Debswana ends $1.3bn contract for Jwaneng Mine extension
Debswana Mining Company, owned by De Beers and the Botswana government, has terminated a $1.3 billion contract with a unit of Australia’s Thiess to extend the lifespan of its Jwaneng diamond mine, and will carry out the project in house.
Debswana, one of the world’s largest diamond producers, declined to provide a reason for ending the contract for the extension project – known as Cut 9 – which was awarded to Majwe Mining in 2019. Theiss has a 70 percent shareholding in Majwe Mining, alongside its long-term local partner Bothakga Burrow Bostwana, which owns 30 percent of the joint venture.
The nine-year extension project is expected to extend the life of Jwaneng – Debswana’s flagship mine – to 2035, and ensuring continuous production, while yielding an estimated 53 million carats of rough diamonds from 44 million tonnes of treated materials.
“The Cut 9 operation will transition to an owner-mining operation, with some of the key services and resources, such as labour, being provided by contractors/service providers to Jwaneng Mine,” Debswana’s head of corporate affairs, Rachel Mothibatsela, said in a statement.
The Botswanan firm had originally signed a $1.31 billion contract with Majwe Mining for the extension project for the mine, which consists of three separate volcanic pipes, with production varying from approximately 12.5 to 15 million carats per year, according to mining plans.
Jwaneng is considered to be the richest diamond mine in the world by value. It became fully operational in August 1982. It is considered to be Debswana’s flagship mine due to substantially higher dollar per carat obtained for its gems. The mine contributes about 60-70 percent of Debswana’s total revenue.
The extension project contract was awarded following Majwe’s successful completion of the Cut 8 project in November 2018. The joint venture was to provide full scope mining services over nine years, including drill and on-bench services, mine planning, equipment maintenance, load and haul, and mining operations.
At the time, CIMIC Group Chief Executive Officer Michael Wright said: “This new contract strengthens Thiess’ presence in Botswana and builds on our operational and technical teams’ solid performance at Jwaneng since 2011.
“The relationship developed between Majwe and client Debswana Diamond Company, owned by the Botswana Government and De Beers, is a testament to all involved with the project.”
Debswana is spearheading the implementation of a grid tied solar PV plant at Debswana Corporate Centre (DCC) in Gaborone, with the aim of contributing to the reduction of the company's carbon footprint.
This initiative is in line with Debswana's strategic intent of the prudent use of natural resources. In addition, this aligns with Botswana's Vision 2036 pillar on sustainable environment and Sustainable Development Goal (SDG) number seven, which calls for the expansion of infrastructure and upgrading of technology to provide access to sustainable and clean energy sources.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”