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Botswana diamond sales crash

The tall Jwaneng
Aquarium building
Gaborone, Botswana — MININGREVIEW.COM — 09 April 2009 – The government of Botswana has reiterated its belief that the country’s diamond sales will fall by at least 50% this year, while prices are expected to drop by at least 20%, underlining the country’s dramatic transformation from an African success story to an economic failure.

Reporting this development from here, Bloomberg News revealed that since the Jwaneng diamond mine closed in February, Botswana – where diamonds made up 65% of the country’s exports in 2008 – has continued the trend of selling few gems which started last November. From boasting one of Africa’s largest fiscal surpluses, the government now is racking up debt at a record pace as revenue plummets, the news agency added.

Debswana Diamond Company – a joint venture between the government of Botswana and the De Beers Group – has closed four mines whose production equalled almost a third of the country’s gross domestic product. While three are set to reopen next week, they are not expected to earn much.

But, says Bloomberg News, Botswana is not without resources to fight the global financial crisis. The country has record foreign currency reserves of about US$10 billion (R96 billion), while years of fiscal surplus mean local banks and foreign lenders will be able to finance deficit spending this year and next.

The open-pit Jwaneng mine in south-central Botswana is the richest in the world, producing 15.6 million carats in 2005. Debswana says it will reopen it and two others on April 15. A fourth mine, Damtshaa, and the Orapa No.2 processing plant will remain closed.