Jwaneng diamond mine in Botswana has received approval for a major expansion.

The shareholders of Debswana (De Beers and the government of the Republic of Botswana) have given the green light to the Cut-8 project at Jwaneng.

The Jwaneng mine lies in south central Botswana, about 160 km southwest of the country’s capital, Gaborone.

Jwaneng means “a place of small stones” – which is very apt – and was first discovered by De Beers prospectors in 1972. Production started in 1982.

In 2008 Jwaneng produced 13.7 million carats of diamonds, making it the world’s richest diamond mine. The mine accounts for about 60-70% of Debswana’s total revenues, with diamonds accounting for about 80% of Botswana’s foreign earnings. Jwaneng is thought to produce around 8-10% of the world’s diamond production (in terms of carats).

It’s reported that this expansion project will secure continuous and profitable production at Jwaneng until 2025, with an initial capital investment by Debswana of around $500m and likely total spending of around $3bn over the next 15 years.

The yield as a result of this expansion is forecast to be an additional 95 million carats of diamonds with a total value of more than $15bn.

The decision to expand Jwaneng in this way is a sign of long-term confidence in the diamond industry following a year when major diamond miners cut back production dramatically as a response to the global financial slowdown.

It also demonstrates how diamond producers are investing in existing assets in order to make them ‘sweat’; no new major diamond mine has been discovered for over a decade, so the long term expectation is that diamond demand will outstrip supply – hence the logic in investing to extend the life of proven diamond sources such as Jwaneng.