|Addressing the Botswana Institute of Chartered Accountants (BICA) at the organization's 9th Biennial International Conference in Gaborone, Botswana, local businessman David Magang warned that the economy of Botswana was still too dependent on diamond revenue, with over 70 percent of government revenue coming from mineral exports, reports Botswana Daily News on allafrica.com.
In his presentation on the subject "Mitigation on Dependency of Diamonds", Magang reportedly noted that, while some estimates saw diamond production continuing until the year 2050, operating costs and capital expenditure would rise over time as it became necessary to drill deeper to extract the diamond ores, with the result that revenue from diamonds would decrease.
"The cost of extracting a carat of diamonds from the dug-up ores will mount," said Magang, as quoted by the news source, "and government will simply have to resign itself to much lower returns than it has been accustomed to in the past", he added.
He also reportedly noted that over-dependency on one major economic activity also had the disadvantages that in the event of a tumble in commodity prices, the shock to the economy overall will be telling. As an example, Magang noted the 40 percent drop in diamond prices experienced over the past three years, with four factories closing and over 1,000 jobs lost.
Magang also singled out synthetic diamonds as "one of the greatest threats to Botswana's economic well-being", warning that if synthetic diamonds "became fashionable" there would no longer be a market for natural diamonds. Says Magang: "Indications are De Beers is about to enter the synthetics market too to peg its claim on the flourishing market. Clearly, synthetics represent one of the greatest threats to Botswana's economic well-being for the ramifications are that even if our mines were to continue to be operational for the next 100 years, no one would buy our diamonds if synthetics became fashionable," he said, as quoted by the news source.