Country Report Botswana March 2011

Economic performance: Debswana is to increase production by 20%

Debswana, the joint diamond-mining venture between De Beers and the Botswana government, has announced plans to increase production to 27m carats in 2011, up by 20% from 22.2m carats in 2010. For 2012 a further increase to 30m carats is envisaged, which will be treated as a self-imposed ceiling on production in order to preserve supplies: there is the capacity to produce significantly more. However, this does not rule out additional supply from the planned reprocessing of previously mined ore. In 2010 Debswana contributed two-thirds of the rough diamonds produced by De Beers, which reported year-on-year sales growth of 58%. Improving sales reflected both increased volumes and sharply rising prices, which rose by an average of 27% according to De Beers. As a result of improved profitability at De Beers, the company has stated that it is in a position to start servicing the shareholder loan that it received from the government in 2010 (January 2010, Economic performance). As well as Debswana, there is intense interest in developing additional diamond mining in Botswana; Botswana Diamonds, which was formed in 2010 when Lucara Diamonds took over the development of the AK6 mine, has recently started the bulk sampling of three kimberlite pipes in the Orapa area.

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