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Kalahari Copper Belt covert search while BCL lies moribund

International explorers with high appetite for copper mining have descended on Botswana ground to explore the untapped area of Kalahari Copper Belt whose underground soil is proven to have hid the treasurous red metal.

The Kalahari Copper Belt is said to contain millions of tonnes of copper and silver resources inside the 1,000-kilometre belt running south west to north east and foreign companies are already pouring billions of Pula in investment. This is despite government of Botswana shutting down a copper operation, BCL, citing failure of copper in the markets and the mine’s inability to be financially sustainably. BCL has been left flat on the ground and currently going through a controversial process of liquidation which is now on its third year; politicians and commentators alike are pointing a sharp finger at government as copper is now the new thing with the advent of Asia’s electric vehicles boom.

Recently international exploration companies have come out with their machinery and have eventually found a new home in the Kalahari Copper Belt. There are two mines on the offing at the Kalahari Copper Belt – the T3 (Motheo) project of Tshukudu Metals Botswana and the Zone 5 project of Khoemacau Copper Mining. These projects are expected to take off by 2020.

The most recent company showing desire for Botswana copper is the Australian copper producer Sandfire Resources which has even taken a bold step of engulfing a fellow Australian copper explorer MOD Resources, an entity with copper rights in this country. Sandfire will take over MOD together with its Botswana businesses or subsidiaries. 

MOD Resources, listed on the ASX and LSE, owns the T3 copper project in Botswana where a prefeasibility study estimated that the project would require a capital investment of P1.5 billion for development of an open pit operation and a plant with a 2.5-million-tonne-a-year throughput capacity, producing 23 000 t/y copper and 690 000 oz/y of silver in concentrate.

Sanfire Resources’ cornerstone asset is the high-grade, low cost DeGrussa Copper-Gold Mine in Australia. According to the company, it also has an interest in the Black Butte copper project in Montana, USA.  Before having an eye on African or Botswana, Sandfire is strategically focused on exploring for and bringing on new production that can in the short run augment its current production and in the long run, replace production as DeGrussa production diminishes and ultimately ceases.

Now Sandfire is aiming for the “highly prospective, dominant landholding on the underexplored Kalahari copper belt in Botswana.” According to information from the Australian bourse, combination of Sandfire and MOD leverages the strengths of both companies to both optimise and de-risk development.

According to information seen by this publication, the T3 Project in Botswana meets Sandfire's investment criteria, including returns, cost profile, scale, life and upside potential.  This also represents an attractive premium for MOD shareholders, whilst providing a funding solution for the development of T3 and retaining exposure to MOD’s significant exploration potential, according to information received.

Competition Authority has recently received a merger notification for the proposed acquisition of the entire issued share capital of MOD Resources by Sandfire Resources. The local antitrust body is interested in this acquisition due to MOD’s control on Botswana listed entities which will be involved in this transaction as subsidiaries or shareholders.  MOD controls MOD Resource Botswana which owns Tshukudu Metals Botswana.

Tshukudu Metals Botswana is a company incorporated in accordance with the Laws of the Republic of Botswana. Tshukudu Metal does not directly or indirectly control any firm in Botswana. According to Competition Authority, Tshukudu Metals is a mineral exploration company and currently does not provide any service or sell any products into or from Botswana. Its shareholders do not own shares in any other Botswana company.

The Directors of Tshukudu Metals are: Leutlwetse Tumelo; Gabaikangwe Chinyepi (both Batswana); Julian Phillip Hanna; and Mark Andre Clements (both Australians). MOD also controls Tshukudu Exploration Botswana whose directors are the same as those of Tshukudu Metals. Even though Tshukudu is a company registered in this country it does not directly or indirectly control any firm in Botswana. Though Tshukudu Explorations has not commenced trading, it is a mineral exploration company. Its shareholders also do not own shares in any other company incorporated in Botswana.

One of MOD’s local directors did Leutlwetse Tumelo want to divulge the details of the Sandfire takeover to BusinessPost. He only said, “the acquisition of MOD Resources by Sandfire is still going through some key regulatory approval processes. Until these processes are completed we cannot disclose more details around the transaction.”

Khoemacau bets billions on Kalahari Copper Belt

At last year’s Botswana Resource Sector Conference (BRSC) it was discussed that the Kalahari Copper Belt has a huge potential of becoming the copper hub of Botswana. But it will continue to be dwarfed by the gigantic production of the Central African Copperbelt of Zambia and the DRC. Those who speak for diversification from another mineral, to move from diamonds, hope for copper to take over-but it is still too far according to experts. Copper stands in a pole position at this time of the revolution of Asian markets demanding the red metal for electric vehicles manufacturing.

The Kalahari Copper Belt is referred as a ‘corridor’ of sediment-hosted copper/silver mineralization extending south-west from Maun in Botswana through to the Namibian border and beyond. The copper belt however has its mishaps. In 2015 February, 422 workers who went out to mine for a better life in the Kalahari had their hopes abruptly cut down when Boseto mine was closed. 

Owners of the Boseto mine, Discovery Metals Limited, had spent P1.75 billion on the project had to endure the slump of copper demand and prices in those years, but the mine is said to have been put on a deathbed by over-reliance on the unsustainable diesel generation which contributed to 35 percent of the mine’s operating costs. The Boseto mine used 17.1 million litres of diesel in generating its electricity, spending P26 million monthly, leading to its mothball.

The US-based Cupric Canyon Capital with its subsidiary Khoemacau Copper Mining purchased Boseto mine in 2015 including a new 3 Mt/a concentrator which was commissioned in 2012 by Australia’s Discovery Metals, and a Tailings Storage Facility (TSF). Cupric Canyon Capital has already spent almost P7.3 billion on the Kalahari Copper Belt for the Khoemacau mine. It is recently projected that Khoemacau copper production will increase to 62.000 metric tonnes while that of silver to 1.9 million ounces silver annually.

President Mokgweetsi Masisi evidently ushered the closure of the BCL copper mine in 2016 while still a vice president. But when ushering the opening of Khoemacau recently, Masisi is a man who now speaks with a renewed heart showing a lot of hope in the future of copper as an economic factor in the case of the newly reopened copper mine.

At a time when copper markets were raising most skepticism, government decided to put BCL on a sick bed and (government) claimed that it could not afford to fund the mine. That time Masisi stood firm and defended government’s decision to put the mine on liquidation as the most prudent. But his words and decisions have come back to haunt him and his presidency as copper is now in demand.

“The future looks bright for copper mining as the global forecasts indicated that copper demand globally was expected to exceed supply by mid-2020s because there was a surging growth from the power and utilities sector especially in China, India and other Asian nations,” said Masisi during the r recent opening of Khoemacau Mine.

When addressing attendees during the opening of Khoemacau Masisi said more than P4 billion was dedicated to be spent between 2018 and 2021 for developing the necessary infrastructure required to operate. He further touted Khoemacau to come with revenue of P10 billion over its 22 year operational life from 2021-2042, a tax revenue of P700 million and the creation of about 1200 jobs during the first phase including 1663 jobs on average per year as well as 883 direct jobs.

Copper prices

While appetite on copper mining and production is growing rapidly, latest figures show that there has been an unsettling trend of falling copper prices in recent months.  From a huge fall in price in the end of last year December, copper prices rose from $2.62/lb to $2.96/lb after February this year. This year the month of August shows it is a month of lows in the copper market.

Expects say this is due to US President Donald Trump last week statement that he would impose more tariffs on Chinese import and the Oriental giant retaliating that it will fight back, ending a month-long trade truce between the world’s two biggest economies. The failure of truce also further fuels the two nations’ long standing trade war.

China and its Asian brothers supply the world, including America, with electric vehicles and a lot of goods that uses copper. Hence a spike in tariffs by US means less production of copper using goods in Asia which also results in less demand for copper, subsequently red metal prices go down. The copper prices have been sharply plummeting since the end of July. At the wake of last week Trump announcement on tariffs prices went to the lows at $2.57/lb on 4 August. However there is a positive trend this week, much to the interest of copper producers, on Wednesday this week the prices even reached a high of $2.61/lb.

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P300m Phikwe Citrus project first harvest milestone

18th March 2024

The P300 million Selebi Phikwe Citrus project in Botswana has reached its first harvest milestone, with the first export dispatched to the UAE and Saudi Arabia last week. This project, aimed at diversifying the country’s export earnings from diamond mining, is a significant step towards achieving this goal.

The project, which has successfully planted 840,000 seedlings in Phase 1 and completed a 17,000 square meter pack house, is set to employ 1,000 people and create business opportunities across various value chains. These opportunities include manufacturing of juice and packaging materials, transport and logistics, and honey production.

The first export from the Selebi Phikwe Citrus project marks a major achievement for Botswana, as it opens up lucrative export markets in the Middle East and beyond. The project has met market access requirements for countries such as the EU, Canada, China, The Philippines, UAE, and Saudi Arabia, paving the way for future exports to these regions.

The economic impact of the project on the SPEDU region, where it is located, is already being felt. The construction of a 12 km water pipeline and the installation of a power line have driven infrastructure development in the area, benefiting businesses in the vicinity at minimal cost.

The project’s success is the result of collaborative efforts between various government departments and agencies, including the Botswana Investment & Trade Centre (BITC) and SPEDU. Through the BITC’s One Stop Services Centre (BOSSC), the project was able to access red-carpet investor facilitation services and unlock necessary business enablers.

The Ministry of Trade & Industry and the Ministry of Agriculture have played crucial roles in facilitating market access for the project. The Department of Plant Health has opened up protocol and permit markets for citrus exports, ensuring that the project can access international markets with ease.

Botswana has met the European Union (EU), Canada, China, The Philippines, United Arab Emirates and Saudi Arabia market access requirements. “I am happy to report that our desire to export has been actualised as the first consignment was dispatched last week to the United Arab Emirates and Saudi Arabia” Minister Kgafela revealed.

The Selebi Phikwe Citrus project is not only beneficial for the project sponsors but also for other citrus growers in Botswana. With 172 citrus growers in the country, over 90% of whom are small-scale farmers, the project presents opportunities for growth and expansion in the citrus industry.

Massive value chain opportunities are presented by the project, including fertilizer and agrochemical supplies, agro-processing opportunities, and more. The project’s spending on imports presents an opportunity for local production, further boosting the country’s economy.

On 21s March 2024, His Excellency Dr Mokgweetsi EK Masisi will officiate at a ceremony to mark the first harvest of the Selebi Phikwe Citrus project and officially open the pack house. Harvest from this multimillion pula project is expected to reach the United States, Europe and other lucrative export markets.

The project was first launched on the 11th December 2020 with a ground breaking by President Masisi. This multimillion pula private sector funded agricultural enterprise, the likes of which this country has never seen before, is widely touted as a major catalyst to revitalising and catapulting the SPEDU region back to economic glory following the closure of BCL mine in 2016.

The project promoters leased 1500 hectors of land from Mmadinare Multi- Purpose Cooperative Society which will benefit directly through proceeds.

Highlighting the ripple economic impact of the project to the SPEDU region, Assistant Minister of Trade & Industry Honourable Beauty Manake said the Selebi Phikwe Citrus project has been able to drive the development of infrastructure in the area, with the construction of a 12 km water pipeline and ensured the installation of a power line.

She said during a briefing in Gaborone on Thursday that businesses within the vicinity have tapped into these infrastructural developments at minimal cost.

The Selebi Phikwe Citrus project came into being through collective efforts of various government departments and agencies. The Botswana Investment & Trade Centre (BITC) in collaboration with SPEDU courted the investors from South Africa to venture into the project.

Through the Botswana One Stop Services Centre (BOSSC) under the BITC, the project was able to establish and take off by enjoying red-carpet investor facilitation services to unlock required business enablers.

BITC has also through its export promotion arm, facilitated the project by identifying potential export markets in the European Union (EU) and lend crucial support to the Citrus Project to access the identified markets.

About 70 percent of the produce from the Selebi Phikwe Citrus will be exported, while 30% will remain in the country. Assistant Minister Manake revealed that the Ministry of Trade of Industry has been working closely with the project sponsors to explore export markets and facilitate entry into those markets.

The Selebi Phikwe Citrus project’s first harvest and export mark a significant milestone in Botswana’s efforts to diversify its export earnings. With the potential for growth and expansion in the citrus industry, this project is set to have a lasting impact on the country’s economy and agricultural sector.

 

 

 

 

 

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Botswana’s first coal-gas fired power station to start commercial production

18th March 2024

Botswana is set to achieve a significant milestone with the upcoming commencement of commercial production at the country’s first coal-gas fired power station. Tlou Energy Limited, an Independent Power Producer listed on multiple stock exchanges, has been at the forefront of developing this groundbreaking project, which is expected to start generating electricity for both the local and export markets later this year.

Situated in the Central District, just 100 km west of Serowe, the coal-gas fired power station represents a major step towards reducing Botswana’s reliance on expensive power imports. Tlou Energy has confirmed the presence of abundant coal-gas resources in the area, making it suitable for commercial power production. The company has obtained all the necessary approvals, including environmental assessments, production licenses, power generation licenses, and a Power Purchase Agreement, to move forward with the project.

One of the key achievements for Tlou Energy has been the completion of a 100km 66kV transmission line, connecting the power station directly to Botswana’s power grid and the Southern African Power Pool. This connection opens up a vast market for the project, allowing for the sale of electricity both domestically and regionally. The company’s Managing Director, Tony Gilby, expressed optimism about the project’s progress, stating that they are on track to start generating revenue soon.

In terms of the project’s timeline, Tlou Energy is currently focused on completing the construction of the power station, installing generators, and finalizing the gas gathering line. The initial target is to generate around 2MW of power, with plans for rapid expansion to 10MW, generating approximately $10 million in revenue per annum. The company is also in discussions with investors to secure the necessary funds for project completion.

The key remaining items to be completed prior to first power sales, according Tlou Energy, include completing the construction of the power station, installation of generators, completing the short gas gathering line (from the gas wells to the generators) and energizing the power line. “Minor finishing works on the transmission line and the addition of switchgear at Serowe will also be completed prior to first power.  The initial target is ~2MW of power, followed by rapid expansion to 10MW, generating approximately $10m in revenue per annum.” The company has confirmed that it’s in discussions with some investors to secure funds required for project completion.

Tlou’s power is expected to help reduce Botswana’s reliance on expensive power imports. In addition to supplying power in Botswana, the company may sell electricity to the regional market via the Southern African Power Pool, a development which could open up a bigger market for the project.

The successful operation of Botswana’s first coal-gas fired power station will not only contribute to the country’s energy security but also have a positive impact on the regional market. By potentially selling electricity through the Southern African Power Pool, Tlou Energy could tap into a larger market, further solidifying its position as a key player in the energy sector.

Overall, the progress made by Tlou Energy in developing Botswana’s first coal-gas fired power station is a testament to the company’s dedication and vision. With the project nearing completion and commercial production on the horizon, Botswana is poised to enter a new era of energy independence and sustainability.

 

 

 

 

 

 

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Food prices could go up in 2024/2025

18th March 2024

Food prices could potentially go up in 2024/2025 due to the current El Niño conditions in Southern Africa, as reported by the Food and Agriculture Organization (FAO) of the United Nations. The update released by FAO indicates that countries in the region, including Botswana, may experience a decrease in food production, leading to higher food inflation.

The update highlights that Southern Africa has been experiencing below-average rainfall, with key cropping zones in countries such as Malawi, Mozambique, Zambia, Zimbabwe, and Namibia receiving only up to 80 percent of average rainfall quantities between November 2023 and February 2024. This has resulted in significant rainfall deficits, particularly in February, which is a critical period for crop development. The warmer than average temperatures and erratic distribution of rains have further exacerbated the situation, leading to stressed vegetation conditions and potentially lower crop yields in 2024.

In South Africa, the leading cereal producer in the region, a dry spell between late January and February 2024 has negatively impacted crop production prospects. Maize production is expected to fall this year, further contributing to the potential decrease in cereal production in the region.

As a result of the anticipated decline in cereal production in Southern Africa, import needs are projected to increase in the 2024/25 year. This could lead to the importation of cereals from outside of the region, such as the United States of America, Mexico, Brazil, Australia, and Argentina. However, importing food from global markets comes with higher transport costs and import tariffs, which may put upward pressure on food prices in Botswana.

FAO projects that based on the likely scenario of a fall in cereal production in Southern Africa, import needs are set to increase in the 2024/25 year. “Furthermore, if production declines in South Africa and Zambia materialize in 2024, cereal export availabilities in the region would be low and this could necessitate the importation of cereals from outside of Southern Africa.” According to analysts from the organization cereal prices were at higher levels in December 2023 and January 2024 in Southern Africa, reflecting the cumulative impacts of weather shocks on 2023 domestic production, elevated international commodity prices and weak currencies that intensified exchange rate pass-through effects to domestic prices. “Farther ahead, a key risk to the price growth is represented by the impact of El Niño-related rainfall deficits on cereal production in 2024.”

Some local analysts believes that Botswana could import sorghum, maize and wheat from as far as United States of America, Mexico, Brazil, Australia and Argentina as South Africa and Southern African countries which are potential suppliers of cereals, are highly likely to record decline in crop production as a result of the impact of El Niño-related rainfall deficits on cereal production in 2024. The analysts added that food imports from the global markets come with higher transport costs and import tariffs which may have an upward pressure on food prices in Botswana.

Overall, the impact of El Niño-related rainfall deficits on cereal production in 2024 poses a significant risk to food prices in the region. It is important for policymakers and stakeholders to closely monitor the situation and take necessary measures to mitigate the potential increase in food prices in 2024/2025.

 

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