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No future for mining beyond 2050 - experts

Publishing Date : 15 May, 2017

Author : REARABILWE RAMAPHANE

Botswana‘s economic future is persistently put in doubt by some international commentators. As far as national income generation and provision of sustainable jobs are concerned, there are no guarantees.


Currently the mixed structured open economy is largely dependent on mineral revenue mainly from the diamond sector for foreign income generation and the government dominates, coordinates and regulates almost every sector of the middle income economy that Botswana is. This current setup in which the diamond sector alone is responsible for a quarter of the national treasury and is the largest single private sector employer is constantly viewed as an economic danger looming.


This sentiments were echoed again recently at a discussion hosted by the World Bank Group where they also released Botswana Mining Investment & Governance Review report. According to reports from the gathering it was emphasized that Botswana needed to move with speed and unearth other sources of revenue and income generation to breathe life into an economy that could otherwise be  lifeless in a decade or two to come.


Specially Elected Member of Parliament, Ms Bogolo Kenewendo weighed on the same, urging that plans for a Botswana beyond Mining need to unfold as soon as yesterday. “We need to plan for a future that has a broader and diverse economy with a variety of sectors contributing significantly to the country‘s revenue pot,” she said. Kenewendo, a shrewd economic expert was also quoted saying that it was no longer a matter of choice to diversify the economy but an obligation.


 “We need to find ways for mining revenue to trickle down to the rest of the citizenry and also increase the impact of mining revenues on areas where mines in Botswana are situated. Business linkages and cluster developments need to show evidence at rich mineral areas,” she said.


According to the youngest legislator in parliament, Botswana needs to devise ways in which mining revenues would benefit the rest of citizenry apart from free basic service, she said that would be archived by sharing national wealth with its people and wealth creation at an ordinary individual level.


Though mineral revenue increased by 63 % in 2016 financial year, with government pocketing tens of billions from mineral tax, dividends and mining royalties and recent figures presenting a positive outlook for most companies and stable profitability for Botswana’s largest mining company Debswana, fluctuating market commodity prices and closure of some mining companies raise concern over an uncertain future for Botswana’s economy.


2016 saw liquidation and shut down of some mining companies especially copper and nickel companies due to low commodity prices. BCL Mine, Tati Nickel, Mowana are some of the victims. Meanwhile some have been reported to be on the brink of reopening soon.
 Debswana’s Damtshaa Mine has been put under care and maintenance. Debswana also reported a fortnight ago that their Letlhakane Mine, popularly known as DK 1, has reached the end of its lifespan with tailings project to take the operations not beyond 20 years to come.


Already prospected kimberlitic and precious deposits at the world’s largest diamond mine by value, Jwaneng Mine place the mine not beyond 2034 (Cut 8). All these factors and others which experts term unforeseen economic circumstances,  expose Botswana to be vulnerable to a possible economic crush in a few decades to come unless  something major is done to transform the economy and diversify national revenue sources.


At the Mining Investment & Governance Review report, Kenewendo observed that the World Bank Group’s Botswana Mining Investment and Governance Review report was expected to help government improve the sector’s performance  and to attract further investment.
According to the review by the world economic think tank, even the Mining sector itself is poorly managed here in Botswana.

 

It was pointed out that ordinary Batswana citizens and remote area settlers were just spectators in the Mining industry wealth creation symposium. The World Bank observes that Mining contractors and big money business partnerships in the mining sector are largely enjoyed by foreign owned enterprises which collect millions and invest them across borders or in their native countries.


The review indicates that Botswana Government regulations and policies are not structured in a way that locals benefit from doing business with mining companies especially in areas of procurement, supplies, as well as human resource as foreign national continues to enjoy preference in highly technical and skilled areas of mining human resource.


Permanent Secretary in the Ministry of Mineral Resources, Green Technology and Energy Security, Mr Kgomotso Abi agreed with the sentiments adding that Botswana needs to strengthen performance and address issues of concern to investors.
“We need to build an environment that will stimulate more investment in mineral extraction,” he said.


World Bank Country Representative, Ms Elene Imnadze said even though the mining sector immensely contributed to the development of Botswana, more still needs to be done to ensure mineral beneficiation, as well as secure a future for Botswana beyond mining.
“Other mines, more especially the copper ones, have had to close down due to low commodity prices. The copper mines, including BCL which is under provisional liquidation, remain closed even though base metal prices are beginning to increase slightly,” she continued.


According to the expert, government has to find ways of diversifying the economy and the capital generated from the mining sector should be invested into sectors that would be sustained beyond mining. She said this could be done by employing more people, building local suppliers and strengthening small and medium enterprises.  Botswana’s Mining Investment and Governance Review was compiled to help strengthen the mining sector’s governance, investment, environment and development impact in Botswana.


It reviewed sector performance from the perspective of three main stakeholder groups -government, investors in the mining value chain, and civil society and it identifies gaps between declared and actual government policy and practice. In 2015 Government of Botswana established the Mineral Development Company as a wholly state owned independent company to manage Botswana is multibillion Pula mining sector portfolio.


The company which is still undergoing full setting up, resourcing its personnel and defining its area of business is expected to manage all government shares in the mining sector and also transform the sector to fully benefit Batswana and the economy. Since establishment MDCB has being facing challenges of formative obstacles especially in the area of securing prominent personnel for the sensitive mandate it’s geared to deliver. Recently MDCB was reported to have licked out its controversial CEO Paul Smith who is constantly blamed for liquidating Botswana’s oldest copper mining giant BCL Mine.

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