Botswana Mining Report Q2 2016
BMI View: The expansion of Botswana's mining industry will be tempered by weakness in global diamondprices over the next few quarters, with the country's largest producer, Debswana, revealing plans to scaleback production at two of its mines over the next three years. A sluggish diamond sector will be mitigated toan extent by rapid expansion in thermal coal mining as the government aims to become a net powerexporter within the next few years. Growth in thermal coal output will pave the way for the gradual, butlong-awaited, diversification of the country's mining sector.
Latest Updates & Structural Trends:
We have revised our medium-term production forecasts for Botswana downwards this quarter, followingthe announcement that the country's leading producer, Debswana, will suspend operations at one of itssmaller mines, citing the recent collapse in global diamond prices. The company will also downsizeoutput at another facility for a period of three years. With Debswana accounting for the bulk of thecountry's diamond output, we consequently forecast output to contract by 6.1% in 2016 to 21.8mn carats(mnct). Growth levels will be muted thereafter, growing by 1.4% a year on average through to 2020.
Nevertheless, we continue to maintain the view that Botswana will become an increasingly importantdestination for global mining investment due to its stable political and economic environment. InDecember 2015, Canada's Lucara Diamond Corp announced plans for an expenditure of USD15-18mnon an additional large diamond recovery process at its Karowe mine. The company stated that the mine isestimated to treat between 2.2mn and 2.4mn tonnes of ore in 2016, producing around 350,000ct ofdiamonds.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook