- Language: English
- 65 Pages
- Published: June 2011
- Region: Botswana
Botswana Mining Report Q3 2012
- Published: May 2012
- Region: Botswana
- 52 pages
- Business Monitor International
The Botswana Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Botswana's mining industry.
Diamonds To Remain Mainstay Of Mining Sector In line with the Botswanan government's plans to diversify away from diamond revenues, there has been a swathe of new mining projects announced in 2011. However, while the country's silver, gold and coal production is set to surge from its low base, BMI expects diamond output to remain the dominant facet of the country's mining production for the foreseeable future.
Hana Mining has announced a 350kt ('000 tonnes) copper reserve (at a cut-off of 0.3% Cu) at its Ghanzi deposit. Discovery Metals' Boseto mine has a total JORC-compliant mineral resource for 102.8mn tonnes, at 1.4% Cu and 17.3g/t Ag, equivalent to 1.4mn tonnes of copper and 57mn oz of silver. There are also additional coal, gold and silver deposits currently being developed by Aviva Corporation and African Copper, which has received an interim mining licence to develop the Thakadu copper-silver project.
Uranium mining could also be a future key revenue generator for Botswana, with news in May 2011 of a 65% increase in the uranium resource at A-Cap Resources' Lethlakane uranium project. Although these projects will increase Botswana's non-diamond mining sector revenues in future years, these projects remain dwarfed by the country's diamond production, which remained the largest in the world in 2010, with output of 24mn carats, accounting for 18.5% of global output. In the diamond sector, Gem Diamonds has been awarded a 25-year mining licence for its Gope diamond project in central Botswana and Lucara Diamond Corporation announced that it will be starting full production at its AK06 diamond mine by early 2012, with expectations that the mine should produce 400,000 carats of rough diamonds during its first year of operations. Commissioning of the mine was scheduled to start in Q411.
Gem Diamonds has stated that diamond production at Gope will start in 2013, at an initial rate of 100,000 carats per annum, increasing over time to a 'peak steady state' production of 780,000 carats per annum.
Against this backdrop, we made some upwards revisions to our copper production and export forecasts earlier in the year to reflect this new output from Boseto and we have also now made an upwards revision to our diamond production and export forecasts to take account of Lucara's higher output from the AK06 mine from 2012 onwards and Gem's higher output from 2013 onwards.
Botswana Still Favourable Botswana remains the highest-rated African country in our Business Environment Rankings. The country has a stable political situation and a well-developed mining sector, backed up by a sound regulatory framework.
Moreover, tax rates remain relatively low on a regional basis and the country has relatively flexible labour regulations, which should also bolster growth. Our positive view on Botswanan mining is shared by the influential Fraser Institute, which has placed Botswana in 14th place (out of 79 jurisdictions) in its Policy Potential index, as contained in its Survey of Mining Companies 2010/11, published in March 2011.
Botswana saw an increase in its score to 74, up from 66.5 in the previous year. In terms of current mineral potential (assuming current regulations and land use restrictions), Botswana was ranked 7th out of 79, underlining the substantial mineral base that is ready to be developed in the country.
Country Overview Exploitation of rich mineral reserves, especially diamonds, has been a significant driver of Botswana's economic growth. Diamonds, along with copper and nickel, are major focus areas in metal and mineral exploration, and earn more than three-quarters of the country's export revenues. More recently, coal and uranium have also emerged as key future revenue generators for the Botswanan mining industry.
The authorities in Gabarone have an impressive track record in garnering the maximum benefit from the production of diamonds, and we expect this trend to continue over the coming decade. Diamonds currently dominate the economy but, with output set to decline over the medium term as reserves dwindle, the government has enacted a number of measures to ensure that revenues are used to aid diversification. For example, a fiscal rule has been adopted that states that mineral revenues must be used to expand the economy's productive base, rather than fund consumption expenditure. Owing to this rule and other initiatives enshrined in successive six-year National Development Plans and the long-term policy Vision 2016, growth in the non-mining sectors is burgeoning.
Industry Forecast We are positive on the outlook for the Botswanan mining sector over our forecast period to 2016. Diamond output will remain the mainstay of Botswanan mining production, boosted by new projects being planned by both Gem Diamonds and Lucara Diamond Corporation; however, there are also key mining projects being developed in the copper, uranium and coal sub-sectors, such as Discovery Metals' Boseto project. We believe that the sector can show growth of over 90% between 2011 and 2016, with the industry reaching a value in excess of BWP53.7bn (US$8.7bn) by 2016. SHOW LESS READ MORE >
Executive Summary 5
SWOT Analysis 7
Business Environment SWOT Analysis 7
Global Mining Outlook 8
Table: Recent Tax Increases 11
Table: Largest Coal Projects 13
Table: Major Frontier Mining Projects 14
Africa Mining Sector Outlook 15
Table: Recent Government Intervention 16
Industry Trend Analysis 20
Table: Botswana's Major New Mining Projects 20
Table: Botswana's Mining Industry, 2009-2016 22
Industry Forecasts 23
Diamonds: Sector To Remain Fundamental To Economy 23
Table: Botswana's Main Diamond Projects 24
Table: Botswana's Diamond Production, 2009-2016 24
Copper: Rapid Development From Low Base 25
Table: Botswana's Main Copper Projects 25
Table: Botswana's Copper Production, 2009-2016 26
Coal: Botswana Set To Become A Major Player 26
Table: Botswana's Coal Deposits 27
Table: Botswana's Coal Production, 2009-2016 28
Regulatory Structure 29
Africa Business Environment Ratings 30
Table: African Government Mining Plans 30
Table: Mining Business Environment Risk/Reward Ratings 31
Competitive Landscape 35
Company Profiles 37
African Copper 37
De Beers Botswana Mining (Debswana Mining) 39
Lucara Diamond Corporation 41
Metals Commodity Price Forecasts 43
Business Environment Ratings Methodology 49
Table: Mining Business Environment Indicators 50
Table: Weighting Of Components 51
African Copper , De Beers Botswana Mining (Debswana Mining) , Lucara Diamond Corporation ,