The Botswana Institute of Development Policy Analysis (BIDPA) has proposed extensive Policy recommendations in a Study into the Consequences of and Responses to the Depletion of Botswana’s Diamonds, estimated to creep in after 2027.
The Botswana After Diamonds report hovers on major issues of Encouraging more mining and exploration activity; Diamond production rate; and Planned infrastructure projects. BIDPA calls on government to be aggressive when dealing with these matters and to take real steps to mitigate the aftermath of 2027.
First among other issues, BIDPA sneaks into the legal and fiscal regime for mining in Botswana which is currently very competitive with the country being ranked in position 4 by resource Stocks magazine and 8th position by the Fraser Institute. Of the eleven exploration and mining companies in Botswana interviewed in the study, the majority find the mining laws in Botswana to be ‘fine and useful’ and the administrative process to be ‘fair and open’.
According to the BIDPA study, the issues relevant to mining laws are – future and current tax regime, and land claim and land issues. BIDPA recommends that Botswana’s level of mineral Royalties take into consideration the profitability of mining project and the latter, other things being equal, depends on the value of the mineral being mined. In this way, base metals and coal attract the lowest royalty rate of 3 % followed by precious metals, that is, gold, silver and platinum group metals at 5% and lastly diamonds at 10 %.
“We therefore do not believe there is additional incentive in lowering these rates as the level of prospecting activity is very high. We also would not recommend that these be raised as this may discourage the prospecting activity, which would do more harm than good. We however believe that there is always room to modernise the royalty formula, for instance, going to a sliding scale formula so that even some diamond mines that may have similar levels of profitability to other minerals such as base metals and coal are not overburdened by fixed royalty rate of 10 %,” reads part of the study report.
According to the study, which was edited by Roman Grynberg, Margaret Sengwaketse and Masedi Motswapong, BIDPA is convinced that the fiscal regime is well defined for non-diamond minerals while for diamonds section 51 of the Act stipulates that there will be a negotiation. “We believe that it is the secrecy of the negotiated regime that may be creating uncertainty and government should find ways of addressing this.” In response to this concern, BIDPA notes:
“Regarding the taxation issues, we believe government should find means to publicise those mining regimes that, after negotiation, still end up with the standard tax regime for mining to provide comfort to the current junior mining companies exploring for diamonds.”
Government should continuously explain the benefits of overlapping prospecting licences. According to the BIDPA researchers, it seems that this has not been sufficiently explained to the mining industry. In addition they have recommended that government should consider an Act for the Coal Bed Methane (CBM) gas and its accompanying regulations to assist in guiding activity in this area.
Meanwhile BIDPA notes that there is a lot of interest in exploration in Botswana, with the whole of the country taken up by exploration companies with only the swamps and some deep sand-covered areas of the Kalahari remaining open as they are inaccessible. “There is therefore need to ensure that only value-adding applications for exploration are approved to eliminate huge land holdings without the accompanying progress towards mine development.
The study also highlights the issue of water and power. “While some projects may be located near existing water and power infrastructure, the challenge faced by the project developers is that there are no set mechanisms for them to obtain such water and power. We therefore recommend that government consider a mechanism whereby the water and power utility companies develop the infrastructure to support the mining project and then recover the cost of such development through higher charges until their cost have been recovered. This would facilitate project development as they would be spared the upfront costs, which also improve project economics,” observers the BIDPA analysts.
The BIDPA study also touches on diamond production rate, stating that it seems Debswana is placing itself in the position of ‘swing producer’, adjusting its target production so as to leave the global supply/ demand balance in a position of shortage rather than surplus, and hence tending to push prices up, or at least maintain them if there are other negative forces at work.
In their view, the cushion of 10 million carats p.a between Debswana’s peak production and its recent production levels is certainly enough to influence the global supply/demand balance according to whether those 10 million carats p.a are being produced or not. “And the experience of the past three years does suggest that international market prices have responded to Debswana’s actual planned production rates,” they state.
BIDPA advises that in the short term Government should study the various production scenarios with the view to possibly revising the current long-term mining plans, which seem to be informed by the validity period of the mining leases for Debswana, which all run until 2029. Furthermore, BIDPA is of the view that Government should consider a policy of postponing possible projects at Debswana mines so that these are phased in at the end of the open-pit mining operations.
“These projects are profitable on their own (stand-alone- projects) and would not depend on the existing open-pit operations.”
Regarding rail and port infrastructure, future coal export projects and some copper and silver projects in the Ghanzi copper belt would rely on this, BIDPA says. “We therefore believe that government should be a joint venture partner in order to ensure that future projects benefit. We, however, caution that due to the scale and possible risks involved, government should conduct a thorough due diligence ahead of any participation in such infrastructure projects.”
The researchers indicate that the projected government mineral revenues from future coal mines are dependent on the existence of rail and port infrastructure to export the washed coal to the world steam coal markets in Asia and Western Europe. “Until concrete steps are seen on the development of the rail and port infrastructure upon which these projects depend, we believe they should be accorded a low probability of being realised by 2026.”
This BIDPA study was conceived about five years ago during the Global Economic Crisis and the impact this had on the economy of Botswana and on the private sector. At that time there was a dramatic decline in the demand for luxury commodities – diamonds and tourism services – which are two of Botswana’s most important export sectors.
These were hit disproportionately as a result of the economic crisis. Diamond mining, the principal source of revenue in the country, declined dramatically in 2009 as the mines at Jwaneng and Orapa were temporarily shut. In 2009 diamond production fell to 17.7 million carats from 32 million the previous year.
In conclusion, BIDPA observes that over the next 10-15 years, government mineral revenues are projected to rise on the back of a projected improvement in diamond prices that would be underlain by strong supply/demand fundamentals.
“While the decline in government mineral revenues from diamonds seems unlikely to occur within the period of projection for this study, we would like to caution that there would be a significant crunch when the open-pit mining operations cease, beginning in about 2027.”
In a classic and shocking case of disgrace and dishonour to this country, the law enforcement agencies are currently struggling to cover up a damaging and humiliating scandal of having conspired to forge the signature of a Palapye Chief Magistrate, Rebecca Motsamai in an unlawful acquisition of the much-publicised 2019 warrant of arrest against Isaac Kgosi, the former director of the Directorate of Intelligence Services (DIS).
The cloak-and-dagger arrest was led by the DIS director, Brigadier Peter Magosi supported by the Botswana Police, Botswana Defence Force (BDF), with the Botswana Unified Revenue Services (BURS) which accused Kgosi of tax evasion, in the backseat.
Umbrella for Democratic Change (UDC) constituent members are struggling to reach an agreement over the allocation of wards for the imminent ward by-elections across the country.
Despite a Memorandum of Understanding (MoU) between Umbrella for Democratic Change (UDC), Botswana Patriotic Front (BPF) and Alliance for Progressives (AP) are said to be active, but the nitty-gritties are far from being settled.
The eight bye-elections will be a precursor of a somewhat delayed finalisation of the brittle MoU. The three parties want to draw a plan on how and who will contest in each of the available wards.
This publication has gathered that the negotiations will not be a run off the mill because there is already an impasse between the Botswana Congress Party (BCP) which is a UDC constituent and AP (currently negotiating to join umbrella).
The by-elections joint committee met last week at Cresta President Hotel in a bid to finalise allocation but nothing tangible came out of the gathering, sources say.
The cause of the stalemate according to those close to events, is the Metsimotlhabe Ward which the two parties have set their eyes on.
In 2019, he ward was won by Botswana Democratic Party’s (BDP) Andrew Sebobi who unfortunately died in a tragic accident in February last year.
Sebobi had convincingly won by 1 109 votes in the last elections; and was trailed by Sephuthi Thelo of the UDC trailed him with 631 votes; while Alliance for Progressives’ Innocent Moamogwe got 371 votes.
Thelo is a BCP candidate and as per UDC norm, incumbency prevails meaning that the BCP will contest since they were runners up. On the other hand, AP has also raised its hand for the same.
“AP asked for it on the basis that they have a good candidate but BCP did not agree to that request also arguing they have a better contestant,” one UDC member confided to this publication.
Notwithstanding Metsimotlhabe Ward squabble, it is said the by-election talks are almost a done deal, with Botswana National Front (BNF) tipped to take Boseja South ward in Mochudi East constituency. Botswana Patriotic Front (BPF) will be awarded Tamasane Ward in Lerala/Maunatlala constituency, sources say.
“But the agreement has to be closed by National Executive Committee (NEC),” emphasized the informant.
The NEC is said to have been cautioned not to back the wrong horse but rather rate with reason and facts.
UDC President, Duma Boko has told this publication that, “allocation is complete with two wards already awarded but with only one yet to be finalized,” he could not dwell into much details as to which party got what and the reasons for the delay in finalisation.
Chairperson of the by-elections committee, Dr. Phenyo Butale responded to this publication regarding the matter: “As AP we contested and as you may be aware we signed the MoU with UDC and BPF to collaborate on bye-elections. The opposition candidate for all bye-elections will be agreed by these parties and that process is still ongoing,” he said when asked if AP is interested on the ward and how far with the talks on bye-elections.
Butale, a former Gaborone Central Member of Parliament, who is also AP Secretary General continued to say, “As the chairperson of the bye-elections committee we are still seized with that matter. We should also do some consultations with the local structures. Once the process is complete we will issue a notice for now we cannot talk about the other two while the other is still pending the other one”.
Butale further clarified: “There is no such thing as AP and BCP not in agreement. It is an issue of signatories discussing and determining the opposition candidates across the three wards.”
Apart from the three wards, there are five more council wards that UDC is yet to allocate to cooperating partners.
FROM PALAPYE MEET: BPP CAUTION NEC MEMBERS
With the UDC cheerful from last weekend’s meeting in Palapye, the meeting however was very tense on the side of both BCP and BNF, with only BPP flexing its muscle and even lashing out.
BCP going into the meeting, had promised to ask difficult questions to the UDC NEC.
BCP VP and also acting Secretary General, Dr. Kesitegile Gobotswang, presented their qualms which were addressed by UDC Chairperson Motlatsi Molapisi, informants say.
It is said Molapisi is fed up and concerned by some UDC members especially those in the NEC who ‘wash party’s dirty linen in public’.
Insiders say the veteran politician cautioned the NEC members that they “will not expel any party but individuals who tarnish the image of the UDC.”
It is not the first time BPP play a paternalistic role as it once expressed its discontent with BCP in 2020, saying it should never wash UDC linen in public.
At first it is said, BPP, the oldest political formation in Botswana, claims disappointment on BCP stance that UDC should be democratised especially by sharing their stand with the media. Again, BPP was not happy with BCP leader Dumelang Saleshando’s decision to air his personal views on social media regarding the merger of UDC party.
Botswana Police Service (BPS) Commissioner, Keabetswe Makgophe, has of late been dousing raging fires from various quarters of society following the infiltration of the police fingerprint system by the Directorate on Intelligence and Security (DIS), WeekendPost has learnt.
Fresh information gleaned from a number of impeccable sources, points to a pitiable working relationship between the two state organs. Cause of concern is the DIS continuous big brother role to an extent that it is now interfering with other institutions’ established mandates.
BPS which works closely with the DIS has been left exasperated by the works of the institution formed in 2008. It is said, the DIS through its Information Technology (IT) experts in collusion with some at BPS forensics department managed to infiltrate the Fingerprint system.
The infiltration, according to those in the know, was for the DIS to “teach a lesson” to some who are on their radar. It is said the DIS is playing and fighting dirty to win the fights they have lost before.
By managing to hack the police finger print system, a number of renowned businessmen and other politically exposed persons found their fingers in the system. What surprised the victims is the fact that they have never been charged of any wrongdoing by the police and they were left reeling in shock to learn that their fingers are on the data-base of criminals.
In fact, some of those who their fingerprints were falsely included in the records of those on the wrong side of law learnt later when other errands demanded their fingerprints.
“We learnt later when we had to submit and buy some documents and we were very shocked,” one politician who is also a businessman confided to this publication this week.
“We then learn that there are some fabricated criminality recorded for us, as to when did we commit those remained secret to the police, but then we had to engage our lawyers on the matter and that is when we were cleared,” said the politician-cum- tenderpreneur.
The lawyers have confirmed engaging the police and that the matters were settled in a gentlemen’s agreement and concluded.
All these happened behind the scenes with the police top brass oblivious only to be confronted by the irked lot, police sources also add. The victimized group who most of them have been fighting lengthy battles with the DIS read malice and did not blink when it was revealed that these were done by the DIS.
“And it was clear that they (DIS) are the ones in this dirty war which we don’t understand. Remember when we sue, it will be the Police at the courts not the DIS and that is why we agreed to a ceasefire more so they also requested that be kept under carpet,” said the victim.
Nonetheless, the Police through its spokesperson Assistant Commissioner, Dipheko Motube, briefly said: “we do not have any system that has been hacked.” On the other hand DIS mouthpiece Edward Robert was not in office this week to comment on the matter.
Reports however say DIS boss, Peter Magosi, who most of the victims accuse of the job, is said to have met his police counterpart Makgophe to put the matter to bed.
COVID-19 RAVAGES POLICE
As frontline workers, Police have not escaped the wrath of Covid-19. Already the numbers of those infected has reached the highest of high and they suggest that they be priorities on vaccine rollout.
“Our job is complicated, firstly we arrest including those who are non-compliant to Covid protocols and we go to accidents and many more. These put us at risk and it seems our superiors are not bothered,” said one police officer this week.
The cops further complain about that working spaces are small, as such expose them to contact the virus.
“Some tests positive and go for quarantine while the rest of the unit will be left without even test carried out. If at all the bosses are serious all the police officers should every now and then be subjected to testing or else we will be no more because of the virus,” added another officer based in Gaborone.
The government has since placed teachers on the priority list for the vaccines, it remains to be seen whether the police, who also man road blocks, will be considered.
“But our bosses should convince the country leadership about this, if not then we are doomed,” concluded a more senior officer.