No future for mining beyond 2050 – experts
Business
Botswana‘s economic future is persistently put in doubt by some international commentators. As far as national income generation and provision of sustainable jobs are concerned, there are no guarantees.
Currently the mixed structured open economy is largely dependent on mineral revenue mainly from the diamond sector for foreign income generation and the government dominates, coordinates and regulates almost every sector of the middle income economy that Botswana is. This current setup in which the diamond sector alone is responsible for a quarter of the national treasury and is the largest single private sector employer is constantly viewed as an economic danger looming.
This sentiments were echoed again recently at a discussion hosted by the World Bank Group where they also released Botswana Mining Investment & Governance Review report. According to reports from the gathering it was emphasized that Botswana needed to move with speed and unearth other sources of revenue and income generation to breathe life into an economy that could otherwise be lifeless in a decade or two to come.
Specially Elected Member of Parliament, Ms Bogolo Kenewendo weighed on the same, urging that plans for a Botswana beyond Mining need to unfold as soon as yesterday. “We need to plan for a future that has a broader and diverse economy with a variety of sectors contributing significantly to the country‘s revenue pot,” she said. Kenewendo, a shrewd economic expert was also quoted saying that it was no longer a matter of choice to diversify the economy but an obligation.
“We need to find ways for mining revenue to trickle down to the rest of the citizenry and also increase the impact of mining revenues on areas where mines in Botswana are situated. Business linkages and cluster developments need to show evidence at rich mineral areas,” she said.
According to the youngest legislator in parliament, Botswana needs to devise ways in which mining revenues would benefit the rest of citizenry apart from free basic service, she said that would be archived by sharing national wealth with its people and wealth creation at an ordinary individual level.
Though mineral revenue increased by 63 % in 2016 financial year, with government pocketing tens of billions from mineral tax, dividends and mining royalties and recent figures presenting a positive outlook for most companies and stable profitability for Botswana’s largest mining company Debswana, fluctuating market commodity prices and closure of some mining companies raise concern over an uncertain future for Botswana’s economy.
2016 saw liquidation and shut down of some mining companies especially copper and nickel companies due to low commodity prices. BCL Mine, Tati Nickel, Mowana are some of the victims. Meanwhile some have been reported to be on the brink of reopening soon.
Debswana’s Damtshaa Mine has been put under care and maintenance. Debswana also reported a fortnight ago that their Letlhakane Mine, popularly known as DK 1, has reached the end of its lifespan with tailings project to take the operations not beyond 20 years to come.
Already prospected kimberlitic and precious deposits at the world’s largest diamond mine by value, Jwaneng Mine place the mine not beyond 2034 (Cut 8). All these factors and others which experts term unforeseen economic circumstances, expose Botswana to be vulnerable to a possible economic crush in a few decades to come unless something major is done to transform the economy and diversify national revenue sources.
At the Mining Investment & Governance Review report, Kenewendo observed that the World Bank Group’s Botswana Mining Investment and Governance Review report was expected to help government improve the sector’s performance and to attract further investment.
According to the review by the world economic think tank, even the Mining sector itself is poorly managed here in Botswana.
It was pointed out that ordinary Batswana citizens and remote area settlers were just spectators in the Mining industry wealth creation symposium. The World Bank observes that Mining contractors and big money business partnerships in the mining sector are largely enjoyed by foreign owned enterprises which collect millions and invest them across borders or in their native countries.
The review indicates that Botswana Government regulations and policies are not structured in a way that locals benefit from doing business with mining companies especially in areas of procurement, supplies, as well as human resource as foreign national continues to enjoy preference in highly technical and skilled areas of mining human resource.
Permanent Secretary in the Ministry of Mineral Resources, Green Technology and Energy Security, Mr Kgomotso Abi agreed with the sentiments adding that Botswana needs to strengthen performance and address issues of concern to investors.
“We need to build an environment that will stimulate more investment in mineral extraction,” he said.
World Bank Country Representative, Ms Elene Imnadze said even though the mining sector immensely contributed to the development of Botswana, more still needs to be done to ensure mineral beneficiation, as well as secure a future for Botswana beyond mining.
“Other mines, more especially the copper ones, have had to close down due to low commodity prices. The copper mines, including BCL which is under provisional liquidation, remain closed even though base metal prices are beginning to increase slightly,” she continued.
According to the expert, government has to find ways of diversifying the economy and the capital generated from the mining sector should be invested into sectors that would be sustained beyond mining. She said this could be done by employing more people, building local suppliers and strengthening small and medium enterprises. Botswana’s Mining Investment and Governance Review was compiled to help strengthen the mining sector’s governance, investment, environment and development impact in Botswana.
It reviewed sector performance from the perspective of three main stakeholder groups -government, investors in the mining value chain, and civil society and it identifies gaps between declared and actual government policy and practice. In 2015 Government of Botswana established the Mineral Development Company as a wholly state owned independent company to manage Botswana is multibillion Pula mining sector portfolio.
The company which is still undergoing full setting up, resourcing its personnel and defining its area of business is expected to manage all government shares in the mining sector and also transform the sector to fully benefit Batswana and the economy. Since establishment MDCB has being facing challenges of formative obstacles especially in the area of securing prominent personnel for the sensitive mandate it’s geared to deliver. Recently MDCB was reported to have licked out its controversial CEO Paul Smith who is constantly blamed for liquidating Botswana’s oldest copper mining giant BCL Mine.
Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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