A tale of two sectors
Mbongeni Mguni | Friday December 20, 2013 11:53
The mining sector was generally robust during the year, with the flagship diamond industry exporting P25,1 billion Botswana-produced stones by October, compared to P23,2 billion for the full year 2012.
The diamond industry also came full circle with the relocation of Diamond Trading International from London and the commencement of total De Beers’ group diamond sales from Gaborone in November. The milestone now means Botswana now boasts all stages of the diamond value chain from production to polishing to jewellery manufacturing.
The state-owned diamond agency, the Okavango Diamond Company, also kicked off its long-awaited sale of government’s share of Debswana production, with two auctions during the year as part of a target to sell US$400 million annually.
Performances across other major minerals were mixed with copper and nickel exports pegged at P3,23 billion by August and thus well on track to surpass the full year 2012 figure of P3,4 billion.
Soda ash exports, on the other hand, were recorded at P585,3 million by October, well behind the full 2012 figure of P644,6 million.
However, the major story in the non-diamond mining sector was in gold, where the value of exports plummeted despite sustained production, due to the drop in global gold prices. The country’s sole producer had exported gold valued at P368,2 million by October, far behind the full 2012 figure of P618,4 million. Globally, gold prices are falling as investors decreasingly require inflation-safe assets and are more concerned about deflation.
This overall recovery in the mining sector this year, was mirrored in its improved contribution to GDP, where it was measured as having weakened by 0.7 percent in the second quarter, compared to 6.1 in the previous period.
Even as mining soldiered through the year, authorities in the electricity sector continued the fight to keep lights on. The now “normal” load-shedding resumed in February - after a festive season lull last year - and lasted until July, being blamed on low domestic generation and non-availability of regional imports.
Morupule B, whose non-completion is behind the “low domestic generation,” was plagued by gremlins throughout the year, including a major fault at Unit 2 in January, which is yet to be rectified.
With the exception of Unit 4, all of the power station’s units experienced one form of technical distress or the other during the year, with Unit 3 going out of service late last month due to cracks in the secondary air duct. The unit had, for a long period, been the sole one operating at Morupule B. Besides focusing its energy on normalising Morupule B, government also spearheaded a tender for the supply of 600 megawatts of green and brownfield power, required to be on-stream by 2016.
Recently, short-listed bidders for the brownfield project were announced, being a major step towards the announcement of the winning contractor and the start of construction. As the year ended, taxpayers counted the costs of the delays at Morupule B with the news that Eskom imports, obligations of the Morupule B loan, Morupule Coal Mine bill and operation and maintenance for the Morupule B project would cost P1,49 billion.
Legislators approved the proposed amount on the final day of their 2013 meeting on Friday, 13 December, a portentous date indicative of the electricity sector’s fortunes this year.