* Debswana operations crashing or converging rapidly * FutureFit cause anxiety
Debswana's cost-cutting measures, initiated in 2020, represent a strategic decision commonly undertaken by businesses but have seemingly become a significant challenge for the company’s management.
Known as the operator of the world's most valuable diamond mines, Debswana has faced scrutiny regarding these measures. A Botswana Guardian investigation has revealed that the cost-reduction strategy includes terminating its partnership with a major labour supplier, Majwe Mining.
This move is expected to save the company P7.3 billion by 2027, with P3.2 billion already realised and the remaining P4.1 billion incorporated into future budgets.
Another measure includes the establishment of Naledi, a Debswana-owned company specialising in drilling operations. Naledi plays a key role in the ongoing Cut 9 project at the Jwaneng mine, which remains a critical component of Debswana's operations.
Additionally, the company has introduced a "FutureFit" plan aimed at redeploying personnel from headquarters in Gaborone to mining sites to improve efficiency. The plan also includes a voluntary employee separation initiative, which, while seemingly well-intentioned, has sparked criticism and allegations of mismanagement.
These measures have led to accusations of nepotism and corruption within Debswana, including claims involving top executives. However, the company maintains a zero-tolerance policy toward corruption and has consistently addressed such allegations through investigations.
Notably, the current Managing Director, Koolatotse Koolatotse, who previously served as Jwaneng General Manager, underwent a thorough investigation and was cleared of any wrongdoing.
Mining experts and analysts have described Debswana's current operational climate as being on the verge of a "crash" but believe that proactive measures could avert disaster. They emphasise the urgency of addressing challenges to ensure the company’s sustainability and continued success.
The commentators argue that Debswana as a company has to do something differently and in doing things differently, it calls for disruption, and where there is disruption, there will be resistance manifesting in many forms, with some of the affected attempting to stop the process.
The hope is that Debswana will apply the strategy to the fullest to save the situation.
Some miners described the mood at Debswana as uncertain because people are anxious. However, they opine that some miners do understand as the current status is driven by market conditions, but argue that it is incumbent upon the management to give confidence that with hard work everything will normalise.
The abnormal situation is caused by Debswana’s positive projections about the mine in 2050, but suddenly the market gets so bad that it drops by 25 percent, with similar costs increasing by 5 percent. A quick calculation shows that the crash will be quicker as it was never planned for the current crises.
The thinking of mining experts is that what is happening now at Debswana may be as a result of the coming of the new government under President Advocate Duma Boko, which brought hope.
But what could have led to the separation between Debswana and Majwe? Botswana Guardian learns that when COVID-19 hit hard in 2020, Debswana allegedly declared a force majeure, explaining to all that they can no longer afford to pay them as such they will have to cease or terminate the contracts.
It is alleged that at that time Majwe Mining -a joint venture between two companies namely a local Bothakga Burrow and an Australian company Thies - allegedly refused to budge, demanding to be
paid P25 million per month.
Debswana argued that Majwe’s demand was unreasonable, particularly given the global business disruption caused by COVID-19, which was not merely a natural calamity but a pandemic that brought industries worldwide to a standstill.
This disagreement pushed Debswana, amidst its financial constraints, to seek cost-cutting measures. The solution they identified was to handle operations themselves at a lower cost. The decision was also influenced by the urgent need to allocate resources towards the health crisis, including providing medication, vaccines, and care for many affected Batswana, including their employees.
This necessity led to the creation of Naledi.
Further discomfort arose with the introduction of the "FutureFit" plan, aimed at redeploying personnel back to the mines rather than maintaining a large workforce at the Gaborone headquarters. This plan, expected to be implemented this year pending board approval, is part of Debswana's broader strategy to improve efficiency.
Sources and mining experts note that this approach aligns with the principles Debswana used when parting ways with Majwe, focusing on improving operations by identifying cost drivers and reducing inefficiencies.
Before terminating its partnership with Majwe, Debswana conducted an internal review to identify its primary cost drivers. The analysis revealed four key contributors: the ongoing engagement of
Majwe, labour costs, repairs and maintenance, and fuel.
To cut costs, the company targeted these areas. The COVID-19 pandemic provided an opportunity to dissolve its partnership with Majwe, which resulted in projected savings of P7.3 billion—far exceeding initial estimates of P3.2 to P4.1 billion due to additional hidden efficiencies and productivity gains.
Following the successful separation from Majwe, Debswana identified labour as its next major cost driver, accounting for 43 percent of its total expenses. For example, if Debswana's annual budget is P10 billion, P4.2 billion is allocated to labour.
By comparison, industry benchmarks suggest labour costs should account for roughly 30 percent of total expenses. This prompted the company to reassess its workforce needs, particularly focusing on activities that are core to operations and determining the optimal labour requirements.
Questions arose about the high costs associated with maintaining head office staff, especially given the minimal activity at headquarters compared to operational sites.
The "FutureFit" plan has faced resistance, partly because many head office employees are considered costly, with the company frequently engaging consultants to handle even straightforward tasks.
Additionally, Debswana is said to have retained over seven different law firms, leading to questions about whether such extensive legal support is truly necessary.
The challenge for Debswana lies in shifting more personnel to operational sites while ensuring the headquarters remains lean and focused on strategic leadership and oversight.
Mining experts explain that one of Debswana's core operations involves mining waste, which requires technical processes such as blasting, drilling, driving, and maintaining vehicles and equipment.
These activities are being carried out in a similar manner to those conducted during the Cut 7, Cut 8, and underground mining phases. However, the key difference with Cut 9 is that unlike the earlier
phases, this project has involved job losses.
The savings from Cut 9 are significant, with P7.3 billion projected—P3.2 billion already realised and P4.1 billion incorporated into the budget.
Experts describe Cut 9 as a multifaceted project comprising several smaller projects, including blasting, drilling, and maintenance. It is essentially a collection of components brought together to achieve a larger goal.
Each project requires a thorough and robust tendering process before reaching the Managing Director's office for approval. This ensures transparency and accountability.
Currently, over 80 citizen-owned companies are engaged in supporting Debswana's mining operations.
Naledi, a Debswana-owned company specialising in drilling, plays a pivotal role in the Jwaneng mine's Cut 9 operations. Naledi, like Debswana, is a joint venture between the Government of Botswana and De Beers.
As for voluntary separation, it will be recalled that Debswana introduced voluntary separation schemes as part of its efforts to restructure and resize its workforce.
The first phase saw over 500 employees voluntarily leaving the company, which helped streamline operations and address financial pressures.
It is alleged that without such measures, Debswana could have faced severe financial difficulties within seven years, threatening its survival and the country's economy.
The belief is that many of those who opted for voluntary separation have the potential to boost the economy by starting their own businesses and creating new employment opportunities.
Despite the challenges, those interviewed expressed confidence in Debswana's resilience and focus. They urged the nation not to be distracted by rumours and unfounded claims, as the company remains committed to serving the country’s economy.
The leadership is said to be working tirelessly to ensure that the benefits of Botswana's diamond wealth are distributed equitably and benefit the nation as a whole, rather than a select few.
Contacted for comment, Debswana’s Executive Head of Corporate Affairs, Rachel Mothibatsela explained that at Debswana, they are dedicated to upholding transparency, integrity, and ethical business practices. "Our robust systems developed over time, ensure that all procurement processes are managed with due diligence and fairness, awarded based on merit, and in accordance with established procedures to maintain transparency."
She further said the company adhere to a strict Code of Conduct and Business Ethics policy that governs all aspects of business operations, ensuring that all employees and partners act with the highest levels of integrity and accountability. "Our Speak Up reporting channel encourages employees and stakeholders to report any unethical behaviour or violations of the Code of Conduct, reinforcing our commitment to a transparent and ethical work environment," she said.
Debswana has processes to ensure compliance with laws and regulations, and in the event of any alleged malpractices, we cooperate with authorities and support transparent investigations into such allegations, said Mothibatsela.
"Debswana is a well-managed organisation, distinguished by its strong governance framework and collective leadership. Hence its longevity and sustainability over five decades. Our diverse and experienced Executive Management Team collaboratively oversees the company's strategic direction.
This collaborative approach and collective responsibility ensure that decisions are well-rounded and consider multiple perspectives, enhancing the robustness of our processes. It is through these tried and tested processes that Debswana has maintained its leadership in the diamond mining industry, consistently setting benchmarks for operational efficiency, ethical practices, and sustainable development," she further stated.
On their transition from Majwe Mining to a Hybrid Model – Fulfilling the Citizen Economic Empowerment Programme (CEEP) Goals, the communications office states that in 2020, the Debswana Board made a strategic decision to terminate the contract with Majwe Mining and transition to a hybrid business model. This hybrid model was designed to align with Debswana's long-term strategic objective of optimising shareholder value through enhanced efficiency and productivity improvements.
The shift to this new business model also expedited the achievement of the Citizen Economic Empowerment (CEEP) goals, which aimed to unbundle large contracts and empower other local companies; aligned with the CEEP’s mandate to empower local companies by spending P20 billion in citizen companies and creating 20,000 jobs for Batswana by 2024.
Known as the operator of the world's most valuable diamond mines, Debswana has faced scrutiny regarding these measures. A Botswana Guardian investigation has revealed that the cost-reduction strategy includes terminating its partnership with a major labour supplier, Majwe Mining.
This move is expected to save the company P7.3 billion by 2027, with P3.2 billion already realised and the remaining P4.1 billion incorporated into future budgets.
Another measure includes the establishment of Naledi, a Debswana-owned company specialising in drilling operations. Naledi plays a key role in the ongoing Cut 9 project at the Jwaneng mine, which remains a critical component of Debswana's operations.
Additionally, the company has introduced a "FutureFit" plan aimed at redeploying personnel from headquarters in Gaborone to mining sites to improve efficiency. The plan also includes a voluntary employee separation initiative, which, while seemingly well-intentioned, has sparked criticism and allegations of mismanagement.
These measures have led to accusations of nepotism and corruption within Debswana, including claims involving top executives. However, the company maintains a zero-tolerance policy toward corruption and has consistently addressed such allegations through investigations.
Notably, the current Managing Director, Koolatotse Koolatotse, who previously served as Jwaneng General Manager, underwent a thorough investigation and was cleared of any wrongdoing.
Mining experts and analysts have described Debswana's current operational climate as being on the verge of a "crash" but believe that proactive measures could avert disaster. They emphasise the urgency of addressing challenges to ensure the company’s sustainability and continued success.
The commentators argue that Debswana as a company has to do something differently and in doing things differently, it calls for disruption, and where there is disruption, there will be resistance manifesting in many forms, with some of the affected attempting to stop the process.
The hope is that Debswana will apply the strategy to the fullest to save the situation.
Some miners described the mood at Debswana as uncertain because people are anxious. However, they opine that some miners do understand as the current status is driven by market conditions, but argue that it is incumbent upon the management to give confidence that with hard work everything will normalise.
The abnormal situation is caused by Debswana’s positive projections about the mine in 2050, but suddenly the market gets so bad that it drops by 25 percent, with similar costs increasing by 5 percent. A quick calculation shows that the crash will be quicker as it was never planned for the current crises.
The thinking of mining experts is that what is happening now at Debswana may be as a result of the coming of the new government under President Advocate Duma Boko, which brought hope.
But what could have led to the separation between Debswana and Majwe? Botswana Guardian learns that when COVID-19 hit hard in 2020, Debswana allegedly declared a force majeure, explaining to all that they can no longer afford to pay them as such they will have to cease or terminate the contracts.
It is alleged that at that time Majwe Mining -a joint venture between two companies namely a local Bothakga Burrow and an Australian company Thies - allegedly refused to budge, demanding to be
paid P25 million per month.
Debswana argued that Majwe’s demand was unreasonable, particularly given the global business disruption caused by COVID-19, which was not merely a natural calamity but a pandemic that brought industries worldwide to a standstill.
This disagreement pushed Debswana, amidst its financial constraints, to seek cost-cutting measures. The solution they identified was to handle operations themselves at a lower cost. The decision was also influenced by the urgent need to allocate resources towards the health crisis, including providing medication, vaccines, and care for many affected Batswana, including their employees.
This necessity led to the creation of Naledi.
Further discomfort arose with the introduction of the "FutureFit" plan, aimed at redeploying personnel back to the mines rather than maintaining a large workforce at the Gaborone headquarters. This plan, expected to be implemented this year pending board approval, is part of Debswana's broader strategy to improve efficiency.
Sources and mining experts note that this approach aligns with the principles Debswana used when parting ways with Majwe, focusing on improving operations by identifying cost drivers and reducing inefficiencies.
Before terminating its partnership with Majwe, Debswana conducted an internal review to identify its primary cost drivers. The analysis revealed four key contributors: the ongoing engagement of
Majwe, labour costs, repairs and maintenance, and fuel.
To cut costs, the company targeted these areas. The COVID-19 pandemic provided an opportunity to dissolve its partnership with Majwe, which resulted in projected savings of P7.3 billion—far exceeding initial estimates of P3.2 to P4.1 billion due to additional hidden efficiencies and productivity gains.
Following the successful separation from Majwe, Debswana identified labour as its next major cost driver, accounting for 43 percent of its total expenses. For example, if Debswana's annual budget is P10 billion, P4.2 billion is allocated to labour.
By comparison, industry benchmarks suggest labour costs should account for roughly 30 percent of total expenses. This prompted the company to reassess its workforce needs, particularly focusing on activities that are core to operations and determining the optimal labour requirements.
Questions arose about the high costs associated with maintaining head office staff, especially given the minimal activity at headquarters compared to operational sites.
The "FutureFit" plan has faced resistance, partly because many head office employees are considered costly, with the company frequently engaging consultants to handle even straightforward tasks.
Additionally, Debswana is said to have retained over seven different law firms, leading to questions about whether such extensive legal support is truly necessary.
The challenge for Debswana lies in shifting more personnel to operational sites while ensuring the headquarters remains lean and focused on strategic leadership and oversight.
Mining experts explain that one of Debswana's core operations involves mining waste, which requires technical processes such as blasting, drilling, driving, and maintaining vehicles and equipment.
These activities are being carried out in a similar manner to those conducted during the Cut 7, Cut 8, and underground mining phases. However, the key difference with Cut 9 is that unlike the earlier
phases, this project has involved job losses.
The savings from Cut 9 are significant, with P7.3 billion projected—P3.2 billion already realised and P4.1 billion incorporated into the budget.
Experts describe Cut 9 as a multifaceted project comprising several smaller projects, including blasting, drilling, and maintenance. It is essentially a collection of components brought together to achieve a larger goal.
Each project requires a thorough and robust tendering process before reaching the Managing Director's office for approval. This ensures transparency and accountability.
Currently, over 80 citizen-owned companies are engaged in supporting Debswana's mining operations.
Naledi, a Debswana-owned company specialising in drilling, plays a pivotal role in the Jwaneng mine's Cut 9 operations. Naledi, like Debswana, is a joint venture between the Government of Botswana and De Beers.
As for voluntary separation, it will be recalled that Debswana introduced voluntary separation schemes as part of its efforts to restructure and resize its workforce.
The first phase saw over 500 employees voluntarily leaving the company, which helped streamline operations and address financial pressures.
It is alleged that without such measures, Debswana could have faced severe financial difficulties within seven years, threatening its survival and the country's economy.
The belief is that many of those who opted for voluntary separation have the potential to boost the economy by starting their own businesses and creating new employment opportunities.
Despite the challenges, those interviewed expressed confidence in Debswana's resilience and focus. They urged the nation not to be distracted by rumours and unfounded claims, as the company remains committed to serving the country’s economy.
The leadership is said to be working tirelessly to ensure that the benefits of Botswana's diamond wealth are distributed equitably and benefit the nation as a whole, rather than a select few.
Contacted for comment, Debswana’s Executive Head of Corporate Affairs, Rachel Mothibatsela explained that at Debswana, they are dedicated to upholding transparency, integrity, and ethical business practices. "Our robust systems developed over time, ensure that all procurement processes are managed with due diligence and fairness, awarded based on merit, and in accordance with established procedures to maintain transparency."
She further said the company adhere to a strict Code of Conduct and Business Ethics policy that governs all aspects of business operations, ensuring that all employees and partners act with the highest levels of integrity and accountability. "Our Speak Up reporting channel encourages employees and stakeholders to report any unethical behaviour or violations of the Code of Conduct, reinforcing our commitment to a transparent and ethical work environment," she said.
Debswana has processes to ensure compliance with laws and regulations, and in the event of any alleged malpractices, we cooperate with authorities and support transparent investigations into such allegations, said Mothibatsela.
"Debswana is a well-managed organisation, distinguished by its strong governance framework and collective leadership. Hence its longevity and sustainability over five decades. Our diverse and experienced Executive Management Team collaboratively oversees the company's strategic direction.
This collaborative approach and collective responsibility ensure that decisions are well-rounded and consider multiple perspectives, enhancing the robustness of our processes. It is through these tried and tested processes that Debswana has maintained its leadership in the diamond mining industry, consistently setting benchmarks for operational efficiency, ethical practices, and sustainable development," she further stated.
On their transition from Majwe Mining to a Hybrid Model – Fulfilling the Citizen Economic Empowerment Programme (CEEP) Goals, the communications office states that in 2020, the Debswana Board made a strategic decision to terminate the contract with Majwe Mining and transition to a hybrid business model. This hybrid model was designed to align with Debswana's long-term strategic objective of optimising shareholder value through enhanced efficiency and productivity improvements.
The shift to this new business model also expedited the achievement of the Citizen Economic Empowerment (CEEP) goals, which aimed to unbundle large contracts and empower other local companies; aligned with the CEEP’s mandate to empower local companies by spending P20 billion in citizen companies and creating 20,000 jobs for Batswana by 2024.