BusinessWeek is reliably informed that Ghaghoo, which was the country’s first underground diamond mine, could be headed for a dim future after the remaining staff received letters warning about possible retrenchment.
In 2022, Gem Diamonds spent $1.9 million on care and maintenance activities at Ghaghoo, from $2.1 million in 2021. At the time, directors said the carrying value of the remaining assets had slipped to negative from zero in 2021. The final closure of the mine will trigger environmental rehabilitation obligations on Gem Diamonds in line with the country’s laws.
The letters dated April 3, 2024, alert workers that the mine is contemplating reducing its workforce in what officials say is a measure to align the workforce “with the current operational realities of the mine thus ensuring its survival and future viability”.
“The need to reduce workforce stems from a reassessment aimed at ensuring the efficient operation of the mine, particularly given the cessation of revenue generation and the substantial operational adjustments,” reads a letter to employees.
This will be the second time the mine retrenches. In 2017, about 250 of the mine’s workforce’s contracts were terminated when the mine was placed under care and maintenance due to depressed diamond prices. Only a skeletal staff was saved to keep the mine infrastructure in prime condition in preparation for a possible re-opening.
However, attempts to sell Ghaghoo appear to have floundered over the years. In 2022, a $4 million deal for the sale of the mine collapsed after the prospective buyer pulled out.
Sources close to the latest developments say there may be two more investors who have recently shown interest in buying the Mine. However, with the rough diamond industry still in turbulent times from the collapse of retail demand and prices last year, it is unclear how successful any takeover deal would be.
The Botswana Mine Workers Union (BMWU) President Joseph Tsimako could not comment on the issue stating that he has not been formally briefed about the developments.
“Where I stand, I haven’t been officially briefed about any possible retrenchments and cannot comment on the issue,” he said.
Initially discovered in 1981, the diamond resource at Ghaghoo was first mined in 2014 with the production of about 92,000 carats in 2015. Gem Diamonds placed the operation in care and maintenance in February 2017 citing low diamond prices.
