Botswana Stock Exchange (BSE)-listed Minergy Limited, a coal mining company, today released its inaugural final results for the year ended 30 June 2017, reporting a loss per share of 6,76 thebe.
The company embarked on a capital-raising exercise in the first quarter of 2017, raising BWP70 million via a private placement prior to listing on the main board of the BSE in April this year. Minergy CEO, Andre Boje commented that, “A lot of work had been done and continues to be done since inception. Our focus shifted to coal production for supply to the regional and export markets rather than coal for power generation. We believe the narrative around South Africa requiring imported power will not come to fruition in the foreseeable future, if at all. This is supported by the announcement that there a surplus of 9,000 MW capacity and that South Africa has signed off-take agreements with Botswana and other SADC countries.”
Boje added that a highly-experienced team had been brought on board to accelerate the process of refining and understanding the full potential of the Masama resource. “74 diamond core boreholes and 22 reverse circulation boreholes have been drilled, totalling 5,570 metres over an area of 147 square kilometres. From this a revised Competent Persons Report (CPR)1 is being finalised, mine plans are in place, markets have been identified and off-take agreements are being discussed.”
Boje commented that the various requirements and obligations relating to the submission of a mining license application are also being attended to, with the target date for submission being the end of September 2017. “We’ve engaged extensively with the various government departments and the response has been most encouraging, leading us to believe that the license should be granted by the second quarter of 2018.” Requests for information (RFI) have been issued to identify qualified suppliers of the processing and wash plant and for mining contractor. This process is expected to be complete by the end of October 2017.
Talking about the industry, Boje said that “Renewable energy has a role to play however has been proven unreliable for base load electricity supply, with the only alternatives being nuclear, hydro and coal. “Nuclear is prohibitively capital intensive, hydro is hamstrung by global water shortages, which leaves coal-fired power generation. In addition, a large volume of coal continues to be used in numerous industrial processes other than power generation. Many of these processes are dependent on coal with no practical substitutes,” said Boje.
This is the first year that the group expensed certain operating expenditures, which were mostly incurred at the holding company level, which acts as an investment and holding company and sources funding for the group. Cash utilised in operations amounted to a loss of BWP9,4m million, with Exploration and Evaluation Asset Expenditure also showing a loss of BWP5,6 million.
In total BWP72 million was raised via the private and public placement of shares, with the cash being used to finance operational expenditures and further exploration and evaluation of the Masama Coal Project covered by the Prospecting License.
Andre Boje, commented that without capital partners a project of this nature would not get off the ground, and that the major investors remain committed and supportive of the project going forward.
The demand for coal in the southern African region continues unabated with prices escalating on an ongoing basis. “The July 2017 McCloskey Coal Report highlights that South African domestic prices were 51% higher than the same period in 2016 and that there is strong demand from the cement, industrial and paper industries.”
Boje said this situation is driven by demand exceeding supply as producers are focused on fulfilling their take or pay export agreements together with the lack of investment in new projects or expansion of existing production facilities. “The climate of under-investment in South Africa is blamed partly on political interference in the mining sector and the rise of resource nationalisation.”
Initial production at Masama is planned for 1.2 million tons of saleable coal per annum ramping up when required, as the project will have a capacity to process 3 million tons of run of mine coal per annum from first commissioning.
Export Market Whilst the initial project plan focused entirely on the 1.2 million tons to the regional market, attention must be paid to the export market as the API4 index price for seaborne thermal coal has risen 67% since 2016 and currently trades at $82.00 – $84.00 per ton.
“The international traders forecast that this trend could continue, albeit at slower rate, due to production cutbacks in China and delayed investment in greenfield coal projects. Noteworthy is significant investment by large multi nationals in coal projects in Australia which highlights their bullish view on coal going forward.” Boje added that Botswana has a significant role to play in the seaborne thermal coal market due to its large untapped coal resources and proximity to the South African coal export infrastructure.
He said that logistical challenges to exploit this opportunity need to be addressed and the company has had extensive engagement with Botswana Rail and Transnet Freight Rail to address the issue of getting coal to port. “The engagements have been extremely positive with an apparent will from all parties to resolve this which is expected to result in full utilization of the project capacity.”
Boje concluded by saying that following the successful listing on the BSE in April, the proposal was to explore a listing on the Johannesburg Securities Exchange (JSE) and list during 2018. “The board has also deemed it prudent to investigate the Australian Stock Exchange and the London-based Alternative Investment Market in addition to the JSE. Shareholders will be advised on progress on this matter in due course.”
Banking on Your Terms: Exploring the World of Self-Service Banking
In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?
Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.
This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.
Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.
Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.
Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.
At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.
With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.
Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services
Botswana records over P6 billion trade deficit
Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.
In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.
Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.
The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.
On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.
The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.
Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.
Business sector optimistic about 2024
The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.
The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.
Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.
All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.
Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.
During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. “However, firms’ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bank’s 3 – 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,” reads the survey report in part.
However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.
In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.
On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.
Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.