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High fuel prices to push inflation

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Increased pump prices for petrol, diesel and illuminating paraffin are expected to push up inflation in the remaining months of the year. This week government announced an increase in retail pump price for petroleum due to volatility of crude oil prices prevailing on the international market.

Though annual inflation recorded a 0.1 of a percentage drop in September to 2.9 percent from 3.0 percent in August, according to the Statistics Botswana report, industry predictions have already anticipated an increase. Last adjusted in May, the hike for retail pump prices for petrol, diesel and illuminating paraffin was also attributed to the growing under recoveries since September 2017.

“This is to say, the cost of bringing petroleum products to Botswana has been higher than the regulated price, hence the need to align local pump prices to international prices,” said a statement from the Ministry of Mineral Resources, Green Technology and Energy Security.

Government further said the volatility of crude oil price is influenced by amongst others changes in supply and demand on the global market, production and refining capacities and geopolitics.

Last month, Chimweta Monga, Managing Director at Engen Botswana had said he believes the increasing international fuel prices and the need to offset the growing slate under-recovery will put pressure to adjust the fuel prices upwards resulting in increased inflation during the remainder of the year.

Statistics indicate that the slate receivable from government increased P226 million to 305 million from December 2017 to June 2018. The adjustments are 65 thebe per litre for petrol, 73 thebe per litre for diesel, 63 thebe per litre for illuminating paraffin.

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Local chalk manufacturer eyes African market

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Je Me Presente, a chalk producing company that has been in operation for a year and has ambitions to position the country, as a chalk production hub, hopes to reduce unemployment figures.

“Our plan is to supply the whole country and eventually the entire continent of Africa. We want to become Africa’s hub of chalk production so that someone in Malawi or Kenya will know that chalk is made in Botswana,” said Maipelo Tshoso, Je Me Presente, Director.

Presently, the company produces 20 000 boxes per week on request and has plan to increase to at least 100 000 per day. “We are working on developing a plant that will operate on a shift basis that will supply the entire continent,” said Tshoso, highlighting that the company’s current market is mostly private schools in and around Gaborone. In addition, the business supplies to some stationary shops in the northern part of the country.

Quizzed why the company is not utilising the Economic Diversification Drive (EDD) programme, Tshoso said the company came into existence when government tenders were already running in the previous year. She is however optimistic that the company will benefit from EDD, this year.

Produced from gypsum, the dustless and non toxic chalk, production at Je Me Presente has other by-products which are manure and a cleaning chemical that gives white shoes their original colour.
Gypsum is a soft sulphate mineral composed of calcium sulphate dihydrate, with the chemical formula, widely mined and used as a fertilizer and as the main constituent in many forms of plaster, blackboard chalk and wallboard.

Tshoso said the company’s most pressing challenge at the moment is distribution, especially to school in the remote part of the country.“Our product is mostly used in rural Botswana and reaching such areas can be quite challenging for a start-up but we do try,” said Tshoso. Despite competition from large retailers that source chalk from outside the country, Tshoso hopes legislation would soon encourage the retailers to source local products.

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Lucura Q1 sales impressive

Keikantse Lesemela

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Lucara Diamond Corporation has recorded an impressive and improved performance with 0.76 million tonnes ore in its Karowe mine during the first quarter of 2019 and the first sales of the year exceeded US$ 47 million.

The company also recovered an unbroken 1,758 carat diamond which is larger than the 1.109 world’s second largest diamond, Lesedi La Rona, which was recovered from Karowe in 2015. During the period the company sold several diamonds larger than 10.8 carats which resulted in quarterly sales revenue of $48.7 million compared to $25.4 million in the same period last year.Lucara President and Chief Executive Officer, Eira Thomas, highlighted that they expect the total stones mined in 2019 to be between 8.5 and 11.8million tonnes.

“While guidance is unchanged, the average strip ratio is now expected to be lower than originally anticipated due to a higher percentage of ore mined during the first quarter of 2019,” she said.
The operating cost for three -months period was 30.52 per tonne, a decrease from $39.97 per tonne in the first quarter of 2018. Thomas explained that operating cash cost per tonne processed was positively impacted by a reduction in waste mined and an increase in tonnes processed during the first quarter.

“Lucara’s focus on operational excellence has delivered another strong quarter, having met guidance with respect to ore mined and processed as well as carats produced. Costs were significantly down quarter over quarter in line with expectations,” said Thomas.

She pointed out that in 2019 the company forecasts revenue between $170 million and $200 million, consistent with the forecast for 2018. In 2019, diamonds recovered are expected to be between 300 000 carats and 330 000 carats and diamonds sold are expected to be between 300 000 and 320 000 carats. The company has approved a budget of $14.8 million evaluating the potential for an underground mining operation at Karowe. “In 2019 efforts will focus on follow up geotechnical and hydro geological drilling and related studies. Exploration expenditures are estimated to be up to $3.0 million”.

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