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Friday, 19 April 2024

Botswana, China want to broaden the P2.6 billion trade

China, the world‘s second largest economy after the United States in one of Botswana’s key economic partners. China spends over 300 million pula annually on Botswana’s key economic resource, diamonds.

On the other hand figures indicate that Botswana imports goods predominantly in the textile and electronic sectors worth over 2 billion pula yearly. China is also a major player in Botswana’s construction industry, especially in public infrastructure development.
The World’s number 2 was underscored as a key partner in Botswana’s economic transformation quest by the Minister of International Affairs and Cooperation Dr unity Dow at the Botswana-China business forum in Gaborone this Monday.

The forum was attended by 70 business delegates mobilized by the China Council for the Promotion of International Trade (CCPIT) drawn from several sectors amongst them; Agribusiness, Transport, Construction, Energy, Manufacturing, Financial Services, with keen interest to explore trade and investment opportunities in Botswana.

Minister Dow noted that the objective of the forum was to strengthen Botswana and China's bilateral relations; facilitate increased trade and businesses between the two nations; and promote foreign direct investment in both countries and to create a platform for the formation of mutually beneficial business partnerships between Botswana and Chinese entrepreneurs and companies.

“The business community gathered here this morning understands the imperatives of this joint effort, and share in the vision of freeing our people from unemployment and under-development,” observed the minister. In 2016, Botswana exported goods worth US$33 million to China which were predominantly diamonds whilst during the same period China exported to Botswana US$233 million worth of goods such as Electrical Equipment, Boilers, Televisions, Footwear, Bedding, Textile and Garments as well as mechanical appliances.

“Therefore Botswana runs a huge trade deficit with China. You will all concur that these figures are low and present an opportunity to further boost trade between our respective countries,” noted Minister Dow. Minister Dow also reiterated that Botswana was keen to attract investment from China in the construction Energy, Manufacturing, ICT, Innovation led business, Textile amongst other where China had comparative advantage.

Currently investment in the Manufacturing sector from Chinese companies in Botswana is in excess of BWP 600million creating more than 1000 job opportunities.  “The important part in the broadening of these relations is the issues around VISAs. We will be engaged in the facilitation of official or diplomatic travel by removing the VISA requirements for those passport holders. We will also be facilitating travel by regular travelers as tourism is important to us. Our slogan is ‘Our Botswana Your Destination’, and we want to make Botswana the world’s destination,” Dow said.

Also at the forum the two countries through their investment promotion agencies signed Memorandum of Understanding (MoU) to strengthen trade and investment ties.
 Botswana through its investment wooing vehicle Botswana Investment & Trade Center (BITC) alongside private sector mouth piece Business Botswana (BB) did court  the China Council for the Promotion of International Trade (CCPIT) on the areas of infrastructure development, manufacturing, financial services, energy, mining, agribusiness and Information Communications Technology (ICT).

Chief Executive Officer of BITC, Mr Keletsositse Olebile noted that through Botswana Special Economic Zones Chinese investment companies can explore abundant resources and opportunities that Botswana was sitting on. He said one of Botswana’s abundant resources, coal was increasingly demanded by the global market despite the world shift to green energy. China is the largest consumer of coal and early this year it prospected to up its coal demand. The country is also producing its own coal but cannot meet demand.

China is the largest coal consumer, accounting for 49% of the world's total coal. The next largest, the United States, consumes 11% of the world's total. China's coal consumption increased by more than 2.3 billion tons over the past 10 years, accounting for 83% of the global increase in coal consumption.

In 2017, China’s micro-economy has been growing steadily in a rising momentum, and coal consumptions in main industries like power, heating supply, steel & iron and chemicals (excluding building materials) have kept rising. Decapacity in coal industry continued moving forward, outstripping the targeted tasks set in 2017 setting high prospects for increased demand on this year.

Speaking at the MoU singing ceremony China Ambassador to Botswana, Zhao Yanbo said the China-Botswana economic and trade cooperation was a win-win principle with a common goal of improving the people's livelihoods. Meanwhile the Chief Executive Officer of BITC, said CCPIT, BITC and Business Botswana collaboration would provide a platform for mutually beneficial business partnerships between Botswana and Chinese companies.

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Business

LLR transforms from Company to Group reporting

9th April 2024

Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.

The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.

At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.

The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.

“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.

The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.

 

In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.

“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.

Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.

 

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Business

Botswana’s Electricity Generation Dips 26.4%

9th April 2024

The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.

Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.

Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.

Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.

Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.

The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.

The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.

In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.

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Business

MMG acquires Khoemacau in a transaction valued at P23Bn

9th April 2024

MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.

On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.

Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.

In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).

On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.

MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.

On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.

 

The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.

On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.

The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.

Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.

Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.

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