Activities in electric vehicle, power infrastructure and renewable energy will lead to increase in copper consumption, but demand for diamonds is plummeting on geopolitical tensions and growing threats from lab grown diamonds, minister of minerals and energy has said.
Speaking at a two-day mining conference in Gaborone, Lefoko Moagi implored industry players to take advantage of a resurgence in copper highlighting the cyclical nature of the industry.
The Future of Mining Summit is an inaugural mining summit hosted by The Projects Magazine in collaboration with the Chamber of Mines. The summit brought together mining industry leaders, high-level government officials to address challenges and opportunities in the mining industry.
Recalling a burst in 2016, the minister said the BCL mine was among several other in the region that had to shut down because of plummeting copper prices.
“But as we know…today the copper industry is experiencing a boom,” he told participants, who included policy makers. He implores the industry to ensure that it reduces emissions.
“As it has been said the road to reducing net zero begins and ends with copper,” he said.
He noted that all infrastructure built to support renewable energy projects and other large ventures requires large amounts of copper to sustain, which has created a large global appetite for this base metal.
“To keep the energy transition going, an increased amount of copper wiring will be required to strengthen the world’s power grids and to build wind and solar farms. Electric vehicles, which are now a rapidly rising source of demand use over twice as much copper as gasoline-powered vehicles,” he said.
Moagi further added that this is a reminder of just how critical copper has become, which is in stark contrast to yesteryears when the industry plummeted, leading to the closure and liquidation of some operations.
As a result of this positive outlook for copper both in the medium and long term, he said there has been a rise in investments in copper mining in Botswana in 2023. There has been a resurgence of the copper industry in Botswana, with significant investments like the acquisition of Khoemacau Copper Mining by MMG Group, which plans to expand production and create more jobs.
“I approved the acquisition of Khoemacau Copper Mining by MMG Group, which has committed to expanding the mine production and creating 1000 more jobs in addition to the 1700 currently supported by the mine.”
The minister said while the copper market has awoken in slumber, the diamond industry faces significant squeeze. Geopolitical tensions, such as the US-China trade conflict, the Russia-Ukraine war, and COVID-19 pandemic restrictions, have led to declining demand, shrinking volumes, and decreasing profit margins.
Additionally, modern consumers’ demand for ethical sourcing has led to increased investment in traceability technology. Moagi noted that the diamond industry must adapt to these new expectations.
“We have as a result entered an era of provenance guarantees and the industry has to respond accordingly to satisfy consumer demands,” he said.
Lab-grown diamonds produced cheaply and in mass also pose a significant threat to natural diamonds. Moagi acknowledged this competition and highlighted ongoing stakeholder engagements to address the threat posed by synthetic alternatives
“Not so long ago the diamond industry did not have to worry about lab-grown diamonds, which have been actually in existence for many years. However, since 2017, lab-grown diamonds have been produced both cheaply, and en-masse, and today, the competition from lab-grown diamonds is affecting natural diamond sales,” he said.
He went on to explain that his ministry is currently engaging with various organisations and stakeholders to establish how best to mitigate the impact of lab-grown diamonds on natural diamond sales.
To add to these challenges, he added that on the backdrop of the Russia-Ukraine war, the G7 countries have decided to impose sanctions on Russian diamonds and barred them from entering their countries.
“This has put a lot of pressure on Botswana and other diamond producer countries and will result in additional costs and longer time to ship goods to consumers. This might have unintended consequences due to increased costs and time delays on non-Russian diamonds,” he explained.
Another key concern is the tracing and provenance technologies, which have some limitations as Moagi noted that the supply of these machines globally to meet the G7 deadlines, might not be possible.
Despite these challenges, Botswana’s mining sector holds promising opportunities in diamonds, copper, and other critical energy minerals, the minister said. These sectors are expected to play crucial roles in job creation, wealth generation, and economic growth in the medium and long term. Moagi highlighted the importance of responding decisively to the evolving industry challenges to maintain Botswana’s competitive edge in the global market.
