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Expert tells Botswana to stop exporting raw minerals

International Mineral processing expert, Dr Vaikuntam Lakshmanan of Canada’s Process Research (ORTECH), has called on Botswana to seriously consider processing minerals locally other than exporting them in raw form, and to actually start doing something about it.

The renowned academic, researcher and globally recognized mertullagist made this remarks when speaking at a Seminar on Nickel Mining Industry organized by Botswana Institute for Technology, Research and Innovation (BITRI) recently. Lakshmanan said Government should rigorously start putting in place all the enabling necessities for local mineral processing and beneficiation as well as manufacturing industries. He noted that to do that all relevant stakeholders led by Government need to take deliberate actions towards this move, that could revolutionaries Botswana‘s economy.

Vaikuntam Lakshaman who is Vice-Chairman and Chief Executive Officer of Process Research ORTECH Inc urged BITRI, government and mining industry stakeholders to come up with ways of utilizing Botswana’s abundant minerals. He explained that with Botswana’s abundant underground mineral resources, especially in the base metals and rare deposits space, the country could easily become a major destination for manufacturing sector in the areas of battery manufacturing, electrical chips and other industrial components.

He underscored the need to cease exporting commodities such as copper and nickel in raw form noting that it was high time the country believes in itself enough that it can be an industrial hub of high value mineral processing factories and metal industries. “These are components that are in high demand across the world , and Botswana has all the raw materials , already you have the leverage to bring those industries here to start factories for manufacturing batteries which were now in high demand globally because  of the current electric car worldwide wave,”  he said.

Dr Lakshamana noted that taking deliberate actions such as attracting foreign direct investment, putting in the right infrastructure and developing the right human capital would be very key in achieving this. He explained that in return, value chain opportunities and other industries would emerge with some easily accessing the materials and equipments to take off “When you have nickel batteries manufactured locally , now you can also talk about venturing into large scale renewable energy projects because you would easily have power storage necessities,” he said.

The renowned metallurgist shared that in turn Botswana would seriously benefit from thousands direct and indirect jobs, growth in GDP, economic diversification and attaining high income status. Speaking on behalf of Government, Acting Permanent Secretary to President, Elias Magosi noted that innovation in nickel batteries would be a breakthrough for the development of a Botswana’s locally made electric car.

Magosi said all stakeholders needed to come up with innovative ways of making this industrialization aspiration come to pass. “A vibrant nickel mining industry and having industries that use the mineral for manufacturing batteries would be a strategic development for cost-effective locally made cars.”  He shared that nickel had long been widely used in batteries, most commonly in nickel-cadmium and in the longer-lasting nickel metal hydride rechargeable kind.

The Acting PSP underscored that nickel is making a vital contribution to the lithium-ion batteries that power much of the electric vehicle revolution. Nickel has long been widely used in batteries, most commonly in nickel cadmium and in the longer-lasting nickel metal hydride rechargeable batteries, which came to the fore in the 1980s. Their adoption in power tools and early digital cameras revealed the potential for portable devices, changing expectations of how we work and live. The mid-1990s saw the first significant use of NiMH batteries in vehicles in the Toyota Prius.

Around the same time, the first commercial applications for Li-ion batteries emerged, initially in camcorders and eventually finding their way into smart phones, laptops and the numerous other portable devices. Experts explained that the major advantage of using nickel in batteries is that it helps deliver higher energy density and greater storage capacity at a lower cost. Further advances in nickel-containing battery technology mean it is set for an increasing role in energy storage systems, helping make the cost of each kWh of battery storage more competitive.

Elias Magosi noted that the batteries would be for the local market but targeted more for export in pursuit of the export-led economy. He further encouraged BITRI to intensify their research and uncover more feasible and commercially viable projects that can be undertaken to deliver Botswana‘s industrialization aspirations.

“BITRI, as a science and technology institution, should play a leading role in supporting innovation in the country’s energy and mining sector and come up with strategies for advancing development through optimization of linkages in the mineral value chain, facilitation of economic diversification, job creation and industrialization,” he said. BITRI’s energy division focuses on the development and adoption of energy technologies for both renewable and non-renewable energies for Botswana, while the Nano-materials division focuses on research that adds value to Botswana’s minerals.

Mogosi told attendees that the mineral beneficiation strategy drawn up by Botswana recently provides a framework that seeks to translate the country’s comparative advantage resulting from mineral resources endowment to a competitive one. “Our country’s mineral wealth and its value chain have a great potential to contribute to the competitiveness of the energy and minerals sector and ultimately economic transformation, there is need for intensive research and development to ensure sustainability and capacity to store the energy Botswana was harvesting from various sources,” he said.

Chief Executive Officer of Botswana Chamber of Mines, Charles Siwawa said Botswana had been fortunate  to have abounded mineral resources especially diamonds, He has however said   diamond resources were not finite , noting that the revenue from diamonds was also not growing  while population and the government expenditure was on the other side increasing. “It is time to look into other minerals and actually other ways of extracting value from these minerals to take over as revenue generating areas of our economy.”

Siwawa shared that Botswana had all the minerals required to manufacture car batteries, from manganese, graphite, and nickel with a number of companies having made significant explorations. He said the batteries would also help the country in inefficient and effective power storage.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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