.
Hana Mining continues its focus on the Banana Zone, which forms part of the 2,200 km² area, the Ghanzi copper-silver belt, located in north western Botswana.
The Banana Zone has the potential to be a standalone operation and the company is reviewing the possibility for open pit and/or underground mining operations there.
A high resolution aeromagnetic survey in early 2010 indicated that copper-silver mineralization at the Ghanzi project may extend into the Kuke property, offering significant exploration potential. Exploration is ongoing.
African Copper through its subsidiary Messina Copper (Botswana) has two mines, the Mowana open pit mine and the Thakadu mine.
Mowana mine restarted production in August 2009, after production had been halted at the end of 2008.
In 2011, production of copper concentrate fell significantly from 14,400 tonnes in 2010 to 5,232 tonnes in 2011, mainly due to transport problems to carry the ore from the Thakadu mine to the Mowana mine for processing as well as problems with the metallurgical plant which is in need of an upgrade.
Output started to recover in March 2012 with improved trucking operations between the mines and two new crushers which were installed in 2011 have also improved plant performance. African Copper’s Thakadu mine which is situated about 80 km from its Mowana mine and shares the mine’s infrastructure is a higher grade mine with mining operations moving closer to sulphide ore.
Initially the area immediately under the Thakadu mine archeological site was restricted to underground mining but African Copper received permission in November 2011 to mine out all resources (including the archaeological site) in the Thakadu mining permit by open pit means. Expected output from the open pit is 1.4 million tonnes of ore.
Nickel
Russian company Norilsk Nickel owns 85 percent of Tati Nickel Botswana (with the remaining 15 percent held by the Botswana Government).
It successfully obtained three out of four exploration licenses in February 2011. Norilsk was currently completing airborne geographical surveying and surface geochemical prospecting in its Tekwane tenement.
No serious challenge to diamonds
From the look of things, coal had the potential to be a top foreign currency earner and this was evident by the considerable reserves the country had as well as the huge number of companies interested in the sector.
The Indians and the Chinese were also ready to consume the coal.
However, until coal mining reaches a full throttle, diamonds (tricky as they are at the moment) appeared to be the only real deal for Botswana as far as mining is concerned.
The country’s other option was to diversify away from mining, and here we are looking at tourism among other industries.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
