At a crossroads – demand shifts as diamonds dull and copper shines

Long hailed as Africa’s diamond darling and the poster child for fiscal prudence, Botswana is navigating a tricky transition. After years of riding high on natural diamonds, the sparkle is fading fast. Global shifts in demand – driven largely by the rise of synthetic stones, lingering reputational damage from the blood diamond era and changing trends in countries like China and India – have all hit Botswana hard. “Diamond prices have been declining,” said Duncan Bonnett, a partner at Africa House. “There seems to be a glut in the global diamond market. This is a real concern for a country like Botswana, where the economy is heavily dependent on diamonds and any change in demand has a significant impact.” The falling market and sliding prices have already taken a toll. GDP contracted by 3% in the last financial year, while budget deficits have widened and government spending is under pressure in ways the country hasn’t seen in decades. “The country has always prided itself on being a prudent spender and a reliable provider of services. It has traditionally avoided going to the markets for finance or taking on debt, so this marks quite a significant moment,” said Bonnett. Botswana’s economy has long rested on three pillars: diamonds, tourism and other mining, though diamonds have always taken centre stage. The country’s manufacturing sector has never truly come into its own. Given its proximity to South Africa, that’s perhaps understandable. Yet, where diamonds are now faltering, copper has been quietly rising. “There is real excitement in Botswana’s copper sector; it is picking up very quickly,” said Bonnett, indicating that there was a fair amount of exploration taking place. With copper demand expected to escalate, and experts already noting that demand is outpacing investment, the Botswana government’s move deserves recognition. Manganese is another mineral that is gaining traction. “The government is gradually shifting its focus away from diamonds and towards critical minerals. That’s a strategically important move for long-term economic resilience,” said Bonnett. It’s not just copper exploration that’s attracting attention: significant investment is also flowing into existing operations. International mining house Sandfire Resources has steadily increased its commitment to the Motheo copper project, which it describes as the foundation of its long-term growth strategy in Botswana. In 2022, the company announced a $71.9 million expansion of the mine, underscoring its confidence in the country’s copper potential. “Project activity in critical minerals has definitely been on the rise in Botswana,” said Bonnett. “There has also been an uptick in developments around minerals such as gold, uranium and iron ore. These are all positive indicators of a diversifying mining sector, broadening the country’s resource base and reducing its reliance on diamonds alone.” LV