50% Gov’t shares at MDCB
Government’s stake in the Mining Sector, particularly in mining and mineral processing companies is being transferred to state owned Mineral Development Company Botswana (MDCB) and the process is almost complete, Minister of Mineral Resources, Green Technology and Energy Security, Sadique Kebonang has told parliament.
Mineral Development Company, MDCB (PTY) LTD is a company wholly owned by the Botswana Government. The mandate of MDCB is the effective management and optimization of the government mineral investment portfolio in the mining industry. Established in 2015, MDCB fully fleshed and resourced will manage all government shares in the lucrative mining sector. When delivering his Ministry Budget last week in parliament Kebonang said capacitating of the MDCB to fulfill its mandate was ongoing.
“An adequately capacitated MDCB will enable the company to effectively manage Government shareholding in mineral companies,” he said. The Lobatse youthful legislator told parliament that transactions for the transfer of assets from Government of Botswana to MDCB have been completed for Morupule Coal Mine, Debswana Investment SA and BCL.
“The process of transferring the remaining assets namely, Diamond Trading Company Botswana (DTCB), Debswana Diamond Company and Botswana Ash have just started,” revealed Minister Kebonang.He further told parliament that the process was expected to be concluded during 2017.
Under the Mineral Development Company it is expected that managing the government’s mineral sector portfolio would be made easy and more effective as the government stake and interest will be in the hands of a private sector setup that understands the processes and technical knowhow of profit making assets management better. “Capacitating the company is also ongoing with a board in place, the Chief Executive Officer already appointed and recruiting of other staff to build a reputable mineral & mining assets management corporation is in good progress,” Kebonang told WeekendPost in an interview this week.
When it commenced operations MDCB immediately took over government shares in BCL, a move said to have been easy as Botswana Government was the largest shareholder with a controlling stake of over 90 %. Mid 2016 before the shocking news of BCL liquidation MDCB bought out Botswana-DeBeers joint venture Debswana Mining Company from Morupule Colliery Mine (MC).
According to ongoing plans theCorporation willsoon sit in a boardroom with Anglo American as it isreplacing government in Debswana Diamond Mining Company, one of the wealthiest mining companies in the world. The Government of Botswana owns a 50% stake in Debswana which owns Jwaneng Mine which is the world’s richest mine by value and Orapa Letlhakane & Damtshaa Mines. Orapa plant is the World’s largest diamond processing plant. Once the transfer of Shares is Complete MDCBwill also control Botswana’s 50% stake in Diamond Trading Company, Botswana Ash as well as 15% of Botswana Government in the De Beers Group.
Mineral Development Company Management
Reginah Sikalesele-Vaka is the Board Chairperson of Mineral Development Corporation. Vaka is a renowned financial expert and insurance industry guru and the founding Chief Executive of Bona Life, Botswana’s 1st citizen owned Life Insurance Company. Vaka is expected to guide the Botswana mineral sector lucrative ship to diversity and maximum beneficiation. Once MDCB holds all government shares in the mining sector the company is expected to transform the entire mineral sector and also make investments to create wealth and increase state revenues.
Other MDCB Board members include former State President Sir Ketumile Masire’s son Mmetla Masire. Masire, an environmental engineering guru by academic qualifications is currently also handling a task with a day to day job of transforming Botswana’s national water supplier, Water Utilities Corporation (WUC ) which is currently holding a record of one the most perennial loss making businesses in Botswana.
Vaka also sits with Sebetlela Sebetlela, one of Botswana’s renowned mining experts. Sebetlela currently is chairman of BPC board, he has literally captained all mining companies in Botswana, from Orapa, Tati to Jwaneng just to name a few.Other MDCB board members include MatomeTsholetsa, Country Manager for Joy Global Inc.
The Chief Executive Officer of MDCB is Paul Smith, a renowned mining sector profit maximizing guru with footprint across Africa. Smith made his name in South Africa’s lucrative Platinum mining sector. Last year, immediately after government acquired a 50 % stake of Morupule Colliery Mine, Smith allegedly got the ball rolling to mastermind the liquidation of Botswana’s oldest Mining Company, BCL. BCL was put under provisional liquidation on October 9th 2016.Smith, according to media publications is one of, if not the highest paid CEOs in Botswana alongside BPC Chief Executive Officer with over P100 000 as take home per month.
Minerals sector performance
According to Minister Kebonang the mining industry experienced a global commodity price downturn over most of the first two quarters of 2016, in mainly the base metals and energy minerals. However, diamond markets improved during the first quarter of 2016 and this resulted in actual sales exceeding production due to sale of inventory from the year 2015.
“Mineral revenue (dividends and royalties) for 2016 increased by 63% when compared to 2015. The average percentage contribution of minerals to GDP during second quarter of 2016 was 21.8% compared to 18.4% in 2015,” parliament heard last week. Debswana Diamond Company produced 20.9 million carats in 2016 compared to 20.4 million carats in 2015. Sales were 26.3 million carats compared to 14.7 million carats in 2015. Revenue from these sales was USD 3.9 billion and this compared favourably to USD 2.4 billion in 2015.
Kebonang also reported that Boteti Mining Company produced 307 thousand carats in 2016 compared to 377 thousand carats in 2015. “Boteti upgraded their processing plant, which enabled them to recover exceptionally large stones. Despite the volatile diamond markets, Boteti mine continue to perform well,” he said.
Ghaghoo Diamond Mine produced 20.6 thousand carats in 2016. Lerala Mine resumed production in April 2016 and has so far produced 58.5 thousand carats and so far made two sales. The performance of base metal mines continued to decline in 2016 due to depressed commodity prices.
Copper and nickel prices showed improvement from US$ 2.06/lb to US$ 2.65/lb for copper and US$ 3.80/lb to US$ 5.20/lb for nickel respectively from December 2015 to December 2016. However the prices remain a challenge for the marginal operations. BCL and Tati Nickel Mining Company were placed under provisional liquidation in October 2016 due to severe financial distress.
Kebonang is of the view that there are notable developments in the energy minerals sub-sector as companies continue to show interest in the energy minerals. “For instance, A-Cap Resources and African Energy Resources Botswana have acquired mining licenses for uranium at Sese and coal at Makomoto, respectively.”
Kebonang said MDCB will be looking to invest inorder to diversify government revenue within the mining sector to reduce dependence in the Diamond segment. Soda Ash and Salt sales were 288.5 thousand tonnes and 435 thousand tonnes respectively in 2016 compared to 258.9 thousand tonnes and 368.9 thousand tonnes for corresponding figures in 2015. Currently Production of soda ash and salt continues to be constrained by low off-take.
Business
LLR transforms from Company to Group reporting
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.
Business
Botswana’s Electricity Generation Dips 26.4%
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.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
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.