Botswana to Let Locals Buy Large Stake in Mines

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Leading diamond-mining nation Botswana is looking to encourage mining companies to allow locals to purchase stakes of up to 24% in projects once they have received the green light.

The proposed change in the current Mines and Minerals Act would open the door for locals to own a major share in new mines if the government does not exercise its existing right to purchase up to 15% in newly licensed mining projects. This share is higher for diamond mining projects. Botswana, located in southern Africa, is the world's leading producer of diamonds by value, and last year its diamond production was valued at US$3.28 billion. Industrial Info is tracking 57 projects there across diamond and copper mining worth US$7.7 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reportS.

"Where government does not exercise its option of acquiring a 15% working interest upon granting of a mining license, the holder shall use his best endeavor to dispose the 24% stake to citizens or citizen-owned companies," stated the Mines and Minerals Amendment Bill, which is being presented in parliament by the country's Minister of Mines and Energy Lefoko Moagi.

There remains a question mark over how local groups and companies could fund buying large stakes since the government itself has not exercised its rights to share buying in a number of recently approved projects and takeovers, including the purchase of Khoemacau copper mine by China's MMG (Beijing, China) and the purchase of the Karowe Diamond Mine by Canada's Lucara Diamond Corporation (Vancouver, Canada). Minister Moagi has previously proposed that the government use money from the country's pension funds to buy stakes in projects. A change in the laws could see more of the funds invested at home, with its foreign investment cut from 65% to 50%. The government holds significant stakes in leading diamond mining companies through its state-owned Minerals Development Company Botswana, including 50% in Debswana Diamond Company (Gaborone, Botswana) and 15% in international mining major De Beers Consolidated Mines (Pty) Limited (Kimberley, South Africa).

Last month, MMG committed to investing US$700 million to double production at the Khoemacau copper mine. The expansion project, which will involve interconnecting six underground mines and the installation of a new mill, will see the mine's copper output more than double from 60,000 metric tons to 130,000 metric tons annually. At the same time silver output will rise to 5 million ounces a year, up from 1.6 million ounces.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).