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Photo: IRIN

Diamonds losing their appeal

GABORONE, 11 February 2009 (IRIN) - Thousands of mining jobs in Botswana are in jeopardy as diamond and other mineral sales dwindle and companies begin retrenching to cut costs.

The Botswana Mine Workers Union (BMWU) have been locked in talks with management in an attempt to avert looming retrenchments as diamond sales plummeted in response to the global financial crisis. Further declines in diamond sales are anticipated.

Botswana has used its mineral wealth to enhance its development, unlike some of the continent's other resource-rich countries, where minerals have often become a source of conflict.

"Diamond sales revenue is expected to decline by about 50 percent, as prices are estimated to decrease by 15 percent, while production is expected to reduce by 35 percent," the Minister of Finance and Development Planning, Baledzi Gaolathe, said in his recent 2009/10 budget address.

Per capita income has grown from US$80 to about $7,000 since Botswana gained independence from Britain in 1966. Government provides free education until the age of 13, and sponsors most tertiary education students.

In response to the AIDS pandemic it has rolled out a huge antiretroviral programme through an established network of health clinics, and has built an infrastructure that is the envy of its neighbours.

The country has held regular elections since independence and is viewed as a model democracy, and has also been an almost lone voice in the region against the excesses of Zimbabwe's President Robert Mugabe.

Diamond sector

In recent weeks, Debswana Diamond Company - a joint venture between South African diamond company De Beers and Botswana's government - the world's leading producer of diamonds by value, has been fervently trying to avert mine closures.

Mine management and union officials have held a series of meetings ahead of the planned closure of two mines, Damtshaa Mine and Orapa Mine's No. 2 plant, as well as possible job cuts at Letlhakane diamond mine, in central Botswana. The mines employ about 2,000 people.

"We are still in negotiations with the unions over the fate of the workers that have been affected by the closure of the two operations and are hoping to reach an agreement this week," Debswana spokesperson Esther Kanaimba told IRIN.

We are going to look at many strategies so that damage to workers is minimal. Retrenchments will only be used as a last resort after all other strategies have been exhausted

"We are going to look at many strategies so that damage to workers is minimal. Retrenchments will only be used as a last resort after all other strategies have been exhausted." The mines have as yet not been closed.

Debswana employs about 6,500 people, accounting for about 2 percent of Botswana's workforce, but general unemployment is still estimated as high as 40 percent. The country's biggest employer is government, with nearly 300,000 employees, or more than one third of the workforce.

However, the diamond industry creates secondary industries and a fall in diamond production will have an impact on those, as well as on government revenues and therefore its ability to pay its workforce.

Other mines

Bamangwato Concessions Limited (BCL), a copper mine in Selebi-Phikwe, northeastern Botswana, controlled jointly by the Botswana government and Norilsk Nickel Mining & Metallurgical Company, a Russian enterprise, has announced 348 retrenchments, but the job losses were put on hold by government in a move viewed as a political strategy ahead scheduled elections later in 2009.

Mine General Manager Montwedi Mphathi told local media recently that BCL could not reconcile labour costs - 40 percent of production costs - in the current economic climate.

The retrenched employees, out of staff compliment of 4,000, will receive assistance and advice. "The Local Enterprise Authority (LEA) has agreed to provide counselling. They will be advised on how to use their exit packages and be enlightened on some of the possible projects they can venture into," Mphathi said.

Moolman Mining has retrenched 177 workers, out of a planned 400, at its nickel plant in Mowana, central Botswana, but the labour department has become involved in the dispute after dissatisfaction was expressed over retrenchment packages.

"We believe that we are an indispensable stakeholder in this scenario," said BMWU Secretary-General Jack Tlhagale. "Moolman should consult and negotiate with us instead of presenting a scantily thought out retrenchment package in which we had absolutely no input."

Botswana's failure to diversify its economy during "good times" and reliance on mineral revenues to fund development is becoming a key criticism of government policy by opposition parties in an election year.

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