HomeBase MetalsDiamonds in Botswana keeps country at mining forefront in Africa

Diamonds in Botswana keeps country at mining forefront in Africa

Botswana – Thanks to the high volume of diamond companies and projects, diamonds in Botswana will ensure the country retains is position as one of the best regulated and strongest performing mining sectors in Africa over the coming years (to 2019).

This is according to a FitchGroup BMI Research report released earlier this year.

And while Botswana’s mining sector is driven by the diamond industry, other metals and minerals will see increasing prominence, including coal, copper, and nickel. Additionally, uranium mining is likely to take off over the next decade says the report.

Gem Diamonds started production at its Ghaghoo diamond mine in Botswana late in 2014
Gem Diamonds started production at its Ghaghoo diamond mine in Botswana late in 2014

“We maintain a constructive outlook for Botswana’s mining sector over our forecast period to 2019. Diamonds in Botswana will remain the mainstay of the country’s mining sector, boosted by new projects planned by Debswana, Gem Diamonds and Lucara Diamond Corp.

“Yet we expect coal will become an increasingly prominent component of the wider mining sector and forecast production will accelerate in the years ahead. We therefore forecast the country’s mining industry value will see average annual growth of 4% to 2019, reaching a value of USD$3.7 billion by 2019.

Coal to play larger role

Botswana’s mining sector has significant potential for further growth on account of large diamond, copper and coal deposits, as well as numerous successful exploration projects the report notes.

African Energy's Sese coal project will uplift Botswana's status within the coal sector
African Energy’s Sese coal project will uplift Botswana’s status within the coal sector

“In particular, we highlight strong growth potential for the country’s coal sector. Fast growth from a low base will be driven by companies including Anglo American, Exxaro, African Energy & CIC Energy, bringing substantial investment into Botswana’s nascent coal sector.”

Country to remain dependent on diamonds

Slow economic recovery in the US and Europe, two of the main export markets for Botswana’s diamond production, has prevented more rapid growth in the country over the past few years. Therefore, the government is keen to reduce reliance on diamond revenue.

Botswana has been stepping up efforts to diversify its mining sector, with the government aiming to develop production of non-core minerals, including copper, gold and nickel. However, weakness in global metal prices will mean that diversification will continue to prove difficult.

“Thus we expect diamond production to remain the mainstay of the country’s mining sector, supported by strong growth in coal over the long term.”

Botswana to remain leader in Africa

“Botswana remains at the top of our Africa Mining Risk/Reward Index, and we see little prospect of the country being surpassed in the near future. Botswana’s impressive country risk scores are due to a strong legal framework and investor-friendly environment. The country has some of the lowest tax rates in the region and there is little government interference in the mining sector. Additionally, Botswana has some of the lowest rates of corruption in Africa.”

Click here for more information on the full report.

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