Following the decision by the Botswana Public Officers Pension Fund (BPOPF) to move some of its services in-house and terminate the Alexandra Forbes administrative functions’ contract, Botswana’s richest fund and arguably one of the wealthiest institutions in the land is set to bolster its wealth accumulation and asset expansion business.
Speaking to their 5 year strategy set to commence next year January, the BPOPF Chief Executive Officer (CEO), Boitumelo Molefhe indicated that by the end of the 5 years in 2022, the Fund’s treasury in assets worth, will be sitting at a whopping 90 billion pula.
Speaking at a press briefing recently, Molefhe said BPOPF will to do so simultaneously empowering Batswana to venture into the asset management business. She said her organization will play its part by awarding new contracts to asset managers that have at least 25% citizen ownership, and 50% locals’ representation in their Boards, and having a minimum of 70 % Batswana in their company executive management.
Molefhe who is a former Finance Chief at Debswana Pension Fund observed that the new guidelines are just the starting point for more citizen empowerment initiatives in the lucrative capital assets and fund management industry. She added that they will review the guidelines from time to time in order to give citizen owned firms more share in the business.
“The 25% is just the starting point, going forward the plan is to continuously review the threshold upwards. The intention is not to leave anyone out but to empower citizens. We have a lot of talented citizens that are doing most of the work for fund managers but are not appropriately remunerated,” she said.
Molefhe explained that they are not just about the talk, emphasizing that there will be a clear compliance framework to ensure robust implementation of these guidelines. “As for the fund managers already mandated with our assets, they will have to comply and meet our new guidelines, if at all they desire to be reengaged because most of their contracts end around February 2018,” she said.
BPOPF is of the view that their assets and capital should be managed by locals as the wealth is generated locally from Batswana public servants. “We cannot have most of the profits from our fund being taken outside the country, if a newly mandated fund manager doesn’t comply in the first year, we will reduce the size of their mandate by 10% and if non-compliance stretches to the second year, then BPOPF will withdraw the mandate totally,” she said.
BPOPF currently does millions worth of business with BIFM, Investec, African Alliance just to mention but a few. The inspiration that Batswana can bite big in the capital asset management business comes from Afena Capital, one of BPOPF mandated fund managers taking care of millions worth of assets and is 100 % owned by Batswana.
In addition, BPOPF revealed that they have half a billion pula ready to finance local asset management startups. “We are willing to inject 500 million pula to finance this bid to see more citizens venture into the capital investment management industry, we will also incubate these businesses to see them through until full establishment as they service back our loans,” Molefhe explained.
She added that they will do so by handholding fledging firms that have less than a billion pula asset management mandate, only those with 100% citizen ownership and at least 50 % locals in senior management. “The incubation is open to all asset classes and we want the businesses to eventually stand on their own and compete in the big league while also transferring skills to locals,” she added.
THE FIVE YEAR STRATEGY
Unpacking the 5 years strategy of which the new guidelines will apply to, Molefhe explained that their asset base has grown from P51 billion in 2015 to P55 billion today. However she noted that although the Fund asset value grew to P55 billion, total returns for its active and deferred members fell to 4.25% from 13.73% in the previous year due to the volatility in both the domestic and global markets. Currently BPOPF has 58% of its portfolio invested offshore.
“We will invest more in private equity and other asset classes such as infrastructure and property to diversify our portfolio amid low growth in the stock and bonds markets,” she said. According to Molefhe, the BPOPF has also appointed a German company, Monrovia Capital as its new private equity fund manager, effective January 2017.
BPOPF is the largest in Botswana housing over 150 000 members and have over 23 billion pula asset worth in Botswana. One of the Fund’s traditional cash spinning investments includes local mobile network giant, Mascom Wireless. BPOPF is the single largest institutional investor on the Botswana Stock Exchange (BSE) owning a significant stake in 19 of the 22 companies listed on Thapelo Tsheole’s P48 billion domestic stock market.
The Fund further owns 16 % of stake in Barclays Botswana, around 25 percent in Botswana Insurance Holdings Limited (BIHL), the diversified financial services firm which has a major stake in other major companies such as the titanic micro-lender, Letshego Holdings Limited and Funeral Services Group (FSG).
Furthermore, Molefhe’s investment drive saw BPOPF recently acquiring shares worth P21 million in tourism company, Wilderness Safaris. The Fund also has a 23 percent stake in Chobe Holdings, another travel and tours operator. The two are the largest and only listed safari services firms. BPOPF owns around 12 percent in the regional fast growing supermarket group, Choppies Enterprises.
As if it is not enough, BPOPF also owns a significant stake in listed petroleum services firm Engen Botswana, at 13.7 percent, First National Bank Botswana (FNBB) is the largest company trading on the BSE, BPOPF owns 13.4 percent of Steven Bogatsu’s 8.8 billion pula chunk. BPOPF also owns 10 percent in the security services giant, G4S, and a further 9 % in industrial property company, Letlole La Rona (LLR).
One of the biggest companies on the BSE, Letshego, also a pan-African micro-finance firm is 23 percent owned by BPOPF directly. BPOPF investments are endless, for instance in the New African Properties (NAP), a company that owns the classic Riverwalk Mall in Gaborone, BPOPF owns over 167 million shares. It further has a 17 percent stake in another property firm, Prime Time Holdings, as well as RDC Properties at 8.13 percent.
In Sechaba Breweries Holdings, the brewers of St Louis Lager, BPOPF owns 22 percent. The fund has a controlling stake in Sefalana, Choppies’ largest competitor, at 33 percent. It has 8.6 percent in Standard Chartered Bank Botswana and around 30 percent in Turnstar, the owners of Game City and Mlimani City malls.
A number of lucrative investment under property portfolio also includes the 300 million pula injected in Central Business Department(CBD) to erect the Hilton Garden Inn Hotel and the purchase of two strategic properties at the fast growing second city, Francistown from Prime Time Properties at tune of P71 million. BPOPF property investment is worth over P1.5 billion including other transactions, of which the mandate is being handled by asset manager, Messidor.
BPOPF Chief Executive Molefhe however expresses worry over their BSE Investment which she observed to be trading southwards since the beginning of the year. Under the new guidelines commenced and encored on Molefhe’s vision 2022, BPOPF will introduce initiatives to encourage skills transfer, local procurement of goods and services such as back office services like performance reports, accounting and compliance, and HR services.
“We have seen instances where the feedback reports we get from our fund managers are complied outside the country including other back office functions such as accounting. We need such services to be done here in Botswana so that skills are transferred to locals,” she said.
The future of Botswana’s largest copper and silver operation, Khoemacau Copper Mining, looks promising as the new owners, MMG Group, commit to the mine’s expansion plans. MMG, an Australian headquartered company owned by China, has expressed its dedication to doubling Khoemacau’s production and transforming it into one of the most significant high-grade copper operations in Africa.
Nan Wang, the Executive General Manager for Australia and Africa at MMG, stated that while the immediate focus is on maintaining a consistent production level of 60ktpa, there are solid plans to increase Khoemacau’s production capacity. The company aims to double its production from 3.65Mtpa to 8.15Mtpa, resulting in an increase in payable copper from approximately 60ktpa to around 130ktpa.
To achieve this expansion, Khoemacau has completed a pre-feasibility study on the project and a solar power initiative. The next step is to conduct a feasibility study, which will pave the way for increased production capacity. Additionally, Khoemacau has identified extensive exploration opportunities across its license area, positioning the company for an exciting new phase of development.
The current Khoemacau operation reached full production and nameplate capacity in December 2022, following over a decade of investment totaling over P10 billion. This significant investment allowed for an intense exploration program, resulting in the development of the most automated underground mining operation in Botswana. The first concentrate was produced in June 2021, and the product entered the export market in July of the same year. Throughout 2022, the company has been working on the pre-feasibility study for the expansion project, with the feasibility study scheduled for the following year.
The expansion plans will involve the construction of a new world-class process plant in Zone 5, where the current mining of ore takes place. This new plant will be larger than the existing one in Boseto, which currently receives ore from Zone 5. The expansion will also involve the development of new underground mines, including Mango, Zone 5 North, and Zeta North East. These additional mines will bring the total number of underground shafts at Khoemacau to six. The ramp-up of production from the expansion is expected to occur in 2026.
Khoemacau, which acquired assets in the Kalahari Copper Belt after the liquidation of Discovery Metals in 2015, currently employs over 1500 people, with the majority being Batswana. The Khoemacau Mine is located in north-west Botswana, in the emerging Kalahari Copperbelt. It boasts the 10th largest African Copper Mineral Resource by total contained copper metal and is one of the largest copper sedimentary systems in the world outside of the Central African Copperbelt.
The mine utilizes underground long hole stoping as its mining method and conventional sulphide flotation for processing. Resource drilling results have shown the existing resources to have continuity at depth, and there are several exploration targets within the tenement package that have the potential to extend the mine’s life or increase productivity.
The Zone 5 mine has already ramped up production, and further expansion in the next five years will be supported by the deposits in the Zone 5 Group. The estimated mine life is a minimum of 20 years, with the potential to extend beyond 30 years by tapping into other deposits within the tenement package.
In conclusion, the commitment of MMG Group to Khoemacau’s expansion plans signifies a bright future for Botswana’s largest copper and silver operation. With the completion of pre-feasibility and feasibility studies, as well as significant investments, Khoemacau is poised to become one of Africa’s most important high-grade copper operations. The expansion project will not only increase production capacity but also create new job opportunities and contribute to the economic growth of Botswana.
Khoemacau Copper Mining, a leading copper mining company, has recently announced its acquisition by MMG Limited, a global resources company based in Australia. This acquisition marks a significant milestone for both companies and demonstrates their commitment to continued investment, growth, and sustainability in the mining industry.
MMG Limited is a renowned mining company that operates copper and other base metals projects across four continents. With its headquarters in Melbourne, Australia, MMG has a strong track record in mining and exploration. The company currently operates several successful mines, including the Dugald River zinc mine and the Rosebery polymetallic mine in Australia, the Kinsevere copper mine in the Democratic Republic of Congo, and the Las Bambas Mine in Peru. MMG’s extensive experience and expertise in mining operations make it an ideal partner for Khoemacau.
MMG’s commitment to sustainability aligns perfectly with Khoemacau’s values and priorities. Khoemacau has always placed a strong emphasis on safety, health, community, and the environment. MMG shares this commitment and applies the principles of good corporate governance as set out in the Corporate Governance Code of the Hong Kong Listing Rules. As a member of the International Council on Mining and Metals (ICMM), MMG adheres to sustainable mining principles, ensuring responsible and ethical practices in all its operations.
Over the past 12 years, Khoemacau’s current shareholders have made significant investments in the development of the company. With approximately US$1 billion deployed in the project, Khoemacau has successfully transformed from an exploration and discovery phase to a fully-fledged operating copper mine. The completion of the ramp-up of the Zone 5/Boseto operations has set the stage for the next phase of expansion.
With the acquisition by MMG, Khoemacau is poised for an exciting new chapter in its development. The completion of a pre-feasibility study on the Khoemacau expansion and a solar power project has paved the way for increased production capacity. The feasibility study will be the next step in doubling the production capacity from 3.65 million tonnes per annum (Mtpa) to 8.15 Mtpa, resulting in a significant increase in payable copper from approximately 60,000 tonnes per annum (ktpa) to 130,000 ktpa. Additionally, Khoemacau has extensive exploration opportunities across its license area, further enhancing its growth potential.
The CEO of Khoemacau, Johan Ferreira, expressed his gratitude to the current owners for their stewardship of the company and their successful transformation of Khoemacau into a fully operational copper mine. He also highlighted the company’s focus on the expansion study and its vision for the future with MMG. Ferreira emphasized that the partnership with MMG will ensure Khoemacau’s long-term success, delivering employment, community benefits, and economic development in Botswana.
MMG Chairman, Jiqing Xu, echoed Ferreira’s sentiments, stating that the acquisition of Khoemacau aligns with MMG’s growth strategy and vision. Xu emphasized MMG’s commitment to creating opportunities for all stakeholders, including shareholders, employees, and communities. He expressed confidence in Khoemacau’s expansion potential and the company’s ability to realize its full potential with the support of MMG.
The sale of Khoemacau to MMG is subject to certain conditions precedent and approvals, with the expected closing date in the first half of 2024. This acquisition represents a significant step forward for both companies and reinforces their commitment to sustainable mining practices, responsible resource development, and long-term growth in the mining industry.
In conclusion, the acquisition of Khoemacau Copper Mining by MMG Limited signifies a new era of investment, growth, and sustainability in the mining industry. With MMG’s extensive experience and commitment to responsible mining practices, Khoemacau is well-positioned for future success. The partnership between the two companies will not only drive economic development but also ensure the safety and well-being of employees, benefit local communities, and contribute to the overall growth of Botswana’s mining sector.
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.