The Debswana Diamond Company operates from Botswana's capital, Gaborone, and is the most important industry in a country that has over many years built up an enviable reputation as one of the success stories of Africa. The country's mining operations have been largely responsible for transforming the country from an agricultural based economy in the to a country that has consistently displayed one of the highest economic growth rates in the world. During 1997/98 the economy grew by 8,3 percent in real terms, while the mining sector grew by 9,5 percent reflecting the benefits of continuous operations that were introduced to the diamond mines in January 1997.

Combined production of the three mines in 2000 exceeded 25 million carats making Debswana one of the major diamond mining producers in the world. The Company is the largest private sector employer in Botswana, employing 5 009 people of whom 93 percent are citizens. With a population of 1,5 million in 1996, the country has one of the lowest average population densities of less than two people per square kilometer. The operations of the Debswana Diamond Company have helped bring development and work opportunities to far-flung communities which would otherwise have had little prospect of employment. The largest contributor to foreign exchange earnings, the company placed all its 2000 production with the Diamond Trading Company (DTC) in London,! contributing more than 80 percent of the country's foreign earnings.

The Debswana Diamond Company is a world leader in the mining, sorting, valuing and exporting of diamond destined for the trading centres and markets of the world. Maximising shareholder value for our shareholders, De Beers and the Botswana Government is a primary aim of our business. However, as a major participant in the economy of Botswana, our success is also measured by the role Debswana plays in stimulating secondary economic activity, how the company protec the environment and promotes social development.

Safety, the health of employees, the environment and an active social involvement programme are central to the way we do business. It is also the responsibilty of all our employees, whether Batswana or expatriates, management or members of the Board to ensure that the way we care for our business, the environment, each other and society around us is deeply ingrained in the way we conduct all our operations. Debswana is committed to operating in an honest manner and aims to contribute to Botswana and its people through the way it operates and the principles it applies when dealing with employees, suppliers, contractors, local communities in which It plays a leading role as an employer and provider of social services, and with our principal business partners.

The mining of diamonds is the principal economic activity within the country and the major contributor to foreign earnings and local economic growth. Ensuring the sustainability of operations and minimising the impact on the environment caused by open cast mining operations is a major focus. As important, is the introduction of innovative water conservation and management measures to safeguard the source of this essential commodity in a country where water resources are scarce and subject to the vagaries of periods of drought.

At a corporate and operational level, Debswana constantly examines ways in which it can improve its core business. This ongoing evaluation is undertaken whilst ensuring that a balance with other national issues, such as conservation of resources, is achieved. This ^ involves collaboration with local and international quality ,j assurance, safety, environment and other bodies to ensure that local strategies and interventions introduced meet the highest internationally applied standards.



The participation of independent experts such as the International Standards Organisation (ISO) and South Africa's National Occupational and Safety Association NOSA) is the essential art of day-to-day operations. to monitor earth tremors commenced in 1999 with the National Seismological Network Project. Safety and the environment are also important concerns, and there has been a marked improvement in the safety performance of the mining industry due to concerted safety efforts by mining personnel and the favourable inspectorate staff complement. The HIV/AIDS threat is being addressed through awareness programmes, with mines adopting contingency measures to minimise operational disruptions. The National Environmental Laboratory should be completed in the first half of 2001, with the rehabilitation of abandoned mine shafts in the Francistown and Ramotswa areas scheduled for completion in the 2002/2003 financial year.

DIAMONDS
The largest diamond producer by value in the world, Botswana's economic success has been underpinned by the diamond industry, with over 75 percent of diamond mining profits accruing to the Government. Diamonds were originally discovered in 1967 in three pipes that now make up the Orapa and Letlhakane mines. The Orapa pipe, about 250 kilometres west of Francistown, is the world's second largest kimberlite pipe currently being mined. Diamond-bearing kimberlite pipes were discovered in 1973 in the Naledi River valley near the village of Jwana, giving rise to the Jwaneng mine. Botswana's three main diamond mines are expected to produce well into the 21st Century.

Debswana Diamond Company operates the Orapa, Letlhakane and Jwaneng mines. Owned in equal shares by the Botswana Government and De Beers, Debswana was incorporated in ) 969 to develop the Orapa Mine, which went into production in 1971. The two pipes at Letlhakane began producing in 1977, with the expansion of the Orapa plant being completed in 1979. Mining operations at Jwaneng started in 1982, with the Fourth Stream Project completed in 1995 increasing ore treatment capacity by 33 percent. The CONTOPS programme (continuous operations) has increased tonnage significantly, and the Aquarium - a new sorting plant at Jwaneng which uses a completely automated process to recover and sort diamonds - is expected to lead to an increase in the recovery rate.

All diamonds are sorted and valued by Botswana Diamond Valuing Company, a subsidiary of Debswana. It is the largest sorting and valuing operation in De Beers and associated companies, with the exception of the Diamond Trading Corporation. In relation to diamond production, diamond polishing and jewellery manufacturing in Botswana is small. Two substantial diamond cutting factories have commenced operations in the past decade, creating several hundred jobs.

A mining project is planned by Debswana at Damtshaa near Orapa, and should come on stream by the middle of 2003. The BK 9 kimberlite pipes to be mined are expected to yield fairly low returns, hence the low cost nature of the project. Although only a small increase in overall production capacity is anticipated, 180 new jobs will be created once Damtshaa is in full production.
Debswana's Orapa Expansion Project came on line during 2000, further entrenching Botswana's position as the world's leading producer of gem diamonds. In fact, the mining sectors output grew by 11.9 percent between 1998/99 and 1999/2000, mainly due to the impact of the Orapa expansion project, which doubled diamond production at that mine. With Debswana's mines now producing at full capacity, further growth in diamond revenue will depend mainly on future price increases. Contrary to initial forecasts, which suggested that the favourable sales of 1999 were simply an isolated 'millennium' effect, the diamond industry continued to perform.