African Mining May 2020 | Page 8

• AFRICAN BUZZ BOTSWANA: BOTSWANA REMAINS ATTRACTIVE FOR MINERS Botswana has a relatively small population, in relation to its geographical size. It is one of the least populous countries in the world, which will mitigate the risks of COVID-19. The combination of prudent mining and minerals development, historically, the development of infrastructure, and the socioeconomic programmes may mean that Botswana can avoid potential catastrophic consequences of COVID-19, and if COVID-19 does spread within Botswana, Botswana may be in a far better position than other mineral-rich jurisdictions, to recover and benefit, more quickly, from any upturn in the global economy. Botswana’s mining sector is likely to remain an important investment destination primarily because of the manner in which Botswana has implemented its mining and minerals policies. Due to the stable environment and ease of doing business, investors have understood the requirements, and taken investment decisions based on the relatively stable landscape in Botswana. Leon Louw Diamond mines are the pride of Botswana’s mining industry. Article by Warren Beech Botswana, like many African countries, has vast reserves of minerals including diamonds, nickel, uranium, copper, and coal. The global mining sector has faced significant challenges over the past few years. However, Botswana finds itself in a unique position for a number of reasons. Political stability, a stable policy and regulatory regime, its rankings as an attractive investment destination, ease of doing business, its population size, the historical sustainable development of the minerals industry in Botswana, and its social and economic programmes are all factors that make Botswana one of the most attractive mining destinations in the world. However, like all other mining jurisdictions, Botswana will be affected by COVID-19, the global downturn in demand for minerals, dramatically reduced prices for minerals that remain in demand, and the possibility of significantly reduced ability to achieve even reduced production targets, if COVID-19 becomes prevalent in the workforce. The mining and natural resources sector is, and has always been, a potentially high risk environment because of mine-related diseases which compromise the immune system, other diseases that compromise immune systems which mine workers may be exposed to, and the close proximity that employees work in relation to each other, in the confined working environment. Botswana is, as a result of its prudent historical mining and minerals policies and socio-economic development programmes, probably better placed than many other countries with strong mining sectors, to deal with an outbreak of COVID-19 at its mines. Since independence in 1966, the government of Botswana has implemented mining and minerals policies and regulations which have maximised the benefits derived from mining. Its socio-economic programmes have resulted in significant infrastructure development, education levels, and significant growth in Gross Domestic Product (GDP) per capita, supported by strong markets and institutions. 6 • African Mining •May 2020 However, there is one element that often scares off investors, namely ministerial discretion. Botswana is well-known for its diamond mines, and the government of Botswana has ensured, through the mining legislation, that the Minister of Mines has wide discretion to negotiate terms and conditions with mining companies which secures direct and indirect participation in mining companies, and mines. The Mines and Minerals Act of 1999, like South Africa, vests ownership of all rights to minerals, in the government of Botswana. In addition to royalties that are payable, the government of Botswana has the right and option to acquire interests in the mining companies, and to renegotiate this participation interest, from time to time. Mining in Botswana is reported to contribute between 35% and 40% of Botswana’s GDP, and Botswana remains a leading producer of diamonds by value. It is understandable that the government of Botswana is therefore also focused on diamond sale agreements, particularly with De Beers, and on promoting local beneficiation. The agreement concluded between Botswana and Angola for the polishing of Angolan diamonds in Botswana, is a further example of Botswana’s prudent policy and regulatory approach to mining in Botswana. Botswana is regarded as an economic success story, primarily as a result of its approach to the sustainable development of its mining sector, and with the focus also shifting to increased coal extraction, despite global concerns regarding the use of coal, Botswana is likely to remain an investment destination of choice, for the foreseeable future. MOZAMBIQUE: PANDEMIC HITS INDEBTED COUNTRIES HARD The global economic crisis caused by the Covid-19 pandemic is expected to affect economic growth in Africa, with highly indebted countries, such as Angola and Mozambique, with a limited capacity to respond to stimulus, according to the UN Economic Commission for Africa (UNECA). The UN Commission report said that growth in African countries will slow from an average of 3.2% to 1.8%, in a best- case scenario, leaving about 27 million people in extreme poverty. www. africanmining.co.za