Debswana: Taking Long Term View While Responding to Current Recession

On the heels of the Moody’s assertion last week that Botswana’s era of fast economic growth is probably over, the country’s Debswana, a 50/50 partnership with De Beers, announced a number of steps aimed at sustaining the company in the long term, by taking a number of quick short term steps.

As first reported by IDEX Online, Debswana decided to give employees extended holiday vacations. In a cost saving measure, employees will go on a four week vacation, Public and Corporate Affairs Officer Boikhutso Linda Ncube said in an e-mailed statement to IDEX Online Tuesday.

For Non Continuous Operations workers, the shut down will be from Monday December 29 to Friday January 23, with work resuming on January 26. For Continuous Operations workers, the shut down will run from December 27 to January 21, with work resuming on the evening of the 21st - a night shift.

“During this shut-down, management will be working on further recession mitigation plans for presentation to the board in late January 2009,” according to Ncube.

“Although this is a major crisis and the diamond business will be impacted in the short term, the global economy will eventually recover. Therefore, it is critical that industries and companies like Debswana, whilst managing the short term effect of the crisis, are adequately prepared for eventual recovery.” On the bright side of the situation, lower production in the short-term will translate to an extended life for the diamond mines in the long-term, Ncube said.

Moody’s view is that Botswana is well prepared to handle the crisis. “The government has managed the income from the country’s diamond riches with a view to long-term economic and social development as well as recognition of the need to diversify the economy towards other sources of growth given the finite nature of the diamond deposits,” Kristin Lindow, senior vice president at Moody’s sovereign risk team, told financial site Bloomberg on Friday.

De Beers South African mining firm DBCM is taking the similar steps as Debswana, as is Namdeb in Namibia.