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Production and Investment Forecasts in the Botswana Mining Industry
Frost & Sullivan, March 2011, Pages: 113
This Frost & Sullivan research service titled Production and Investment Forecasts in the Botswana Mining Industry provides a comprehensive analysis of Botswana's mining industry from 2006 to 2014. The research service provides a succinct analysis of industry fundamentals that drive growth and influence strategic planning and investment within Botswana's mining industry.
This research service covers trends and forecasts for Botswana's mining industry from 2006 to 2014. The base year for this study is 2009 and the forecast period is from 2010 to 2014. The research service begins with a high level analysis of Botswana's economy and mining industry. The second section discusses the Botswana mining industry's key challenges, market drivers and restraints. The third section discusses historic production and supply trends of key mineral commodities in Botswana. The fourth section provides an assessment of investment patterns for key mineral commodities. The study concludes with the provision of production and investment forecasts for the Botswana mining industry from 2010 and 2014
Market Overview:
Resurgent International Demand for Diamonds set to Boost Botswana's Mining Industry
A decline in global consumer demand influenced diamond miners within Botswana to implement a production holiday in 2009. This suspension of mining activities caused production output to decline by 45.0 per cent. A decline in global copper prices as a result of the financial crisis also caused the Botswana nickel mining industry to temporarily suspend operations and witness a 19.5 per cent decline in production output. Despite the global financial crisis, which resulted in Botswana experiencing an unprecedented loss of national income as the global demand for diamonds plunged, the country's mining industry is expected to witness a recovery. The steady increase in global diamond demand is also expected to contribute to diamond prices gradually returning to the levels achieved during the first half of 2008 by 2012-2013.
Botswana's mining industry produced an estimated 22.97 million carats of diamonds in 2009. Key investment projects within the diamond mining sector amounted to $355.0 million in 2010. The Botswana diamond industry's investment is forecast to decline to $134.0 million in 2014. “A steady rise in consumer demand from China and India, and a modest improvement in demand from North America and Europe, are chief among the factors expected to contribute to the recovery of Botswana's diamond mining sector,” states the analyst of this research. “Botswana's diamond production output is forecast to rise from 22.97 million carats in 2010 to 30.83 million carats in 2014.” To support this anticipated increase in demand, Debswana's investment expenditure is also expected to increase considerably from $355.0 million in 2010 to $555.0 million in 2014. Key projects expected to contribute to the substantial increase in short-term capital spends include the Jwaneng Cut 8 expansion and the Morupule Colliery expansion.
Diamonds to Restore Lustre to Mining Industry
Mining companies in Botswana are expected to continue to struggle to raise funds to start or expand operations during the short term. Botswana's mining industry consists mostly of multinational companies that rely on funding from international markets to expand or construct new mine operations. With most international financing houses focusing on investing in low-risk ventures, companies are going to find it difficult to develop their prospects to new mines. The combination of risk aversion and uncertainty of mineral commodity prices are expected to have a significant impact on Botswana's mining companies, particularly the smaller, emerging mining entities. The Credit Suisse Bank has announced that due to the risk-averse nature of the investment industry, a delay in mining finance of $150.0 billion to $200.0 billion is forecast between 2011 and 2013. Delays in obtaining funding are therefore expected to impact the mining industry negatively between 2011 and 2014.
“Despite the limited access to funding, the International Monetary Fund (IMF) predicts that Botswana's diamond exports could reach between 80 and 85 per cent of the levels reached prior to the recession in 2008, during the medium term of the forecast period,” concludes the analyst. “This anticipated growth in global diamond demand could restore investor confidence and re-inject the needed capital for the successful implementation of planned expansion projects.”
Market Sectors:
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Diamond
- Coal
- Copper
- Nickel
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