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Miners see Botswana ideal for mining - Study

Publishing Date : 11 March, 2019

Author : TSAONE SEGAETSHO

No country in Africa is rated before Botswana when it comes to encouraging investment in exploration and its jurisdiction is seen to provide attractive mining policies, according to Fraser Institute’s 2018 annual survey of mining and exploration companies.


The study was done by carrying out survey on approximately 2,600 individuals in exploration, development, and other mining-related companies around the world. The survey has the Investment Attractiveness Index which measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure. The other main index is the Policy Perception Index which looks at the attractiveness of mining policies in a jurisdiction, and can serve as a report card to governments on how attractive their policies are from the point of view of an exploration manager.


Through the survey Fraser Institute assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment. Carried out across the world’s leading mining jurisdiction zooming into prospecting, exploring and mineral extracting companies the study also takes into account issues of safety, occupational health and environment as far as mining operations are concerned.


Since dominating for the last couple of years Botswana is again the highest ranked jurisdiction in Africa on policy, ranking 12th (of 83) in 2018, after ranking 21st (of 91) in 2017. According to the survey Botswana’s high scores this year and an improvement in past few years’ means mining and exploration investors can come home for mining projects since the is less or no concern over uncertainty concerning protected areas like: (-24 points), trade barriers (-20 points), and political stability (-18 points).


“The tax regime in Botswana continues to be exemplary when compared to other African jurisdictions and encourages investment in exploration,” says an exploration company vice-president interviewed for the survey according to the latest report by the Fraser Institute.
The survey which was circulated electronically to approximately 2,600 individuals between 21 August  and 9 November 2018 helps investors to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.
The “Best Practices Mineral Potential” index ranks the jurisdictions based on which region’s geology “encourages exploration investment” or is “not a deterrent to investment” and Botswana is still among the top performers in this index.


New ventures in Botswana

Recently there has been fresh news of opening of the mining that was formerly called Boseto by Khoemacau with a P5.6 billion investment. These news together with Botswana’s healthy diamond relationship with De Beer or/and Anglo America, may have contributed to Botswana’s high rankings in the mining survey. De Beers and Botswana talks are expected to reach a climax in June this year and both parties have promised an amicable deal to the media.


A company with foreign investors like Botswana Diamonds continues to hold exploration rights in Botswana soils and promises to keep them without any complain. Canadian diamond giant Lucara boasts of its Botswana’s Karowe diamonds which were recently making headlines synonymous with production of huge rough diamonds-this must provide a positive outlook for the Fraser Institution survey.


Saskatchewan displaced Ireland from the top spot this year, and had the highest PPI score of 100. Saskatchewan was followed by Nevada in second, which moved up from 5th in the previous year. Along with Saskatchewan and Nevada the top 10 ranked jurisdictions are Finland, Ireland, Western Australia, Northern Ireland, Sweden, Utah, New Brunswick, and Quebec.


The 10 least attractive jurisdictions for investment based on the PPI rankings are starting with the worst Venezuela, Democratic Republic of Congo (DRC), Neuquén, Chubut, Philippines, Guatemala, La Rioja, Zimbabwe, Bolivia, and China. Venezuela, Democratic Republic of Congo, Chubut, Philippines, Guatemala, Zimbabwe, Bolivia, and China were all in the bottom 10 jurisdictions last year.


Botswana which is home to the richest diamond mine by value is noted as one the leading mining countries in the world with investment friendly policies and factors.  The country’s mining policies has birthed one the most celebrated public –private partnerships in the world between Botswana Government and global diamond giant De Beers Group .

Botswana accounts for more than 70 % of the De Beers diamond rough diamond produce. The 53 year old Southern African republic is the leading diamond-producing country in terms of value, and the second largest in terms of volume. This is the home base of De Beers, and the source of most of its production today. In 2013, Botswana produced 23.2 million carats with a stated value of $3.63 billion.The country is also home to one of the most abundant coal deposits in the world sitting at over 200 billion tones   with other minerals explored  being copper , zinc , silver and nickel.


But there are lowlights

The country has been unfortunate in seeing the abrupt closure of the BCL mine which was seen to be done in political expediency by close observers. The mine which is said to be one of the biggest copper mines is failing to garner investors since its closure and subsequent liquidation of 2016. Some believe the mine might end as a great white elephant as its care and maintenance continues to botch.


Another failed copper project which is unable to get a white knight investor is the Mowana mine which was closed last year December due to inability to live up to operation costs. Lerala mine is one of the worst in terms of attracting investors as it has even gone down in value-more than 50 percent its initial value. It was nearly auctioned for P80 million but its investors failed to raise capital according to the mine liquidator. Lerala mine still hangs on the hopes of the people of Lerala village as it is still looking for a knight investor.


The nightmare in the fall of the promising Pula Steel was recently reignited as its former owner Deepak Verma blames government for leading the mine into collapse. The mine was closed and liquidated after operational failure. For the 2018 report released this week, survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment.


The Fraser Institute received a total of 291 responses for the survey, providing sufficient data to evaluate 83 jurisdictions. By way of comparison, 91 jurisdictions were evaluated in 2017, 104 in 2016, 109 in 2015, and 122 in 2014.The number of jurisdictions that can be included in the study tends to wax and wane as the mining sector grows or shrinks due to commodity prices and sectoral factors. This year’s survey includes an analysis of permit times, which was previously evaluated in a separate publication.

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