* Bidders for Cut 9 did not meet the desired requirements * 20 former Majwe employees declined offers from Debswana * External South African investigators conducted investigations on Jwaneng mine allegations

It will take a while before the dust settles on the Debswana’s massive cost-effective decision in which an Australian company Majwe Mining could have walked away with P20 billion had they gone ahead with Jwaneng Mine’s Cut 9 project.

A few years ago, the mining leadership decided to end Majwe’s contract and engage Naledi Mining Services to implement a hybrid model which was to start operating in 2023.

According to earlier cost projections, the contract was expected to require over P16 billion. However, further analysis revealed that Majwe’s costs could rise to P20 billion due to prevailing price trends at the time.

Consequently, Debswana’s board opted for the hybrid model, enabling the company to save P7.3 billion by 2027. Debswana remains a cornerstone of Botswana’s economy and a critical contributor to De Beers' revenue, with over 80 percent of the latter’s income derived from Botswana’s diamonds.

Mining experts emphasise the importance of preserving the wealth generated by this sector for the benefit of the country's shareholders. An investigation by Botswana Guardian revealed that as part of its efforts to implement cost-saving measures of up to 40 percent, the Debswana board divided its operations into three strategic horizons.

These horizons reflect different phases of the company’s vision, starting with Horizon 0, which represents a reflection on Debswana's contributions to Botswana over its 55 years of operations.

Horizon 1 focuses on the current state of business operations as they are. Horizon 2 encompasses future projects, including the underground mining operations at Jwaneng and the Cut 3 project at Orapa.

Finally, Horizon 3 outlines Debswana’s strategy beyond diamond mining, emphasising sustainability and long-term planning. Debswana’s approach is reportedly grounded in the understanding that diamonds are not an infinite resource.

With 58 percent of Botswana's diamond reserves already mined, only 42 percent remains. The company aims to safeguard and maximise the value of these remaining resources, ensuring that both the nation and shareholders fully benefit.

Experts interviewed revealed that the projected production profiles between contract mining and the hybrid model showed that the latter would achieve an additional five percent in output compared to Majwe Mining.

Furthermore, the hybrid model promised greater efficiencies in areas such as the procurement of explosives. Evidently, Debswana’s decision has upset some stakeholders, who have since allegedly launched a smear campaign against the company.

Among their accusations they claim that the tendering process for the ongoing Cut 9 project was corrupt. However, investigations by this publication have revealed that no tendering process ever took place for the Cut 9 project.

Instead, Naledi Mining Services—a Debswana subsidiary—was directly appointed by the company’s Board of Directors. Sources within Debswana explained that when Majwe's contract was terminated, a business case indicated that the company could save approximately P3.2 billion.

Due to additional efficiencies, those savings are now projected to reach P7.3 billion by 2027, with the government as the primary beneficiary. Records also show that Naledi Mining Services did not exist at the time Majwe’s contract was terminated.

In response, Debswana temporarily absorbed Majwe’s employees for 12 months while finalising Naledi’s registration paperwork, ensuring a seamless transition in operations.

Sources say Majwe was a labour group or labour hire, and all the equipment such as trucks, and mine employees who were Batswana would remain behind even if Majwe ceases to operate. This called for Debswana to have a 12-months transition as per the board approval to have a subsidiary so the people from Majwe went to work under Debswana.

Thankfully for Debswana, the composition of the board hardly changes. Sources reveal that terminating a contract of the magnitude of over P20 billion such as Cut 9 does not come easy.

There was lot of resistance as well as allegations, accusations and suspicion that something did not go right against the management. The aggrieved allegedly reported that, “there were irregularities on how Cut 9 tender was awarded”.

Despite knowing that the Cut 9 project was never tendered for and was instead awarded to Naledi Mining Services through a direct appointment, the company in 2023 initiated a forensic investigation into the operations and decisions of the management team during that period, following allegations of corrupt practices.

The investigation was conducted by an external firm from a reputable South African institution (name withheld). The firm assigned two highly-qualified professionals: a seasoned attorney and a mining engineer with extensive knowledge of mining operations.

The investigation team spent two weeks in Jwaneng, thoroughly examining the matter. They were given full freedom to consult with anyone they deemed necessary.

However, their findings revealed no wrongdoing in the awarding process. All those implicated, including the then Jwaneng General Manager, Koolatotse Koolatotse—now Debswana’s Deputy Managing Director—were cleared of any allegations.

In response to this publication's question, Senior Corporate Affairs Manager – Brand & Stakeholder Relations, Agatha Sejoe explained that a successful transition of the Cut 9 expansion project from Majwe Mining Joint Venture (MMJV) to Debswana Diamond Company was reached on 4th April 2021.

The Cut 9 contract is a P12 billion waste stripping project that started in 2019 and is expected to end in 2027. The Cut 9 operation will continue with its intent to extend the life of diamond mining in Jwaneng Mine to 2035.

The transition from Majwe to a hybrid model of owner mining and outsourcing entailed Jwaneng Mine directly operating and managing the Cut 9 mining operation and only outsourcing some key services and resources. Below is the sequence of events that led to the establishment of Naledi Mining Services.

Prior to the establishment of Naledi Mining Services, Jwaneng Mine successfully progressed and acquired the required outsourced services such as drilling, tyre management, and maintenance.

The contract for tyre Management was awarded to a 100 percent citizen-owned company. Another 100 percent citizen-owned equipment leasing contractor was awarded supply of some equipment for the Cut 9 operation.

Maintenance was for some time undertaken by the Original Equipment Manufacturers (OEMs) before the company moved to hybrid maintenance model in 2022.

Other tenders awarded then included a short-term contractor mandated to ensure a smooth Cut 9 transition whilst a longer-term contract was out on tender, this was for a 100 percent citizen-owned company tasked with the running of the contractor’s camp clinic.

Smaller contracts such as the provision of food and bussing have also been awarded to 100 percent citizen-owned companies.

This is a few of the many examples of Debswana’s commitment to prioritise the implementation of the Citizen Economic Empowerment Policy (CEEP) which the Company adopted in 2017 with a deliberate aim to significantly increase the amount of money spent on local procurement of goods and services from citizen-owned companies.

The Debswana CEEP is in alignment with the national Citizen Economic Empowerment Framework whose intention is to reduce the import bill by buying from Botswana based companies to spur employment creation and enhance economic diversification.

In terms of outsourcing labour services for Cut 9, a tender was floated, however the initial tender did not yield the desired results, mainly because the submissions received were found inadequate in addressing the requirements specified for the Cut 9 mining operation.

Consequently, the Debswana Board approved a recommendation to re-tender and a revised tender was floated.

In the spirit of empowering local citizen companies, along with the revised tender, revised guidelines were issued for better clarity and additional time given to ensure detailed understanding of the scope of services by the bidders and their compilation of more comprehensive and competitive proposals.

What Debswana was seeking to achieve through this tender process, was to identify and contract a company that would source, own and manage a variety of skills to discharge on the emergent labour requirements of Cut 9.

Whilst the revised tender was in process, an interim plan was implemented where Debswana sourced labour directly from the market, under Fixed Term Contracts, to work in the Cut 9 mining operation for a specific period.

Sejoe said it is important to note that this interim plan was implemented to mitigate against impact on production whilst the tender process was ongoing. Advertisements for the Cut 9 mining operation FTC positions were published.

Through FTC process Debswana Jwaneng Cut 9 Operation had a complement of 475 positions of which all were filled by candidates who had applied for the advertised positions.

Former Majwe employees made up 91 percent of all the employees employed under the FTCs. Further, the Original Equipment Manufacturers (OEMs) and other contractors also employed people to conduct work within Cut 9 operation.

Information provided by the respective contractors showed an additional complement of 338 people across all other companies of which 107 people were former Majwe employees.

Twenty former Majwe employees declined offers from Debswana to go to other operations.

Sejoe explained that regretfully, subsequent adjudication of the revised tender established the same outcomes as the initial tender, which is that bidders still did not meet the desired requirements.

This then presented Debswana leadership with the opportunity for a review of the operational strategy, leading to the decision to establish a 100 percent owned subsidiary with a broader mandate

than just labour services.

Naledi Mining Services was established as a subsidiary of Debswana Diamond Company to provide labour services for contract mining activities amongst other key deliverables.

The transition from Debswana FTC to Naledi Mining Services was 100 percent retention of the 773 employees at the start of the founding year and more employees have since been hired with the growth of the company alongside Debswana business needs.

Of the 617 former Majwe employees 563 employees work in Jwaneng Mine mostly through Naledi Mining Services Company, 20 have declined offers while the remaining are either employed by other operations or remain unemployed.

Sejoe said Naledi was founded on the principles that were meant to achieve efficiencies. That is to say; to lower rising operating costs, Preservation of Jobs (absorption of former Majwe employees, Acceleration of the development of Mining services industry and to Participate in socio-economic development).