AFRICAN BUZZ
TANZANIA:
LANDMARK DEAL FOR GEITA ZIMBABWE:
WORK STARTS ON STEEL PROJECT
AngloGold Ashanti has been able to finance the expansion of its Geita gold
mine in Tanzania thanks to a landmark dual-currency deal, fully underwritten
by Nedbank CIB. Geita Gold Mining (GGML) borrowed USD115-million
to finance underground development at one of the largest mines in the
AngloGold Ashanti portfolio. According to Winston Chitando, Zimbabwean minister of mines and mining,
Chinese based Tsingshan Holding Group, has begun working on its
USD1-billion steel plant in Zimbabwe. Chitando says that the deal was
signed in June 2018 and the plant is expected to produce about 2 million
tonnes of steel annually. "Tsingshan personnel are on site and they have
started geological surveys. Government is working closely with them to
ensure that the project takes off smoothly," says Chitando.
In 2018, the Tanzanian government introduced new local content
regulations that sought to achieve broad-based participation of
indigenous enterprises in the mining sector. That includes the provision of
financial services.
Tanzanian banks have traditionally had limited interaction with the large
global mines that operate in the country and typically procure financing
elsewhere. In addition, foreign investment in Tanzania’s mining sector has
been muted since the imposition of taxation-linked fines on Barrick Mining’s
Acacia Mining.
“Nedbank CIB is proud to have facilitated another first for the continent in
securing this deal. We are more steadfast in our commitment to unlocking
value across the continent and it is our belief that the collaboration with
local stakeholders will benefit the local community and economy in the
long-term,” says Witness Kamera at Nedbank CIB.
Nedbank CIB underwrote the entire transaction and then began the process
of distributing a portion of the exposure in Tanzanian shillings. Lenders who
expressed interest provided non-binding expressions of interest and based
on the responses received, final commercial terms were distributed to banks.
The initial target is set to produce 1 million tonnes per annum by 2022
before growing to 2 million by 2026. According to Chitando, the project will
have a significant economic ripple effect.
BOTSWANA:
OKAVANGO GETS THE BLUES
Botswana is reaping the rewards after decades of successfully managing
its diamond sector. Speaking at the Plenary Meeting of the Policy Dialogue
on Natural Resource-based Development hosted by the Organisation for
Economic Co-operation and Development in Paris recently, managing
director of the Okavango Diamond Company (ODC), Marcus ter Haar, said
that transparency and good governance must continue to be a guiding
value of corporate behaviour in order to earn the trust and respect of our
current and future consumers.
In order to accommodate indigenous Tanzanian banks, their accession
into the facilities had to be managed on a bespoke basis, unlike traditional
underwritten syndications. Nedbank CIB navigated lenders through the
regulatory changes and risk mitigants inherent in the transaction, giving
them time to familiarise themselves with the deal.
The result was a first-of-its-kind syndicated Tanzanian shillings mining
transaction, using a mechanism where acceding Tanzanian shillings lenders
de-risked the existing US dollar lender. It provided certainty for GGML,
while sounding out the market for credit appetite among local lenders to
participate in local currency.
The diamond sector is the largest private sector employer in Botswana and
the primary engine for growth and development, contributing 80% to foreign
exchange earnings, 50% of government revenue and 30% of GDP. Before
diamonds were discovered in Botswana in 1966, income per capita was just
USD70, but that has since grown to over USD7000. There were only nine
schools before the discovery of diamonds. Today there are about 1 000 schools.
"In Botswana diamond mining now directly employs more than 5 500
people. The diamond cutting and polishing industry employing close to
2 300 people. Maximising the value derived from diamonds across the value
chain means greater benefits such as ongoing skills training, ranging from
artisan level to highly skilled professionals," says ter Haar.
Witness Kamera, senior associate: Mining Finance at Nedbank CIB.
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African Mining September 2019
According to ter Haar, policy dialogues are critical in enabling ODC and
Botswana to share its best practices with a wider group of stakeholders
as the country transforms from a resource-based to a knowledge-based
economy. Due to the major strides made to broaden the economic activity
in the sector and thanks to once-in-a-lifetime finds like the Okavango Blue
diamond that was unveiled to the world in April 2019, ter Haar believes
Botswana is fast being transformed into a leading global natural diamond
centre. The remarkable oval shaped Okavango Blue diamond, is officially the
biggest blue diamond discovery ever made in Botswana, weighing 20.46
carats in its polished form.
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