Debswana cuts output target, suspends Damtshaa
Mbongeni Mguni | Wednesday December 9, 2015 18:00
For 2015, Debswana had forecast production of 22 million carats. However, a senior finance ministry official revealed in October that the figure had since been revised to 21 million.
Yesterday, Debswana head of corporate affairs, Esther Kanaimba-Senai said the reduction for 2016 would be achieved by shifting priorities within the diamond giant’s mines, which include Jwaneng and Orapa, Letlhakane and Damtshaa Mines (OLDM).
Production at Damtshaa Mine – the smallest of Debswana’s operations – will be suspended for 2016.
“This (the reduction) will be achieved by producing more from Jwaneng Mine which is a high value, low cost asset and reducing production from OLDM,” Kanaimba-Senai said in a statement.
“Jwaneng Mine will produce around 12 million carats whilst Orapa, Letlhakane and Damtshaa Mines will produce around eight million carats.”
She said Orapa Mine Plant 1 would produce approximately one million carats whilst “maintaining plant readiness for an upswing in production should it be required”.
Known commonly as Orapa No 1, the plant is the country’s oldest and least efficient, often necessitating frequent maintenance and higher costs.
When the global recession caused diamond market stress in 2009 and Debswana responded by shutting all operations, it reopened all after seven months, but left Orapa No 1 and Damtshaa closed for longer, as these traditionally have the lowest cost/benefit.
In the statement, Kanaimba-Senai said all efforts were being made to “preserve jobs by re-deploying affected employees to other parts of the business”. She later told Mmegi Business in an interview that 250 employees would be redeployed from OLDM. “At this point, there are no plans to retrench at any of the mines,” she said.
De Beers, which holds 50 percent equity in Debswana, has launched a $100 million marketing drive in the U.S, China and India aimed at ramping up jewellery sales and thus restoring balance to the supply pipeline.
De Beers’ peak sales period runs between Thanksgiving and the Chinese New Year annua0lly, when jewellery sales traditionally go up and support production at its mines around the world.
The $100 million in marketing campaigns is the global diamond group’s largest ever investment in jewellery marketing in the U.S and China, its main consumer markets.
De Beers Group chief financial officer, Gareth Mostyn recently told Mmegi Business that this particular festive period would be key to the rebound in production and upstream activities across the group.
“We feel that with a successful peak selling season and with strong demand from consumers, this will be a platform to bounce back,” he said on the sidelines of a recent De Beers/Chatham House conference in Gaborone.
“We do feel that the indigestion in the pipeline from high inventories will normalise, helping rough diamonds to recover, but stimulating demand through our marketing is critical.”