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BIHL five-year strategy delivers growth

Botswana Insurance Holding Limited (BIHL), an investment group with interests in leading insurance and finance business across Africa continues to increases its market share and retain profitability amid increasing competition from new entrants and evolving regulatory and trading environments.

When delivering a review on the lapsing 5 year strategy which commenced in 2013 BIHL Group Chief Executive Officer (CEO), Catherine Lesetedi-Letegele noted that the strategy delivered sustainability and continued profitability for the group with increasing market share.
Letegele shared these at the BIHL 2018 interim results announcement in Gaborone this Tuesday.

The BIHL chief explained that since the commencement of the “The Tomagano” five-year strategy the company has been able to protect its leading status and position in all its businesses, penetrated new markets as well as introduced new segments. “When growing our businesses we did so closely monitoring profitability and risks in new investments, we did not just aim at increasing our market share without protecting profitability and sustainability,” she said.


She highlighted that in the past five years the Botswana Stock Exchange (BSE) listed BIHL acquired 25 percent stake in Nico Holdings based in Malawi, 50 percent stake in Botswana Insurance Company as well as increased share stake in Pan African outfits Letshego Holdings and Funeral Services Group. She also noted that BIHL disposed some assets that were no longer serving the interests of BIHL‘s strategic expansion targets.

Stakeholders were informed that BIHL increased efficiencies in group operations through establishment of a program office, group business development office, HR and IT administration and monitoring bases. “These business suits have delivered and continue to deliver efficiencies within the group, we also introduced new technologies across the group to harness synergies in ensuring that we run a well managed business and create a pull of individuals that are not just specialists but also generalists,” she said

Letegele also echoed that BIHL has within the five year strategy entered into collaborations with strategic corporate entities in the interest of the company and its workforce.  “We have signed agreements with the likes of Baisago University, sent our people to Gordon Institutes of Business Science, collaborated with Sanlam   and Stellenbosch University amongst others, all of this has been done under clear management processes. We recognized that BIHL does not exist in a vacuum as a corporate citizen, we believe we have executed well on the strategy,” explained Letegele.

She revealed that a new strategy will be launched in March next year. Since 2008 Botswana Insurance Holdings Limited has realized a growth in embedded , raking in  5 billion in profits before tax since  to date , paid 2.7 billion pula  dividends and paid just under 800 million pula  tax to Botswana government. Speaking to the half year results for the six month period ended June 2018, BIHL CEO explained that the Group continues to lead profitable operations amid trading challenges.

 “In our view as management we believe we gathered resilient set of results supported by growth in revenue, growth in value of new businesses, growth in operating profits, growth in group embedded value amongst others,” she said. Letegele explained that overall expenses have been well maintained to output flat growth.  “This is our dedication to ensure that we are managing cost by spending money on areas that we believe are investment geared rather than on consumption operations,” she stated.

 Letegele contend that BIHL raked in an impressive 54 percent increase in premium income, because of new products, strategic partnerships, and schemes adding that the group administration system implemented during the half year under review also contributed to Group’s impressive overall performance. Letegele explained that return on group embedded value grew from 8.3 percent to 17.6 percent attributable to increased value of new business which expanded by 14 percent as well as the fact that the company didn’t incur any impairment.

On segment and subsidiary performance, Letegele  revealed  that  the Life insurance business which is headlined by BIHL largest subsidiary, Botswana Life gathered and increase in Net Premium Income for the first half of 2018  with increase from P1.1 billion in six month  ended June 2017  to P1.15 billion during period  under review. Still under Life Insurance Business total New Business written grew by 7 percent underpinned by strong single premium income performance.

Recurring premium income grew by an impressive 9 percent from P605 million in June 2017 to P659 million in June 2018.  “This line represents a sustainable source of profits in the long term at group level,” she said. The value of new business, which represents the present value of future profits from new business premiums written during the period, increased by 14 percent from prior year on the back of impressive new business volumes from the group lines and term assurance policies.

 Operating profit grew 15 percent on prior year mainly because of good new business volumes from the group line, low new business strain and cost savings from the streamlining exercise carried out second half of last year. Operating profit increased from P142 million in June 2017 to P164 million in June 2018.

Under the Botswana Insurance Fund Management (BFIM) Letegele shared that despite the challenges of mixed economic performance reflecting both international economic uncertainty as well as domestic challenges BIHL’s asset management outfit managed to retain mandates and existing clients. However BIFM group’s overall operating profit in the 2018 first half showed a decline of 8 percent year on year.

BIHL explained that this is due to direct result of Zambia operations not performing as expected because of unrealized activities that were anticipated to take place in the year 2018. “Despite the current difficult trading conditions, where we have witnessed several new entrants into the market and pension funds adopting new strategies of splitting mandates, BIFM has continued to show resilience and continued to gain market confidence and maintain its position as a leading Asset Management Company,” explained Letegele.

Total Assets under management including Zambia’s P4.7 billion stands at P26 billion. Regarding the Short term insurance business, Letegele explained that the segment continued to face pressure on the top line resulting in an 8 percent decline in income compared to prior year.
Despite the top line pressures, Legal Guard has achieved an operating profit of P1.8 million to June 2018 up from a P0.9 million loss for the same period last year.

“With the introduction of a new core operating system last year, the business has been able to provide an enhanced platform for claims administration which has resulted in turn in a decline in claims costs,” she said. Botswana Insurance Holding Limited Board Chairperson, Dambe Groth said BIHL Group remains well positioned in terms of capital management and solvency.

She explained that the board has confidence in the Group’s ability to maintain dividends at this level while ensuring that its capital position remains solid and aligned with future capital requirements across the Group, at sustained levels of Return on Group Equity Value.
The Group’s embedded value increased to P4.37 billion as compared to the P4.31 billion in the half year ended June 2017. The embedded value allows for P288 million dividends paid during the period

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Business

The  Bulb World CEO selected for Africa’s prestigious award

22nd July 2021

The Bulb World Chief Executive Officer (CEO) and entrepreneur, Ketshephaone Jacob has been selected as a 2021 Top 50 Africa’s Business Hero.

Jacob was chosen from a pool of 12,000 applicants – many of whom are highly-skilled and accomplished entrepreneurs.

Africa’s Business Hero, sponsored by technology entrepreneur, Jack Ma, aims to identify, support and inspire the next generation of African entrepreneurs who are making a difference in their local communities, working to solve the most pressing problems, and building a more sustainable and inclusive economy for the future.

The initiative is as inclusive as possible and applications were open in English and French to entrepreneurs from all African countries, all sectors, and all ages who operate businesses formally registered and headquartered in an African country, and that have a 3 year-track record.

Every year, finalists are selected to compete in the ABH finale pitch competition and participate in a TV Show that will be broadcast online and across the continent.

The finalists will compete for a share of US $1.5 million in grant money.

The Bulb World, is home grown LED light manufacturing company, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017.

The Bulb World operate from the Special Economic Zone of Selibe Phikwe. Early this year, The BulB World announced its expansion to South Africa, setting in motion its ambitious Africa expansion plan.

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Business

Mining production down 12 % IN Q1 2021

14th July 2021

During the first quarter of 2021, production in Botswana’s economic nucleus- the mining sector contracted by 12 percent. This is according to Mining Production Index released by Statistics Botswana this week.

The country’s central data body revealed that Index of Mining production stood at 74.4 during the first quarter of 2021, showing a negative year on-year growth of 12.0 percent, from 84.6 registered during the first quarter of 2020.

The main contributor to the decline in mining production came from the Diamonds sector, which contributed negative 11.7 percentage points. Soda Ash was the only positive contributor in the mining production, contributing 0.1 of a percentage point. However Soda Ash’s contribution was insignificant to offset the negative contribution made by Diamonds.

The quarter-on-quarter analysis by Statistics Botswana experts shows an increase of 16.3 percent from the index of 64.0 during the fourth quarter of 2020 to 74.4 observed during the period under review.

Diamond production decreased by 12.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. The decrease was as a result of planned strategy to align production with weaker trading conditions mostly linked to Covid-19 protocols restrictions.

Botswana’s diamond sector is underpinned by Debswana, the country’s flagship rough producer- a 50-50 joint venture between government and global mining giant De Beers Group. The other producer is Canadian based Lucara Diamond Corp through its wholly owned Karowe Mine which is a relatively small but significant production that has made a name for itself worldwide with rare diamond recoveries of unprecedented carat size.

On the other hand, quarter-on quarter analysis shows that production has improved, registering a positive growth of 17.5 percent during the first quarter of 2021 compared to the preceding quarter – 2020 Q4.

Though production was significantly lower in the first quarter, the two producers ended Q2 with rare diamond recoveries. Debswana early last month found the world’s third largest gem diamond – weighing 1098 carat at Jwaneng Mine, its flagship gem quality diamonds producer, also regarded the world’s richest diamond mine.

A week later Lucara  announced its second biggest recovery, the 1174 carat clivage near-gem dug from its Karowe Mine. The diamond is the world third in carat size after the plus-3000 carat Cullinan found in South Africa back in 1905 and the 1758 carat Sewelo unearthed at its Karowe mine in 2019. Debswana and Lucara are investing billions of pulas in underground mining projects to extend the life of its mines, Jwaneng & Karowe respectively.

In terms of Gold which is produced at Mupani mine near Botswana’s second city of Francistown output decreased by 17.9 percent during the first quarter of 2021 compared to the same quarter of the previous year.

Similarly, quarter-on-quarter analysis reflects that production decreased by 21.4 percent during the first quarter of 2021, compared to the preceding quarter. The decrease was as a result of the deteriorating lifespan of the mine as well as the impact of COVID-19 which slowed down the mining activities.

Soda Ash production increased by 11.1 percent during the first quarter of 2021 compared to the same quarter of the previous year. In terms of quarter-on-quarter Soda Ash production also showed an increase, picking up by 2.1 percent during the period under review. The increase in production is attributable to the effectiveness of the plant following refurbishment which occurred in the third quarter of 2020.

Salt production decreased by 34.0 percent during the first quarter of 2021, compared to the same quarter of the previous year. Similarly, the quarter-on-quarter analysis shows that salt production registered a decrease of 32.9 percent during the period under review. Both salt and Sodash are produced by partly government owned Botswana Ash (BotsAsh) operating from Sowa town near Makgadikgadi pans.

Coal production decreased by 11.2 percent during the first quarter of 2021, compared to the corresponding quarter of the previous year. The decrease was attributed to the reduced demand from Morupule B Power Station following the remedial works being undertaken, as one boiler was in operation during the period under review.

Although production fell, Statistics Botswana says there was no shortfall in supply of coal due to stockpiling. On the other hand, the quarter-on-quarter comparison shows that coal production increased by 20.4 percent compared to the preceding quarter.

Botswana’s flagship coal producer is Morupule Coal Mine; a wholly state owned mining company located in Palapye producing primarily for Botswana Power Corporation (BPC)’s power generation plants Morupule A & B.

The other coal producer is Botswana Stock Exchange listed Minergy which operates a 390 MT Coal Resource mine in Masama near Media in the southwestern edge of the Mmamabula Coalfields.

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Gov’t awards mining licence for Gantsi Copper Mine

14th July 2021
Moagi

Department of Mines in the Ministry of Mineral Resources, Green Technology & Energy Security has awarded mining licence to Tshukudu Metals-a subsidiary of Aussie firm Sandfire Resources ,giving the company a green light to start piecing the ground at its Motheo Copper Project near Gantsi.

Lefoko Moagi, minister in charge of mineral resources in Botswana confirmed to weekendpost on Tuesday. Minister Moagi revealed that “the licence has been approved , but Sandfire Resources as a listed company will report to its shareholders and investors then make an official public statement” he said.

Based on a forecast copper price of US$3.16/lb (reflecting current long-term consensus pricing) the Base Case 3.2Mtpa – Ghantsi copper project is forecast to generate US$664 million (over P7 billion) in pre-tax free cash-flow and US$987 million (over P10 billion) in EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), at a forecast all-in sustaining cost of US$1.76/lb over its first 10 years of operations.

In December 2020, the Board of Sandfire Resources approved the commercial development of the Motheo Copper Mine located in the Kalahari Copper Belt in Botswana, marking a key step in its transformation into a global, diversified, and sustainable mining company.

Tshukudu Metals Botswana (Pty) Limited (Tshukudu) a 100% owned subsidiary will be the owner and operator of the Motheo Copper Mine which is scheduled to produce up to 30,000 tonnes per annum of copper in concentrate over a 12 year mine life.TMB is targeting development of its Motheo Copper Mine in 2021 and 2022, with its first production in 2023.

GOVERNMENT NOT TAKING UP 15 % STAKE ON OFFER

Beginning of this year presentations were made to the Department of Mines as part of the Mining Licence approval process and to the Ghanzi Regional Council, additional information was requested by Department of Mines in April and was duly supplied by the company.

As part of the Mining Licence approval process, the Government of Botswana has a right to acquire up to a 15% fully contributing interest in all mining projects locally. Quizzed on whether government through Mineral Development Corporation Botswana (MDCB) would be taking up stake in the project Minister Moagi said, “No consideration is being made on that regard”.

“Government is not considering taking up a stake in the Ghantsi Copper Mine project, every opportunity is assessed on all risks, but Government makes money all the while from leases, taxes and royalties, remember if you take stake you are liable for liabilities of the project as well,” Moagi said.

MINING CONTRACT

Last month Sandfire announced that it has awarded over P5 billion worth mining contract to African Mining Services (AMS), a subsidiary of Perenti, to deliver the open cast operation.

The contract, which has an estimated value of US$496 million (over 5 billion), is the largest single operational contract for the new Motheo Project covering a period of 7 years and 3 months, with provision for a one-year extension.

The contract according to Sandfire Resources was awarded following a competitive 3-stage tender process which saw a number of key factors taken into consideration when selecting the preferred contractor.

These included Citizen Economic Empowerment, safety culture, equipment suitability and availability, commercial terms and identified improvement opportunities. Under the terms of the contract, AMS has agreed to form a 70:30 Joint Venture with a suitable local Botswana partner or partners.

The JV is expected to be finalized ahead of commencement of mining in early 2022. African Mining Services has been operating in Africa for over 30 years. AMS’ parent company, ASX listed diversified mining services group Perenti, already has a presence in Botswana through Barminco, their underground mining division, at the large-scale Khoemacau Copper Mine located 200km north-east of Motheo.

Last month Sandfire executives said the award of the open pit mining contract represents another key milestone in advancing the Motheo Project towards production, with all components of the contract in line with the key parameters outlined in the December 2020 Definitive Feasibility Study (DFS).

The company said full-scale construction of the US$279 million (over P 3 billion ) mine development is expected to commence immediately upon receipt of the Mining Licence, with mining scheduled to commence in early 2022 ahead of first production in early 2023. This week Sandfire Resources advertised over 10 positions in calling on applications from geologists, mining engineers and geotechnical engineers.

The Motheo mine has an initial mine life of 12.5 years based on production from the T3 pit. The initial development is expected to generate approximately 1,000 jobs during the construction phase and 600 direct full-time jobs during operations, with at least 95% of the total mine workforce expected to be made of up of Botswana citizens.

Later in the week Sandfire Resources announced in the company website that it has received the licence. Sandfire’s Managing Director and CEO, Mr Karl Simich, said the award of the Mining Licence represented a major milestone that would see a significant increase in construction and development activities on site.

“We are absolutely delighted to now be in a position to move to full-scale construction at Motheo, with our construction crews expected to mobilise to site over the next few days. I would like to thank the Government of Botswana for their support throughout the approvals process, which will see Motheo come on-stream in 2023 as one of very few new copper mines commencing production globally.”

Simich said the project is expected to generate approximately 1,000 jobs during construction and 600 full-time jobs during operations, and represents the foundation for Sandfire’s long-term growth plans in Botswana.

“Our vision is that Motheo will form the centre of a new, long-life copper production hub in in the central portion of the world-class Kalahari Copper Belt, where we hold an extensive ground-holding spanning Botswana and Namibia,” he said.

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