Botswana eyes gas as diamond output plateaus

WASHINGTON – Botswana is eyeing natural gas production as a means to offset an expected cooling in diamond mining, the southern African country’s minister for minerals, energy and water resources said on Wednesday.

Charles Tibone told Reuters in an interview that Botswana’s diamond mining output remains strong but warned that a looming slowdown could threaten the mineral-dependent country. “The existing mines, although they are prolific in their production, we see them plateauing soon in terms of their production,” he said on the sidelines of a conference run by the US-based Corporate Council on Africa.”This is why we are so keen on diversifying the economy away from diamonds so as we hit the plateau and revenues start declining, we can have other revenue bases as well.”Botswana is the world’s top diamond producer by value, and diamonds make up half of the government’s revenues and one third of gross domestic product.Tibone said natural gas linked to the country’s huge coal deposits could prove another important economic generator.He said he was meeting business people in Washington to seek investors to develop Botswana’s industry for coal-based methane, a clean-burning gas extracted from coal mines.Methane is the chief ingredient of natural gas.The US Energy Department estimates millions of cubic feet of methane escape daily from active coal mines, and some have seized its potential as an unconventional energy source.Botswana is estimated to have 200 billion tonnes of coal.Another way to dampen the impact of slower mine extraction is to do more diamond refining in Botswana and southern Africa more broadly, Tibone said, stressing a need for more local polishing and manufacturing industries.”If that tradition could be established, then even if the production itself drops then at least we could maintain some activity,” he said.Plans for diamond giant De Beers, which is 45 per cent owned by Anglo American, to move diamond mixing or aggregation operations to Botswana from London are “progressing well,” Tibone said.The proposal, agreed earlier this year, is designed to bypass De Beers’ traditional mixing process in which uncut gems from around the world are mixed in London and sold in batches.Tibone said De Beers’ concerns about a new South Africa diamond law had been largely allayed and said a consensus was emerging that more local processing was good for the region.”Naturally London will continue to have a significant role in the marketing and so forth, but we think that the physical aspects of dealing with diamonds should be nearer where the diamonds are produced,” he said.Tibone estimated diamond production at four mines operated by Debswana – Botswana’s 50-50 joint venture with De Beers – could reach 33 million carats this year, surpassing a record 2004 production of 31 million carats, but said the forecast remained preliminary.”We are estimating that the production will be a little higher than last year,” he said.”At worst it will be the same as last year, at best a little better.”- Nampa-Reuters”The existing mines, although they are prolific in their production, we see them plateauing soon in terms of their production,” he said on the sidelines of a conference run by the US-based Corporate Council on Africa.”This is why we are so keen on diversifying the economy away from diamonds so as we hit the plateau and revenues start declining, we can have other revenue bases as well.”Botswana is the world’s top diamond producer by value, and diamonds make up half of the government’s revenues and one third of gross domestic product.Tibone said natural gas linked to the country’s huge coal deposits could prove another important economic generator.He said he was meeting business people in Washington to seek investors to develop Botswana’s industry for coal-based methane, a clean-burning gas extracted from coal mines.Methane is the chief ingredient of natural gas.The US Energy Department estimates millions of cubic feet of methane escape daily from active coal mines, and some have seized its potential as an unconventional energy source.Botswana is estimated to have 200 billion tonnes of coal.Another way to dampen the impact of slower mine extraction is to do more diamond refining in Botswana and southern Africa more broadly, Tibone said, stressing a need for more local polishing and manufacturing industries.”If that tradition could be established, then even if the production itself drops then at least we could maintain some activity,” he said.Plans for diamond giant De Beers, which is 45 per cent owned by Anglo American, to move diamond mixing or aggregation operations to Botswana from London are “progressing well,” Tibone said.The proposal, agreed earlier this year, is designed to bypass De Beers’ traditional mixing process in which uncut gems from around the world are mixed in London and sold in batches.Tibone said De Beers’ concerns about a new South Africa diamond law had been largely allayed and said a consensus was emerging that more local processing was good for the region.”Naturally London will continue to have a significant role in the marketing and so forth, but we think that the physical aspects of dealing with diamonds should be nearer where the diamonds are produced,” he said.Tibone estimated diamond production at four mines operated by Debswana – Botswana’s 50-50 joint venture with De Beers – could reach 33 million carats this year, surpassing a record 2004 production of 31 million carats, but said the forecast remained preliminary.”We are estimating that the production will be a little higher than last year,” he said.”At worst it will be the same as last year, at best a little better.”- Nampa-Reuters