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Botswana’s mining production declines 8.7% in Q2 2019

Mining production in Botswana decreased by 8.7 per cent in the second quarter of 2019, compared to the second quarter of 2018, latest statistics released by the Statistics Botswana this week show.

Announcing the latest production figures, Statistician General, Dr. Burton Mguni said the main contributor to this reduction in the index were diamonds, which contributed a negative 8.1 percent. Other minerals that saw a drop in production under the period under review were; gold and coal while soda ash and salt recorded some significant increases. “The Index of Mining Production stood at 85.9 during the second quarter of 2019, showing a year-on -year reduction of 8.7 percent from 94.0 recorded during the second quarter of 2018,” Dr. Mguni said.

He added; “Comparison on a quarter-on-quarter basis shows a decrease of 4.1 percent, from the index of 89.6 realised during the first quarter of 2019 to 85.9 registered during the second quarter of 2019.” Mining production in Botswana averaged 9.48 per cent from 2004 until 2019, reaching an all-time high of 624.40 per cent in the first quarter of 2010 and a record low of -91.60 per cent in the first quarter of 2009

The quarter-on-quarter analysis showed a decrease of 4.1 percent, from the index of 89.6 per cent during the first quarter of 2019 to 85.9 per cent observed during the second of quarter of this year. Dr. Mguni said diamond production decreased during the period under review, declining by 8.4 percent during the second quarter of 2019, as compared to an increase of 6.4 percent registered in the same quarter of the previous year.

“This can be attributable to weaker trading conditions as well as being cautious to macroeconomic uncertainty. The quarter-on-quarter analysis reflects that diamond production decreased by 4.2 per cent during the second quarter of 2019 as compared to a decrease of 5.4 per cent registered in the first quarter of 2019,” he said. Gold production declined for the second consecutive year, decreasing by 14.0 per cent during the second quarter of 2019 compared to the same quarter in 2018.

According to Dr. Mguni, the decrease in gold production was as a result of unstable commodity prices as well as the notable deteriorating lifespan of the Mupane Gold Mine. “On the other hand, the quarter-on-quarter analysis shows an increase of 36.6 per cent during the second quarter of 2019 compared to the first quarter of 2019,” he said. Meanwhile positive production increases were recorded in soda ash, recorded positive growth for the sixth consecutive quarter, increasing by 0.1 per cent during the second quarter of 2019, compared to the same quarter of the previous year.

“The continued improvement in production may be attributable to the plant’s high efficiency following the plant refurbishment which occurred in 2017. On the other hand, the quarter-on-quarter analysis shows that production declined by 30.7 per cent during the period under review,” the Statistician General said.

Botswana Ash (BotAsh), the only extractor of Soda Ash, is a 50/50 partnership between the Government and Chlor Alkali Holdings (CAH) Group, a South African based company, which is also the management partner. BotAsh has a capacity of 300, 000 tons of soda ash per annum and currently produces over 280.000 tons, making Botswana one of the largest producers in the world.

Salt production also recorded an increase of 41.7 per cent during the second quarter of 2019 compared to the same quarter in 2018. The quarter-on-quarter comparison on the other hand, shows a decline of 25.0 per cent during the second quarter of 2019 compared to a decline of 21.9 per cent of the preceding quarter.

However, coal production dropped for the third consecutive quarter, declining by 6.3 per cent during the second quarter of 2019 compared to production registered during the same quarter of the previous year. Although production fell, it is important to note that there was no shortfall in supply of coal due to stockpiling. The quarter-on-quarter comparison on the other hand shows that coal production rose by 12.3 per cent when compared to the preceding quarter.

“Copper-nickel-cobalt matte, copper in concentrates and silver recorded zero production during the period under review. The instability and uncertainty of commodity prices affected the operations of the involved mines, which made it difficult to sustain themselves at the current prices, leading to the provisional liquidation,” said Dr. Mguni. The mining industry in Botswana has since the early 1980s been the largest contributor to real Gross Domestic Product (GDP), contributing between 20 and 50 percent.

These mineral contributions have enabled the Government to undertake investments in both human and physical infrastructure development over time. Even though the mining sector’s contribution to GDP has been below 25 percent since the 2009 recession, available data indicates that the sector still leads in terms of value added contribution to GDP.

Dr. Mguni said despite its great contribution to Botswana’s GDP, the mining industry was capital intensive and accounted for less than five percent of employment in the private sector. “With such a significant contribution to the GDP, and the national economy, the need for a measure of the change in the production of minerals in Botswana cannot be over emphasised. The index of the physical volume of mining production is such a measure that provides a relative change over time in mining production,” he said.

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Inflation spike building further upwards

27th October 2020
Inflation spike

In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.

Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.

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Plans to erase Edgars, Jet trademark from Botswana malls underway

27th October 2020
Edgars Jet trademark

Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.

Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.

South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.

Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.

Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.

Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.

According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.

Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.

The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.

“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.

In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA.
Foshini also lines up to take Jet Botswana from Edcon.

The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.

CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.

TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.

Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.

Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.

According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.

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BOCRA, associates to provide broadband internet in schools

27th October 2020

Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).

The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.

The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.

Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.

When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.

Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.

The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.

Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.

BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.

“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.

The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.

UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.

“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”

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