• 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.
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