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Buyers fly in, out without leaving anything here


According to several local dealers, the relocation of locally-mined diamond sales, from London to Botswana is yet to produce the envisaged benefits to the local economy.

The US$5 billion dollar injection to the economy through the rough and polished diamond sales, is seen by observers as having the potential for a ,multiplier effect of two and a half times itself; P130 billion into the local economy annually, if harnessed to its full potential.

In an interview with BusinessPost, Mmetla Masire of the Diamond Hub said that after the relocation of the De Beers Sales to Gaborone, Government is now looking at developing a jewellery industry. Government, through the Diamond Hub, has instituted an internal study that will inform the development of jewelry manufacturing industry.   

“We are lucky to have Shrenuj Botswana, the sole jewellery manufacturer in the country, and they can provide a test model for how best we can develop manufacturing.”

However, local diamond dealers are crying foul at the lack of legislation that compels diamond buyers to transact through them.  

One local dealer who preferred anonymity told BusinessPost that: “These diamond buyers pay brokers fees everywhere, except here,” saying the law in other world centres, empowers the local dealers to reap substantially from billion dollar industry.

“So basically what has happened is that sales from moved from overseas and there are no other benefits for us.”

The dealer cites larger brokers such as Rothschilds and Henning as having their own clients and thus setting up in the country to facilitate their trade.  

“But of the 200 buyers that come to ODC every month, if I had just 10 of them, I would have hired close to 12 people,” said the dealer.

“We actually had a manager at ODC, (name withheld) who told one of our clients that they did not need us, that they can buy direct; needless to say the client was gone the following month.”

“Imagine you had ten licensed brokers all employing about 10 to 15 people minimum,” said the dealer.

“We organise some business for ourselves and then when they realise they don’t need, us they bail”

But Masire insists that the issue of dealers’ contribution to the trade should be put in the proper context. “Botswana’s diamond trade processes are much smaller and uncomplicated; in India, you will have 800 diamond cutting factories and it makes sense to have locals there who know the terrain better; same as in Antwerp,” said Masire.

Masire says that the conundrum is caused by the need for buyers to view their purchases, and this necessitates their visits to Botswana, where they find out that they don’t need to deal through the brokers and dealers.

He concedes that in Botswana, there is no law that compels diamond buyers to go through dealers when transacting for diamonds. He adds that some diamond producing countries in the region, such as South Africa and Namibia, have suffered from over regulation and this has to be avoided.

“Dealers and brokers have complaints but they must lobby Government and make Government understand their point of view; they must group themselves or form associations because a one by one approach cannot be as effective.”

DIAMOND SECTOR OPPORTUNITIES
Masire tells this publication that the opportunities in the diamond sector are infinite and the thinking that the sector is risky, is old thinking. He says that, perhaps Government has helped to perpetuate the perception that diamond business is low; on the contrary, the business is growing but not at pre recession levels.

“The industry changed post the recession and we have seen what used to be families now turning into companies that run the trade; banks have also become strict on the diamond trade, insisting that traders put up some of their own money when transacting, to share the risks involved,” said Masire.

Masire reveals that there are opportunities for training in the diamond sector, with only two institutions holding the fort, namely Afrimond Diamond Institute who teach broadly on issues surrounding the industry, and the GIA (Gemological Institute of America) who teach mostly about valuations.

He says the security sector also could hinge on the diamond industry, with Brinks and Malca-Amit, being the only significant players.

While only as much as 150 new jobs have been created with the relocation from London, the intention was to bring the diamantaire traffic to Botswana for multilier business and for Der Beers clients to access diamonds from other sellers; besides De Beers, other diamond companies are also holding their auctions in Botswana, with Lucara having held its first auction in November of 2014 and one to follow in two weeks.  

ANTWERP VS BOTSWANA
Botswana still has some way to go in emulating or even surpassing Belgium as a diamond centre, but the stage is set for this development to possibly take place in future. Botswana has since asserted itself as one of the global diamond centres of repute, after the relocation of Der Beers Global Sight Sales, a move meant to facilitate the arrival of diamantaires.

The world’s largest diamond trading hub with 80 percent of the world’s rough diamonds and 50 percent of polished diamonds traded through Antwerp Yearly turnover with a turnover of over €42 billion in 2011.

1st Belgian export product outside the EU. The leading component of Belgian trade with India, China and Russia Diamonds Account for 5 percent of Belgian Exports. Leader in global diamond compliance and Corporate Social Responsibility and 1,850 registered diamond businesses in Antwerp.

Diamonds create an added value of €1500 million for Belgium with more than 34,000 jobs in Flanders, contributing to 70 percent of Belgian trade surplus with High-end niche manufacturing.  The fiscal and parafiscal contribution of the diamond sector is €300-€800 million year. Antwerp has in its Presence of the world’s largest diamond mining companies; BHP-Billiton, Rio Tinto, Alrosa and De Beers. Diamonds are an iconic facet of Antwerp’

Though Antwerp is currently the largest hub in the world, it is not sitting on its laurels, considering the threat from Botswana and other centres.

Cathy Berx, Governor, Province of Antwerp, Belgium, in a foreword of the Antwerp diamond Masterplan document released in 2012, mentions that: “I was first approached by some key players of the diamond industry who expressed their concern about the future of their sector in Antwerp. Citing aggressive competition and an ‘uneven playing field’, they feared that without a clear vision and strategy, the sector’s prospects of survival were slim.

Despite its problems, I felt there was tremendous potential; with strong leadership, unity and vision combined with a sense of innovation, professionalism and openness, the sector was capable of creating a new and brighter future for diamonds and for Antwerp.”

“My office was happy to facilitate a repositioning exercise that the sector would own and take responsibility for.”


“In addition to the many ideas and initiatives put forward, problems were identified, solutions discussed and new business areas targeted to keep Antwerp as world-leader in diamonds. I am particularly glad to see the exercise has been honest in tackling important issues such as transparency, compliance, individual responsibility, CSR and innovation driven by new technology. There was also a strong plea for a competitive fiscal operating template, as  without this, successfully competing with India, Dubai or Botswana in the future, will always remain an uphill struggle,” said Cathy Berx.

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Business

New Khoemacau owners commit to mine’s multibillion Pula expansion

6th December 2023

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.

 

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Business

Khoemacau Copper Mining to be acquired by MMG Limited

6th December 2023

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.

 

 

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Business

BPC Signs PPA with Sekaname Energy

6th December 2023

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.

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