Diamonds Not Forever: Africa's Shining Example of Economic Management, Botswana, Is Losing Sleep. Investors, Stakeholders and Ordinary Citizens All Have Their Eyes Glued on the Country's Mining Sector and Particularly the Diamond Mines, as the Global Economic Slowdown Wreaks Vengeance on Commodity Prices, Reports Silethemba Mathe from Gaborone

By Mathe, Silethemba | New African, March 2009 | Go to article overview

Diamonds Not Forever: Africa's Shining Example of Economic Management, Botswana, Is Losing Sleep. Investors, Stakeholders and Ordinary Citizens All Have Their Eyes Glued on the Country's Mining Sector and Particularly the Diamond Mines, as the Global Economic Slowdown Wreaks Vengeance on Commodity Prices, Reports Silethemba Mathe from Gaborone


Mathe, Silethemba, New African


What began as a housing subprime credit crisis in the United States more than a year ago, has eventually unleashed a domino effect on many economies around the world. Botswana has not been spared. The crisis has come in the form of falling diamond prices, constricting diamond markets, falling base metal prices, fewer avenues for raising project capital, and lower foreign currency reserves due to declining mineral revenues.

The impact goes far beyond, also affecting offshore investments made by public, private and parastatal bodies, whose value has been eroded by the crisis. For the ordinary Batswana, the crisis has resulted in mine closures, resultant job losses, negative downstream implications, and general uncertainty within the economy.

Diamond prices on the world market rose by approximately 20% during the first three quarters of 2008, continuing a trend seen in previous years. Prices were largely fuelled by the supply/demand balance in the market, a trend towards higher value stones and the emergence of new buyers in the East. Now diamond prices are expected to decline by 15% in 2009, taking the lustre off the precious stone.

Diamonds, being a luxury product, are among the first to be struck off budgets by belt-tightening consumers in target markets, while diamonds for industrial use contribute less value to producers' bottom lines. Starting from last September, local analysts began warning that diamond prices would be hard hit by the global financial mess, which had its roots in the USA, the single biggest diamond market. Warning signs of hard times were seen on 30 October when DiamonEx received $20 per carat for 10,612 carats sold in its inaugural sale from the Lerala Mine. This was against the valuation of $48 per carat.

Botswana's diamond giant, Debswana (a joint venture between the state and De Beers), was not left unscathed as it was unable to sell any diamonds in November, and only recorded "very low sales" in December, according to the company's spokeswoman, Esther Kanaimba.

Sources also indicate that Debswana's January 2009 sales were similarly depressed. Of the 32.6 million carats produced by Debswana in 2008, only 28.9 million were sold by year end. The company shut down for four weeks beginning in mid-December as a cost-cutting measure. It is understood that Debswana saved more than 100 million pula (Botswana's local currency) through the shutdown exercise.

Starting this year, uncertainty has surrounded Debswana, with reports that the future of its 5,800-plus workforce is in jeopardy. Recent local media reports claim that the management has, apart from instituting a slew of cost cutting measures, asked workers to accept retrenchment or concede to half-salaries to reduce operational costs. In addition, the company has urged workers who have previously been unable to go on leave to do so now that demand is low.

[ILLUSTRATION OMITTED]

Debswana's managing director, Blackie Marole, has said retrenchments will be a last resort and when done, these will be in consultation with workers' unions. A 29 January meeting of Debswana's board of directors stressed the importance of conserving cash in view of the reduced sales volumes at the company's mines. Thus, Debswana has requested approval from the Ministry of Minerals, Energy and Water Resources to suspend production at its Damtshaa Mine and Orapa Number 2 Plant for 2009. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Diamonds Not Forever: Africa's Shining Example of Economic Management, Botswana, Is Losing Sleep. Investors, Stakeholders and Ordinary Citizens All Have Their Eyes Glued on the Country's Mining Sector and Particularly the Diamond Mines, as the Global Economic Slowdown Wreaks Vengeance on Commodity Prices, Reports Silethemba Mathe from Gaborone
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.