Budding diamond mine in surprise closure

The future of about 160 workers at BK11 diamond mine in the Boteti sub-district hangs in the balance after UK-based proprietor, Firestone Diamonds, suspended operations yesterday.

BK11, which is located near Debswana's Orapa and Letlhakane mines, began production in late 2010, selling diamonds worth 800,000 British pounds (P9.2 million at current rates) last year.

Announcing the suspension, Firestone CEO, Tim Wilkes, said the move was necessitated by a combination of operational challenges and weak market demand for the precious stones.

"We remain committed to the operations in Botswana and the programme at BK11 is a temporary measure that has been designed to enable a rapid re-start of operations when the technical and market challenges have been resolved," he said.

In the meantime, Firestone Diamonds will focus its energies on its flagship Lesotho mine that contributed 2.2 million pounds (P25.3 million at current rates) in revenue last year. Unionists say the suspension means retrenchments of an estimated 160 workers at the mine who, combined with sub-contractors, total 200.

The latest move has been met with shock by the Botswana Mine Workers Union (BMWU), which at the time of the suspension was working on, incorporating BK11 employees into the Union.

Union officials said BMWU had been due to sign a recognition agreement with the mine's management on February 15, but it was instead informed that operations would be suspended and workers retrenched.

"They (management) said workers would be retrenched and only those required for care and maintenance would be kept," BMWU national organising coordinator, Abel Buka told Mmegi.

"I was at the mine yesterday and the general manager told me they were awaiting final letters from head office which will say who's going and who's staying.

"The suspension was a shock to us because they never indicated that they were facing any problems when we were in discussions on the agreement."

According to Buka, the suspension of operations curiously coincided with the planned signing of the recognition agreement, which had been under negotiation for months before the latest move.

"We asked how the suspension just came on the day of the agreement and they replied that the recession was to blame and that the move was an order from the head office," he said. "As a result, the move meant that we could not sign the agreement because the people who wanted to join were likely to be retrenched."

Buka said the union has sought the intervention of the departments of mines and labour because its own efforts to assist workers will be limited by the non-existence of an agreement.

"We are still trying to find a way to at least convene a meeting with the company and the two departments where we can put our views to management on how they can avert retrenchments," said Buka. "We went through similar situations during the previous recession and we have ideas that could help the mine on how to avoid retrenchments."

In a previous announcement, Firestone Diamonds said BK11 was plagued by technical challenges that were limiting the recovery of diamonds. At the time, the UK miner said management was considering a number of strategic options on the way forward.

In December, Firestone noted that diamond prices had fallen approximately 30 percent from their highs in July 2011, but expressed confidence that these would improve in 2012.

Other leading producers, including De Beers, expect prices to remain flat this year.