HomeDiamonds & GemstonesDiamond mines trigger Botswana economic recovery

Diamond mines trigger Botswana economic recovery

Damtshaa Mine “’ the
youngest of the
Debswana’s diamond
Gaborone, Botswana — MININGREVIEW.COM — 01 October 2009 – Botswana’s economy returned to growth in the second quarter of 2009, expanding 1.3% from a year ago as the country’s diamond mines reopened and farming surged.

Gross domestic product rose in the three months to 30 June, after contracting by 18.8% in the first three months of the year, the Central Statistics Office said here in an e-mailed report.

Rising demand for gems had led Debswana Diamond Company “’ the joint venture between De Beers and the government of Botswana “’ to re-open three of its four mines in the country in April, following a four-month shutdown. The mines account for 70% of Botswana’s exports and a fifth of global diamond production.

“The outlook for diamonds is still quite uncertain,” said Keith Jefferis, managing director of Gaborone-based consultancy Econsult. “Prices will be volatile over the next 12 months, and government revenues are going to be under pressure for some time.”

Mining output fell 18.6% in the second quarter after plunging 68.6% in the previous three months, the statistics office said.

Bloomberg News reports that Botswana’s government earns about half of its revenue from diamonds. Plunging sales since the fourth quarter of last year will probably widen the budget deficit to a record 14% of GDP this fiscal year, according to the finance ministry.

The Botswana government secured a US$1.5 billion (R12 billion) loan from the African Development Bank in June, the first time it has turned to the African lender in 17 years.

The economy will probably contract 11% this year, but should expand by 15% in 2010 as diamond production recovers, said Jefferis.