Mining sector endures worst recession

Mining shows zero confidence on better business conditions
Weaker global demand of rough diamonds trouble the sector
Other sectors optimistic about improved conditions in 2025

BAKANG TIRO

The neutral stance by the Mining and Quarrying sector about business conditions in the second quarter of the year and the 12-month period ahead could be attributable to the uncertain outlook on global demand for rough diamonds and the growing popularity of other luxurious goods in major markets.

The neutrality and lack of confidence on improved business conditions by the mining sector was measured by the central bank, Bank of Botswana (BoB) Business Expectations Survey (BES) for March 2025.

Meanwhile, BoB said the optimism in other sectors could be aligned to announced government interventions aimed at supporting economic activity, including reforms to further improve the business environment in Botswana.

The mining industry has been grappling with anxiety due to constrained market characterised by lower demand of commodities ranging from the diamond, copper and nickel and coal among others.

The Chief Executive Officer (CEO) of Botswana Chamber of Mines (BCM) Charles Siwawa while speaking during Business Botswana economic forum on US imposed tariffs on Botswana recently said mining will be severely affected.

Siwawa indicated that said Botswana’s rough diamonds are undergoing a torrid time, adding that the tariffs would negatively impact the diamond sector.

Siwawa said the USA is amongst big markets for Botswana rough diamonds and the high tariffs rate would reduce Botswana’s exporting capacity of diamonds with that likely to weaken the government revenue sourced from the mineral exports.

“The whole tariffs situation would impact negatively on the economy. We will likely to see the cost of production increasing in the mining sector while profitability remains lower. Diamonds producers could slow down production with that likely to impact on employment as well,” cautioned Siwawa.

To paint a bleak picture for the mining sector, BoB on the Monetary Policy Report for April 2025 said Debswana Diamond rough diamond production dropped by 31 percent to 4.2 million carats in the fourth quarter of 2024.

The decline was compared to 6.1 million carats produced in the corresponding period in 2023. The significant decline in Debswana production comes at a time when the rough diamonds industry is facing global uncertainty due to weakened global demand, a situation that is likely to be worsened by the imposed 37% tariffs by the USA on Botswana’s exports including the diamonds.

OTHER SECTORS

Looking ahead, BoB said firms in Retail, Accommodation, Transport, Communications and Manufacturing were optimistic that business conditions will be supportive of economic activity in the second quarter of the year while those in Mining and Quarrying and Construction and Real Estate were neutral.

Nonetheless, it indicated that firms in Finance, Professional and Administrative Activities and Agriculture were pessimistic about business conditions in the second quarter of the year.

Furthermore, firms in Retail, Accommodation, Transport, Communications; Manufacturing; Finance, Professional and Administrative Activities; Construction and Real Estate were optimistic about business conditions in the 12-month period ahead.

In contrast, firms in Mining and Quarrying were neutral while those in Agriculture were pessimistic.