UK-based Mantle Diamonds to reopen long-shut mine in Botswana

08:50, June 01, 2011      

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British private diamond miner Mantle Diamonds is in the process of reopening Botswana's eastern Lerala mine next month, local daily Mmegi reported Tuesday.

According to the newspaper, the government would receive royalties calculated at 10 percent of the gross market value of diamond sales and taxes on the profits. Other benefits include procurement of goods and services by the mines and employees in the local economy as far as it is practicable.

Howerver, it is not yet clear how many people will be employed by the mine when it reopens and whether the workers previously employed will be engaged again if they are available.

Potso Thari, the principal public relations officer in the Ministry of Minerals, Energy and Water Resources, was quoted as saying the ministry had approved the transfer of the mining licence from Australia-based DiamonEx Botswana to Mantle Diamonds in April.

Thari said the government's key objective was to ensure that the mine avoided liquidation to make it possible for new investors or buyers to reopen it with ease.

"Government's involvement in this project dates back from the time of the global economic crisis when it guaranteed DiamonEx Botswana a 10 million pula (1.52 million U.S. dollars) bridging loan facility from commercial banks and engaged some of the creditors in a bid to resolve the company's financial problems in such a way that will preserve the future of the mine and attract new investors," she said.

Regarding securing a market for Lerala, Thari said Botswana and other major producers' view has been to take actions not targeted to one mine but to the recovery of the global diamond market. Such actions include closure of mines during the economic downturn to conserve cash and preserve value of the product, thus avoiding dumping the product in the market.

"With the improvement of the global market, mines like Lerala will also benefit," Thari said.

The Lerala mine was originally expected to produce 330,000 carats annually during its 10-year lifespan. DiamonEx sold its first more than 10,000 carats diamonds from the mine in 2008, but failed to make a profit due to the crash in prices. The mine closed in 2009 against the backdrop of poor sales, leaving 160 employees jobless.

Source: Xinhua
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