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Gaborone Hilton Hotel gets the nod

The Botswana Public Officers Pension Fund (BPOPF) and Messidor Investment have been given a nod by the Hilton Group to go ahead with the construction of the hotel worth P300 million. The approval comes after the Hilton Group was impressed with the mock-up room that was constructed to display the interior design of the rooms.


The Mock-up room was commissioned by the group to ensure that the new hotel will have the same look and feel like other Hilton hotels so as to maintain consistency. Furthermore, the mock-up room was necessary for the Hilton Group to ascertain if the first Hilton Hotel in Botswana meets their standard global brand. At a press briefing, it was revealed that the Hilton Group has inspected the mock-up room and gave a go ahead after making comments and suggestions.


“We have reached a milestone with our Hilton Hotel project following approval by the Hilton Group. The project now commences and we will be working on a strict schedule,” said Ms. Boitumelo Molefe, BPOPF CEO. Ms. Molefe was accompanied by Mr. Victor Senye and Harry Fleetwood-Bird, both from Messidor Investment, the company that will be managing the project. Mr. Senye reiterated the BPOPF CEO’s words that they have reached a real milestone in terms of the development of the hotel.


“We have met the specifications by the Hilton Group through our mock-up room and they have approved the specifications as it meets the set quality assurance standards,” explained Mr. Senye before adding that following the Hilton Group’s review, the real work now begins. “Through the mock-up room we gave them a feel of the product. Now we have to pull up our sleeves and deliver.”


The mock-up room will be demolished as construction commences in full force. Messidor Investments has tapped GM Five as the main contractor for the development of the two buildings. According to Mr. Senye, the development consists of offices and the hotel with both structures to be built concurrently. It was also revealed that the envisaged 4-star hotel will have a total of 153 rooms made up of 6 suites and 147 standard rooms. Situated at the heart of the nation’s new central business district (CBD), the Hilton Hotel will attract travelling business people, and the addition of offices by the developer will enhance convenience.


The media was taken on the tour of the mock-up room to give them exclusive view of how the hotel rooms will look after construction is complete. During the inspection of the room, it was also explained the process that went behind building the structure. Mr. Harry Fleetwood-Bird says in constructing the hotel, the Hilton Group’s brand standards had to be adhered to so as to maintain consistency with rest of the Group’s hotels.


“The Hilton Group is strict on its brand globally, and they want to maintain the same look and feel. Even the sizes of the rooms are determined by the Hilton Group. This mock-up room has been designed to match the Group’s specifications.” Mr. Fleetwood-Bird said that although it is a 4-star hotel, the materials to be used in the rooms are of the highest quality, a development which easily puts the new hotel on par 5-star hotels. Perhaps to emphasize his point, Mr. Fleetwood-Bird said the doors to be used are one of a kind and not readily available in Africa, and indication of the Hilton Group’s strict specifications on maintaining consistency. 


The hotel which is expected to be completed by end of November will feature state of the art technology that will ensure that the hotel is eco-friendly and they have gone to great lengths to ensure that each room will be sound proof to prevent disturbances to guests.
“Of course in a project of this size there will invariably be delays but we are fortunate not to have experienced major delays except for the recent rains but we are in talks with the main contractor to push the schedule up which might involve working at night,” explained Mr. Fleetwood-Bird.


It is expected that after the main contractor finishes with the construction in November, the second phase will involve interior fittings and commissioning of the hotel staff, and then followed by a testing phase to see if everything works according to plan.  The process is estimated to take three months, meaning the hotel will be fully operational in early 2018.


Meanwhile, Mr. Fleetwood-Bird says by meeting the Hilton Group’s specifications regarding the development of the hotel, they have not deviated from BPOPF’s clear instructions which required that there should be strong citizen participation in the project. “BPOPF is strict about citizen participation, and that involves buying locally. We have more than 300 citizens on site,” he said and added that a balance had to be made in relation to meeting Hilton Group’s demands and those of BPOPF.


The P300 million Hilton project was commissioned in 2015 after BPOPF signed an agreement with the Hilton Worldwide for the first Hilton Hotel in the country. Around that time, it was announced that the 4-star hotel will be called Gaborone Hilton Garden Inn Hotel and the project was to be managed by Flemming Asset Management. However relations between BPOPF and Fleming broke down last year amid allegations of Flemming sidelining local contractors, an occurrence that went against BPOPF’s wishes.


Matters soon took a turn for the worst when BPOPF cancelled contracts worth billions with Flemming on the back of a financial scandal that hit the company. There were unconfirmed allegations that BPOPF’s funds managed by Flemming might have been exposed to unnecessary risk. Despite the fall down between the parties, BPOPF agreed to keep Flemming as a project manager for the hotel development.


The decision was short lived as BPOPF ended up severing all ties with Flemming, announcing that the Fund has been working with Fleming on transitioning the development of the Hilton to its property manager Messidor Investment. Ms. Molefe at the time explained that given the magnitude of the project, it was critical that the transition is as smooth as possible.


Messidor Investment, a joint venture between Botswana Insurance Fund Management (BIFM), Stocker Fleetwood-Bird and Haighs Investments, is a special purpose vehicle responsible for managing the property portfolio of BPOPF. On the other hand, BIFM is a subsidiary of the financial giant Botswana Insurance Holdings Limited. BIFM also manages some of BPOPF’s billions. Haighs Investments is a property development company managed by Mr. Senye, a former BIFM CEO. Stocker Fleetwood-Bird specialises in property consultancy, development and valuations. The company is partly owned by Mr. Fleetwood-Bird.

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Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.

 

In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

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Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.

FINANACIAL REVIEW

In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”

COAL SALES AND MINE PERFORMANCE

Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”

OUTLOOK

According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

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