Botswana’s ‘diamond reputation’ faces high uranium mining threats

Botswana, the best regulated and strongest performing mining sectors in Africa, with diamonds being the main commodity, may soon change its reputation as the leader in the precious metal with forecast increased uranium mining in that country.

Botswana’s mining industry, the hosts of one of the much sought after minerals globally; also deal in other metals and minerals including copper, nickel and coal. However, additionally, uranium mining in the Southern African state and one of the lowly populated nations is likely to take off over the next decade.The World Mining Report says the country, however maintains a positive outlook for its mining sector over the forecast period to 2018. Diamonds will remain the mainstay of Botswana’s mining production.

It has anticipated there will be modest growth for the diamond sector, bolstered by new projects planned by Debswana, Gem Diamonds and Lucara Diamond Corp. Nevertheless, the major driver of growth will be acceleration in the country’s coal production. “Botswana’s mining sector is on course for steady growth over the next few years as we forecast the sector to average 3.5 percent growth from 2014 to 2018, reaching a value of USD6.3bn by 2018, the report adds, citing the Botswana mining report as saying for the period of quarter three of 2014. Strong Coal Growth Potential  Botswana’s mining potential is enormous, with large diamond, copper and coal deposits and numerous successful exploration projects. Over the next few years, it highlights particularly strong potential for growth in coal production.

Fast growth from a low base will be driven by companies including Anglo American, Exxaro, African Energy and CIC Energy, bringing substantial investment into Botswana’s nascent coal sector, the report adds. Diversification To Prove Difficult  Slow economic recovery in the US and Europe, two of the main export markets for Botswana’s diamond production, has hindered growth in the country. The Botswana Mining Report has been researched at source and features Business Monitor International (BMI)’s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values.

The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment. BMI’s Botswana Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI’s independent forecasts and competitive intelligence on the mining industry in Botswana.

However, according to recent data by the International Monetary Fund, Botswana’s economy grew faster than expected earlier – reaching a real Gross Domestic Product growth of about six percent in 2013.

This reflects the cyclical recovery of the mining sector along with recovery in its major trading partners.

The Bretton Woods institute notes further that the diamond sector contributed to improvement as the current account recorded a surplus in 2013 compared to a deficit in 2012. However imports continued to grow

As a result, the overall external position continues to be relatively strong with official reserve coverage standing at about 10 months of import cover at end-March 2014.

Meanwhile the IMF forecast the country’s GDP to shrink on account of a slump in demand for commodities-illustrating the country’s undiversified economy as its main vulnerability. A report released at the conclusion of the 2014 Article IV Consultation in that country, the report adds, the IMF said the main near-term risks for the country relate to the uncertain external environment, such as potential slowdown in emerging markets, which poses downside risks to mineral export demand. “Under current conditions the economy is broadly internally and externally balanced and the authorities’ near-term macroeconomic policy stance is appropriate,” the IMF is cited as saying noting further that;

“Overall external stability is, however, affected by lack of export diversification, which leaves Botswana’s economy vulnerable to fluctuations in the international demand for diamonds.” The Botswana’s real GDP growth is projected to slow down to 4.4 percent in 2014 and subsequently stabilize at around 4 percent over the medium-term.  “The growth slowdown in 2014 is owing to a slowdown in diamond recovery and continued problems in electricity and water supply which has affected the non-mineral sector,” IMF revealed.  “On the domestic front, the ongoing problems with power supply and continued high though decelerating growth in household borrowing are potential sources of vulnerabilities. A key medium-term risk relates to the sustainability of long-term growth as trend growth has softened in the last decade, requiring the easing of structural bottlenecks and finding new growth drivers.”

Loading

Check Also

Atlas Copco DrillAir compressors unleash drilling solutions

Atlas Copco’s DrillAir range of air compressors are specifically developed and engineered to provide maximum …