- Report notes Western sanctions on Russia will force investors to look to Botswana
Botswana stands to benefit from the war in Ukraine by taking advantage of the Western sanctions against Russia over its invasion of Ukraine, the Permanent Secretary in the Ministry of Minerals and Energy, Ellen Richard-Madisa, has said
In a report submitted to the Public Accounts Committee (PAC), Richard-Madisa said with signs of recovery being witnessed across the globe, the war in Ukraine will help Botswana’s economy as investors in the diamond sector will be forced to look to Botswana. She noted that the Russian invasion of Ukraine has created an extremely volatile and unpredictable situation for the diamond industry, thanks to Western sanctions against Russia that are affecting the global supply of diamonds used in jewellery.
Richard-Madisa said the ban directly targets Alrosa, which the US government identified as the world’s largest diamond mining company responsible for 90 percent of Russia’s diamond mining capacity and accounting for 28 percent or nearly a third of global diamond output. “The ban now means USA businesses can’t buy Russian diamonds at all and will have to source Canadian, African, Brazilian, and Australian or Botswana diamonds,” the report said. “This will boost demand for Botswana diamonds.”
Due to the improved market conditions, Richard-Madisa said, De Beers Global Sightholders sold some US$3.8 billion worth of rough diamonds in 2021 compared to US$2.3 billion in 2020. Okavango Diamond Company realised a significant increase in sales, selling US$963 million worth of rough diamonds in 2021 compared to US$207 million in 2020 while Lucara sold US$302 million worth of rough in 2021 compared to US$107 million in 2020.
Richard-Madisa’s noted that as Chair of the Kimberly Process, Botswana is expected to host the Kimberly Process Intercessional Meeting in June 2022 and a plenary session in November 2022. She said the Kimberly Process, which is a UN-mandated initiative, continues to play an important role in ensuring, through its certification system and peer review mechanism, that conflict diamonds do not enter legitimate trade in rough diamonds.
Richard-Madisa said during its chairmanship, Botswana will endeavour to, among other things and subject to the COVID-19 situation, rekindle the peer review process that collapsed over the last two years due to the pandemic. The peer review process is crucial and forms one of the key cornerstones in monitoring compliance with the Kimberly Process Certification Scheme. In other issues, Richard-Madisa said there are numerous projects being undertaken to sustain Botswana’s mining sector. The Jwaneng Cut 9 project, whose mining contract was reviewed to switch over from contractor mining to owner mining, is progressing well.
“The project will extend the mine life for Jwaneng to 2035,” she said. “To further extend the life of Jwaneng Mine, feasibility study work on post-Cut 9 Project is ongoing with a focus on underground mining option. Orapa Mine Cut 3 Project, which is still at feasibility phase, is anticipated to extend the life of the mine from 2031 to 2046.” Richard-Madisa told the PAC that six new companies were issued cutting and polishing licences during the year and that the companies are at various stages of setting up operations with a view to starting manufacturing during 2022.
