republic of botswana: state of the mineral industry and investment opportunities in botswana
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MINING ON TOP: AFRICA-LONDON SUMMIT, June 2014
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STATE OF THE MINERAL INDUSTRY AND INVESTMENT OPPORTUNITIES IN IN BOTSWANA
Tiyapo Hudson NgwisanyiDirector
Department of Geological SurveyMinistry of Minerals, Energy and Water Resources
Pre Independence Era
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Botswana : at a glance
impressive track record of good governance and
economic growth supported by prudent
macroeconomic and fiscal management,
At the centre of Southern Africa & SADC region
Area: 582,000 sq. km.Population (2011): 2.031 million.
Nominal GDP (2012): $14.50 billion.Real GDP growth rate (2012): 4.2%, (2011): 6.1%.
Per capita nominal GDP (2012): $7,650 .
Natural resources: Diamonds, copper, nickel, coal, soda ash, salt, gold.
Sources of Government Revenue SACU largest share (34%) in 2012/13, first time since
1970’s, Mineral’s share declining: fell from 48% in 2006/07 to 29% in 2012/13
INTERNATIONAL RANKINGS
• Corruption Perception Index – Transparency International (30/177) 2013• The Global Peace Index – Vision of Humanity (32/162) 2013• Mining Report – Fraser Institute (17/93) 2011/2012, (24/112) 2013• Index of Economic Freedom- Heritage Foundation/WSJ (30/185) 2013• World’s Best Countries Index- Newsweek• The Global Enabling Trade Index- World Economic Forum (54/132) 2012• Doing Business Report (World Bank) 2013 Rank =65/189, 2014 Rank = 56• Democracy Index- Economist Intelligence Unit (33/167) 2011• Human Development Index- UNDP (118/187) 2011• Global Competitiveness Index- World Economic Forum (66/133) 2013• Credit Ratings - Moody’s (A2) 2013 • Credit Ratings - Standard and Poor’s (long term: A-, short term: A-2) 2013• Mo Ibrahim Index of African Governance (2 /52) 2012, (2/52) 2013
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Uncertainty concerning existing regulations
5Fraser Institute – Survey of Mining Companies 2013
1. Maximize the economic benefits for the nation while enabling private investor to earn competitive returns.
– We fully appreciate the concept and practice of internal rate of return in that enterprises are not charitable organisations but adapt corporate social responsibility policies as they thrive.
– We have no restrictions on the repatriation of profits because there are no exchange controls.
– Low level of taxation and – prudent economic management by Government.
2. Create a competitive environment to stimulate private sector investment in mineral exploration and exploitation. – Geological data from previous exploration work freely
availably at the National Geoscience Information center
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Minerals Policy Objectives
3. Encourage linkages with the rest of the economy to expand value addition activities.– Where economically feasible beneficiation and downstream
activities should be done in Botswana to facilitate economic diversification, e.g for diamonds we attracting companies to relocate to Botswana to cut and polish, provide support service and trade polished and rough diamonds in order to create a diamond trading centre which will out-live the mining operations.
– Suppliers of consumables such as chemical reagents for processing plants and equipment spares are encouraged to setup businesses in the country.
4. Generate employment and training for Botswana’s citizens
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Minerals Policy Objectives
5. Safeguard the environment – mining operations are required to operate in accordance with good
mining industry practice, to preserve in as far as is possible the natural environment, minimize and control waste or undue loss of or damage to natural and biological resources.
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Minerals Policy Objectives
Investment Climate
Political stability Safety and security Corruption Top sovereign credit rating Foreign exchange policy Stable inflation Taxation Information and communication technology (ICT) Infrastructure Enforcing contracts Trading across borders
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Mineral Investment Climate
• Favourable Geological Environment• Progressive Mining Code• Simplicity and Predictability of Mineral
Legislation• Security of Tenure• Commitment to Customer Satisfaction• PPP
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EXPLORATION INTEREST IN BOTSWANA
• There are currently >1000 PLs for all minerals
• Though exploration expenditure has declined from the 2007 levels there are signs of recovery
• PL overlaps allowed
• PL map (all)
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Availability of Geodata
The Department of Geological Survey is the custodian of all geoscience data collected in Botswana
By
Government
Exploration companies
Researchers
• Analogue• digital
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Geological Data
1:1,000,000 Geological map (entire country)
1:250,000 (western Botswana)
1:125,000 (QDS) (eastern Botswana)
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GEOPHYSICAL DATA
• Reconnaissance aeromagnetic survey at 4km and 1km line spacing
• Detailed high resolution aeromagnetic and radiometric surveys at 200 – 250m line spacing
• Private sector surveys at 50 – 100m line spacing
• Radiometric data covering eastern Botswana
• Gravity - countrywide 14
GEOLOGICAL CONTEXT
• Oldest rock masses in Botswana constitue the Archaean age “basement” which crop out only in the east of the country
• Subdivided into Kaapcaal Craton, Zimbabwe Craton and Limpopo Belt
• Composed mainly of granitoid lithologies• Also presence of Archaean igneous intrusions (Kanye
Volcanic Formation, Gaborone Granite, etc)• 75% of Botswana’s surface is underlain by
Phanerozoic successions of the Karoo Supergroup and Kalahari beds
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Structural Provinces & Tectonic UnitsCarney, Aldiss & Lock, 1994
Kaapvaalcraton
Zimbabwecraton
Mag
ondi
belt
Kalahari cra
ton
Ghanz
i-Cho
be b
elt
Okavango
zone
Congo
craton
Limpopo mobile belt
Kaapvaalcraton
Zimbabwecraton
Mag
ondi
belt
Kalahari cra
ton
Ghanz
i-Cho
be b
elt
Okavango
zone
Congo
craton
Limpopo mobile belt
Kaapvaalcraton
Kaapvaalcraton
Zimbabwecraton
Zimbabwecraton
Mag
ondi
belt
Mag
ondi
belt
Kalahari cra
ton
Kalahari cra
ton
Ghanz
i-Cho
be b
elt
Ghanz
i-Cho
be b
elt
Okavango
zoneOkavango
zone
Congo
cratonCongo
craton
Limpopo mobile belt
Limpopo mobile belt
Ma Lithostratigraphic units Period Era Eon 1.8 Kalahari Quaternary Cenozoic
65 Kalahari Tertiary
144 kimberlites Cretaceous
203 Karoo Supergroup Jurassic
250 Karoo Supergroup (+kimberlite)
Triassic
Mes
ozoi
c
298 Karoo Supergroup Permian
354 Karoo Supergroup Carboniferous
416 Devonian
440 Silurian
495 Ordovician
545 kimberlite Cambrian
Pal
aeoz
oic
Pha
nero
zoic
1000 Ghanzi – Chobe - Okavango
Late
1600
Otse – Waterberg – Palapye (+kimberlite)
Mid
2050 Olifantshoek – Okwa - Gweta
Early
Pro
tero
zoic
2650
Transvaal Supergroup
Vaalian
3100 Witwatersrand
Randian
3600 Barberton - Kraaipan
Swazian
Arc
haea
n
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Limpopo mobile belt
Kaapvaalcraton
Zimbabwecraton
Okavango
zone
Mag
ondi
belt
Kalahari cra
ton
Ghanzi-Chobe belt
Congo
craton
1.3% Cu – 131Mt, 3%-Pb-Zn-25Mt,
3.5Mt-Ag
stratabound Cu-Ag at Ngwako Pan
minor Cu-Au, mica & Sn in Zimbabwe
Metals Potential
Gold in greenstones
2.4%-Ni/Cu in basic magmatic rock
Ni/Cu in basic amphibolite-
30Mt
Gold in greenstones
Transvaal Super group Stratabound Iron & Manganese
Molopo Farms Complex (Bushveld Complex
analogue) Platinum Group Elements
Diamond in Kimberlite(various ages)
after Norman Lock, 2006
Okavango
zone
Kalahari cra
ton
Mag
ondi
belt
Ghanzi-Chobe belt
Limpopo mobile belt
Kaapvaalcraton
Zimbabwecraton
Congo
craton
Kaapvaalcraton
Zimbabwecraton
Limpopo mobile belt
JwanengIntra-Karoo
(±240Ma)
MabuasehubeMid - Late
Proterozoic
Martin’s Drift
Proterozoic (±1200Ma)
Mochudi/MosomaneProterozoic (±1200Ma)
Tsodilo / Orapa / Gope / Okwa /
KokongCretaceous
(±90Ma)
Tsabong / Lekgodi
Cretaceous (±90Ma)
SikwaneCambrian (±600Ma)
Cambrian(±500Ma)
Coal Potential
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• Botswana has extensive, and largely unexploited, coal resources which when developed can form part of the Government’s effort to diversify the economy.
• Known coal resources are of the order of 212 billion tonnes
• Current coal mine (Morupule Coal Mine) expanded to produce just under 4.0 mtpa is insignificant in comparison to these resources endowment
• The demand for coal-for-energy has increased significantly nationally, regionally and internationally
Options for utilisation of Botswana coal
• Coal exports• Domestic power• Export power• Coal-to-liquids• Coal-to-gas• Coal bed methane
Fertiliser - Producing nitrogen-based fertilisers from coal, etc.
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Base Metals Industry Review• There are 4 licensed base metal mining operators in Botswana
– BCL Limited: Nickel/Copper– Tati Nickel Mining Company: Nickel/Copper– Messina Copper: Copper– Discovery Metals : Copper & Silver
• Botswana has been mining copper and nickel for more than three decades on the mineralization in the extensive greenstone belts covering much of the East and North East of Botswana. (BCL Limited Mines and Tati Nickel Mining Company Mines)
• The strengthening of copper prices prior to the current global financial crisis has led to renewed interest in the other copper deposits in the North Eastern part of the country as well as those found in the Ghanzi ridge in the west.
• Improvement of the road infrastructure in the western part of the country has the potential to increase the prospectively of these deposits.
The Enabling Mining Environment for Investment
• The Mining CodeThe Mines and Minerals Act, 1999, the centrepiece of
Botswana Mineral Legislation• Mineral rights vested in the State• Law provides for security of tenure and predictability• Virtually an automatic transition from a Prospecting
License to a Mining License the Minister shall ensure, in the public interest, that the
mineral resources are investigated and exploited in the most efficient, beneficial and timely manner
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Mineral concessions are required to explore for or mine minerals
Four types of mineral concessionsProspecting licenseRetention licenseMining licenseMinerals permit
Legislation
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Prospecting Licences
Duration: not more than 3yearsRenewals: not more than 2
renewals, each not exceeding 2 years
Area ≤ 1,000 km2 per licenceConsiderations:
• Adequate financial resources, Technical competence and expertice
• Satisfactory Proposed programme of prospecting operations
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Retention Licences
Conditions• Feasibility study carried out• Approved prospecting programme completed
Duration: not more than 3 years Renewal: Once only for a period not exceeding 3
years
Mining Licences
Duration of up to 25 years Renewable for up to another 25 years
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Mineral Permits
For small scale mining operationsFor any minerals except diamondsArea not exceeding 0.5 km2 per
permitPermits for industrial minerals
granted to citizens onlyDuration: not more than 5 yearsRenewal: for a period not
exceeding 5 years at a time
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Government Investment
• No intention for day-to-day management of mining operations
• Non-diamond Minerals– Option for a working interest participation
of up to 15% • Diamonds
– Level of participation reached through negotiations
– Negotiations initiated by application for a mining licence
– Good faith negotiations, failure not foreseen
• Government not a majority shareholder
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Financials
• Royalties - %age of gross market value
Mineral Type Percentage– Precious stones 10%– Precious Metals 5%– Other Minerals 3%
• Lease rentals– P100/km2 or part thereof
Conclusions
• Botswana is the investment destination of choice in:– Minerals Prospecting– Mining– Downstream diamond beneficiation– Transportation in mining– Power generation– Transmission infrastructure– Renewable Energy Technologies
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Ministry of Minerals, Energy and Water ResourcesP/Bag 0018
Gaborone, BotswanaTel: +267-365-6600Fax: +267-372-738
Permanent Secretary bpaya@gov.bw
Deputy Permanent Secretary (Water & Energy)
kabi@gov.bw
Deputy Permanent Secretary (Minerals)Director of Geological Survey
nmmolawa@gov.bwtngwisanyi@gov.bw
Contacts
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