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Debeers anticipates positive outlook for 2018

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Jwaneng’s first ore from Cut-8 which was processed last year June is expected to become the mine’s main source of ore during 2018, enough to produce up to 91 million carats of diamond. Speaking at the recent Financial Overview for 2017 in Gaborone last week, the Executive Vice President of Global Sightholder Sales at DeBeers, Paul Rowley said the year is for the undertaking as they have set a production target of as high as 36-million carats for 2018. In its 2017 results announcement the Anglo American subsidiary reported a production guidance of 34-million carats to 36-million carats, which compares with 33.45-million carats produced in 2017. “Improving global macroeconomic conditions remain supportive of consumer demand growth for polished diamonds in 2018,” Rowley said, although it noted that the degree of global economic growth would be dependent on a number of factors, including the extent of the positive impact on consumer spending growth from US tax cuts.

The miner reported a two percent improvement in its underlying earnings before interest, taxes, depreciation, and amortisation (Ebitda) to $1.44-billion in 2017, despite a lower revenue of $5.8-billion following the one-off industry midstream restocking in 2016. This performance, the company noted, was driven by improved margins, which benefited from lower unit costs, which were supported by higher production and efficiency drives across the business, a strong contribution from Canada, and Element Six, which benefited from a recovery in oil and gas markets. However, this was partly offset by unfavourable exchange rates, and an increasing proportion of waste mining costs being expensed rather than capitalised, owing to an improved strip ratio at Venetia, in South Africa. Total revenue declined by four percent to $5.8-billion, with the average realised rough diamond price decreasing by 13 percent to $162/ct mainly owing to a lower value mix.

This was partly offset by an eight percent increase in consolidated sales volumes to 32.5-million carats. Capital expenditure reduced by 48 percent to $273-million, owing to the completion of major projects, including Gahcho Kué, in Canada, Debmarine Namibia’s new exploration and sampling vessel, the SS Nujoma; and planned lower waste capitalisation at Venetia. In terms of production, most regions registered positive margins of growth; Botswana (Debswana) increased production by 11 percent to 22.7-million carats, with production at Orapa being 28 percent higher, mainly driven by planned increases in plant performance and the ramp-up of Plant 1.

In Namibia (Namdeb Holdings), production increased by 15 percent to 1.8-million carats. At Namdeb’s land operations, production rose by six percent, despite challenging conditions, including grade variability owing to the nature of alluvial deposits, structural cost pressures, and some operations nearing the end of their lives. In South Africa, De Beers Consolidated Mines increased production by 23 percent to 5.2 million carats, primarily owing to Venetia. Construction continues on the Venetia Underground mine, which is expected to become the mine’s principal source of production during 2023.

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‘Manufacturing holds key to economic growth’

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Barclays bank’s economist Naledi Madala has urged the country to consider manufacturing, as a key tailwind to drive the economy and reduce inequality.

She was speaking at a gathering organised by the bank which focused on economic outlook for 2019. “We should not make a mistake of leapfrogging without manufacturing,” said Madala, lamenting that the country’s diversification remains a pipeline dream, as the diamond is still the economy’s mainstay. She bemoaned that mining activities in the country could not spring forward diversification, though non-mining GDP has been steady over the years.

“Extractive industries are not good stepping stones for diversification, the sector does not prepare us for the next step,” said Madala at the Barclays’ Economic Outlook Forum Review 2019. The economist further noted that government should confront head-on challenges of productivity and competitiveness to attract the much needed Foreign Direct Investment (FDI). Though diversification efforts continue to hit a brick wall, Madala said the country should expect increased activities in the mining sector hinged to ramp up in coal production in the year ahead.

She also implored government to consider a welcoming attitude towards foreign investors and generous tax incentives to businesses that set up in the country. Madala is also upbeat that the use of public private partnership model could also help diversify the economy coupled with privitisation. “Privitisation will offer opportunities for growth, through the renewed optimism from government, as business confidence has improved,” said Madala.

She implored the government and the business community to access what is going to drive and hinder growth highlighting that key headwinds to growth are income inequality, diversification challenge and productivity, among others. “The pace of poverty reduction has slowed down, while income inequality goes up,” said Madala

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MINISTER BEWAILS BAD REPAYMENT BY YOUTH

Keikantse Lesemela

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Minister of Youth Empowerment, Sports and Culture Development, Tshekedi Khama has told parliament his ministry continues to face challenges on the repayment of Youth Development Fund (YDF) loans.

Recently presenting the budget to Parliament, Khama said this financial year the ministry has received a total of 2582 YDF applications and approved 983of them to the value of P98 million. He said the programme attracts a high level of interest from youth but the ministry is only limited to funding a maximum of 1200 youth projects annually due to budget limitations.

“However the greatest challenge for the Fund is the repayment of the loan component by the majority of the youth businesses. The youth have advanced number of challenges for this including high rentals for operating spaces, low market access owing to tight competition and limited production capacities,” said Tshekedi, adding that they continue to pursue beneficiaries to repay the loans.

Out of the 919 businesses funded 1058 jobs have been created. The minister highlighted that disbursements of funds will continue to be undertaken until the end of the financial year. “The YDF is currently under review in line with the pronouncement made by the President, Dr Mokgweetsi Masisi in the State of the Nation Address, to improve beneficiaries through training, and encourage consortia and cooperatives,” said Tshekedi.

The ministry assists YDF beneficiaries in marketing their products and services through fairs and exhibitions. The ministry also runs entrepreneurship-training seminars for youth and in the past year 3692 young people were trained. Over 600 youth businesses attended fairs and exhibitions to market their products and services. Currently the ministry is collaborating with Local Enterprise Authority (LEA), First National Bank Botswana and Citizen Entrepreneurial Development Agency (CEDA) on training in entrepreneurship development and mentorship of YDF beneficiaries.

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