It will not be anything next to the usual when the multibillion mining company Anglo American takes on the chambers of The Queen Elizabeth II Conference Centre for an Annual General Meeting(AGM) with only two shareholders. Anglo American is listed on the Botswana Stock Exchange foreign company’s main board.
Anglo American had issued a notice on 9 March 2020 that the mining company will be convening its AGM on 2.30 pm (UK time) on 5 May 2020 and the venue will be The Queen Elizabeth II Conference Centre at Westminster, London.
However Anglo American arrangement will have to reach a compromise and comply with UK government COVID-19 measures which aims at “limiting the impact and spread” of the pandemic like “the restriction on all gatherings of more than two people in public.”
In its communication this week, Anglo American, which is primary listed on the London Stock Exchange with secondary listings on the Botswana, Johannesburg, Namibian and Swiss Stock Exchanges, has announced that the UK measures will “thereby limiting the ability of shareholders to attend the AGM.”
The UK has 400 549 confirmed cases of COVID-19 and 12 857 deaths before press time. Also, British Prime Minister Boris Johnson is battling with a coronavirus infection and the virus symptoms are said to have deteriorated on Monday leading to him being put on intensive care at St. Thomas’ Hospital in London.
Anglo American jointly owns De Beers with Botswana government and the mining company has a share of 85 percent while this country owns the remaining 15 percent.
In its latest communication released this week, Anglo American said even though AGM is a valuable forum that provides shareholders with an opportunity to raise questions and comments to the Board, the health and safety of the Company’s employees, shareholders and wider stakeholders comes first. The mining company said due to distancing measures, shareholders will not be able to attend the Company’s 2020 AGM in person.
However, according to the mining company, this year’s AGM will be convened with the minimum necessary quorum of two shareholders. Anglo American said this new arrangement will be facilitated by the company.
“It is nevertheless important that shareholders cast their votes in respect of the business of the AGM as early as possible. This can be done by completing a proxy form or submitting proxy instructions electronically. Shareholders are encouraged to appoint the “Chairman of the meeting” as their proxy to vote on their behalf,” said Anglo American communication.
The Botswana partner in De Beers said proxy instructions of the AGM must be received by 2.30pm (UK time) on Friday, 1 May 2020 and further details on how to submit a proxy form can be found on the company’s website.
Anglo American also suggested that instead of attending this year’s AGM, shareholders are invited to submit any questions they may have by email to firstname.lastname@example.org by 2.30pm (UK time) on Friday, 1 May 2020. Responses to questions will be published on Anglo American website following the AGM and shareholders are requested to continue to monitor the Company’s website and announcements for any updates regarding the AGM.
Last week after coronavirus was declared a global pandemic by WHO, Anglo American promised to abide the advice from the government and health authorities in its different operating jurisdictions in relation to the COVID-19 pandemic. The company says it is also implementing additional measures across its offices and operations, guided by the WHO and national public health authorities.
Anglo American CEO Mark Cutifani who is on the company next AGM’s resolution to be re-elected as a director commented and said they are taking all appropriate measures to protect health and wellbeing of their people. He said the nature of Anglo American business is such that much of our work cannot be done remotely, “so our focus is on reducing the risk of the virus spreading into and across our sites.”
He said operational continuity is critical for jobs, for the communities around our operations and for the local and global economies. Cutifani said their sites and offices therefore have escalation plans to accommodate the ongoing impact of the pandemic and these will continue to be revised as the situation evolves.
“We recognize that this is a fast changing and stressful situation for everyone and we know that we all have our part to play to help each other through the pandemic and be ready for when we emerge on the other side,” said Cutifani last month.
Anglo American has significant and focused interests in gold, platinum, diamonds, coal, base metals, ferrous metals and industries, industrial minerals and paper and packaging, as well as financial and technological strength.
In its recent financial results Anglo American’s profit attributable to equity shareholders increased to P19 billion (30 June 2018: P13 billion). Its underlying earnings were P20 billion (30 June 2018: P16 billion), while operating profit was P33 billion (30 June 2018: P24 billion).
According to the company’s Tax and Economic Contribution 2018 Report which was released last year concurrently with the mining company’s Integrated Annual Report for the last financial year, Botswana got P17 billion from Anglo American as total tax and economic contribution for its precious stones. Anglo American’s P17 billion pay to Botswana was an improvement from 2017 which was at P16 billion.
For the year ended 31 December 2018, according to Anglo American, the mining company employed 1,524 people in Botswana. This came at a cost of P915 million($86.0) for Wages and related payments which Anglo American explains as, “payroll costs in respect of employees, excluding contractors and certain associates’ and joint ventures’ employees, and including a proportionate share of employees within joint operations.”
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.
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.
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”