The Mine was tasked with saving P3.5 billion this financial year, but its general manager, Koolatotse Koolatotse told journalists last week that at least P3.7 billion had been achieved by mid-year.
“Jwaneng was allocated P3.5 billion in savings and Orapa P3.5 billion. “As of June, we are at P3.7 billion savings and that tells you a story that we are resilient. “When the market goes down, we will behave exactly like the market is down,” he said.
Koolatotse gave examples of cost-cutting that Jwaneng Mine had instituted to keep its running costs low this year. While others were major, others were as simple as cancelling a planned trip to South Africa.
"A team was supposed to go to Cape Town for a strategy meeting, but then we got a memo that the market is subdued. "We decided to cancel that trip because people can't go and eat sushi then we also tell people the market is subdued. "The Exco decided to cancel that trip to lead by example," he said. The savings at Jwaneng, Orapa and other parts of Debswana’s operations are part of a commitment to create P10 billion in value for shareholders, who include government and De Beers.
Last year, the diamond company’s attempts to tighten its spending were undone by runaway inflation which hit the cost of fuel, tyres, maintenance, explosives as well as other consumables and overheads.
Koolatotse said strong production by Jwaneng in the first two quarters of the year, had helped shore up revenues, before the downturn hit the industry. The diamond industry is suffering a sharp decline in both demand and prices, caused by an oversupply of stones in the market and global economic uncertainty.
The GM however told journalists that overall, the per carat value of Jwaneng’s diamonds is up four percent as of September this year compared last year, while revenues accrued are 21% up.
He said he was confident the mine would end the year with strong positive returns defying the market downturn.
“When the market got subdued, we had already made money for our ‘school fees,’” he said. “We had already met our annual target by June before the situation got out of hand and that is why we are sitting on large revenues.” Quizzed by BusinessWeek whether the weak international demand would see Jwaneng Mine revising its production targets going forward, Koolatotse said the Mine would stand its ground and keep its course.
“We will stockpile diamonds produced and when the market recovers we will be positioned to sell,” he told BusinessWeek. “We can’t alter production according to market performance because it’s never stable. “This is not the first time the diamond industry enters into a downturn. “It happened in 2008 and 2019 and it has been proven that there is no need to alter targets.”
