Tough times ahead for Debswana employees

Portia Mlilo
FILE PIC: Orapa Mine

As diamond sales fall

Following a five-months slump in diamonds sales, Botswana’s world leading diamond producer by value, Debswana has embarked on a belt tightening exercise, withholding employees bonuses and withdrawing some employee benefits.

As the employer of choice in Botswana, Debswana has for decades paid bonuses in January but this year employees were disappointed to go home empty handed because the diamond company could not afford.

Last month, Debswana management addressed the union leadership about the dire situation and briefed them about how the company has resorted to acquiring a P1 billion loan from the bank for capital injection in order to meet the company’s salary bill for the next five months.

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The company has also implemented a comprehensive market slowdown response to ensure the sustainability of its operations during this period of uncertainty. On the 24th of January Debswana Senior Finance Manager, Jwnaneng Mine, Nametso Masuku released a MEMO informing employees that there will be no more provision of cell phones and internet until further notice. Reasons given were that it is part of the cost-saving initiative resulting from the diamond sales market downturn.

Another cost-saving initiative is reducing production hours as the company can’t afford to pay overtime. There was also no provision of new PPE and employees have been advised to use old ones.

In her response to the enquiry, Debswana Senior Corporate Affair Manager-Brand and Stakeholder Relations Matshidiso Kamona said the reduced demand for rough diamonds in the global market as a result of lacklustre economic growth in the major markets contributed to low or no diamond sales. She said while sales may resume in the short-term, the market is expected to remain subdued for most part of the year with reduced demand.

“The demand for rough diamonds was impacted by the ongoing global macroeconomic headwinds which have resulted in the accumulation of higher than usual inventory levels throughout the industry pipeline. To ensure sustainability of our operation, we align production with demand through predetermined flexibility and agility levers, which include slowing down waste mining at both Jwaneng Mine and Orapa Mine, which are ahead of plan. We have slowed down our cash burn rate to compensate for our reduced sales revenue. All discretionary bonuses are currently being reviewed,” said Kamona

When asked about the acquired loan, Kamona said Debswana has always had loan facilities in place that are meant to ensure business continuity by cushioning the business during cash flow challenges.

Botswana Mine Workers Union Deputy President Desmond Seomeng said management constantly updated them on the situation. He said they have assured them that employees’ jobs are safe at the moment. Seomeng said the union is currently in talks with the employer regarding employees’ salaries increment which unfortunately happens during a challenging time.

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