- Language: English
- Published: May 2012
- Region: Botswana
Botswana Mining Report Q4 2012
- Published: September 2012
- Region: Botswana
- 47 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.
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.
Diversification Is The Priority
Botswana has been stepping up efforts to diversify its mining sector with the government aiming to develop production of non-core minerals including, coal, copper and precious metals. In Q312 concerns over a possible slow-down in mining production and economic growth has accelerated government efforts to promote growth outside of diamond mining. Botswana's GDP grew by 3.2% y-o-y in Q112, down from 9% in Q111 while, during the same quarter, the country recorded a contraction in mining growth of 7.8%,
according to government figures. Fears of a double-dip recession in the US and Europe, which represent some of the main export markets for Botswanan diamond production are thought to be partly responsible for the slump and has intensified efforts to promote growth in non-core mining.
One key measure, introduced in recent months, has been the amendments made to the country's tax framework with the level of company tax having been reduced from a minimum of 25% to 22%.
Botswana's Minister for Minerals Dr Ponatshego Kedikilwe said the measures are aimed at encouraging foreign investment in areas of non-core mining including production of coal, copper and other minerals.
Coal mining has enjoyed one of the largest boosts in recent months and the government is in the process of drawing up a national Coal Development Unit (CDU), which will oversee development of mining projects and transport infrastructure and will also act as a go-between between the government and private investors.
Botswana Leads The Rest
Botswana remains at the pinnacle of our mining risk/reward ratings and we see little prospect of the country being usurped in the near future. Botswana's impressive country risk scores are due to a strong legal framework and investor-friendly environment. It has some of the lowest tax rates in the region and there is little government interference in the mining sector. Furthermore, Botswana has some of the lowest rates of corruption in Africa. Botswana's mining potential is enormous, with huge diamond deposits and numerous successful exploration projects. There is strong potential for growth due to the government's focus on diversifying away from diamond production. Discovery Metals has begun drilling at the Boseto copper mine and African Copper has started operations at the Thakadu silver and gold mine. It is in coal production, however, that we expect to see the fastest growth rates, as the sector grows rapidly from its low base. Furthermore, while much of Southern Africa is undergoing greater resource nationalism, we do not expect this trend to reach Botswana as it has pledged to maintain its businessfriendly outlook.
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. SHOW LESS READ MORE >
Executive Summary 5
SWOT Analysis 7
Botswana Mining Business Environment SWOT 7
Global Mining Outlook 8
Table: Recent Tax Increases 11
Table: Largest Coal Projects 13
Table: Major Frontier Mining Projects 13
Africa Mining Outlook 15
Table: Recent Government Intervention 16
Industry Trend Analysis 20
Table: Botswana's Major New Mining Projects 21
Table: Botswana's Mining Industry 22
Industry Forecasts 23
Diamonds: Moderate Growth Ahead 23
Table: Botswana's Main Diamond Projects 24
Table: Botswana's Diamond Production 25
Coal: Asian Demand Driving Growth 25
Table: Botswana's Coal Deposits 27
Table: Botswana's Coal Production 28
Copper: Ghanzi Development A Taste Of Things To Come 28
Table: Botswana's Main Copper Projects 29
Table: Botswana's Copper Production 29
Regulatory Development 30
Business Environment Ratings 31
Table: African Government Intervention 31
Table: Africa's Risk/Rewards Ratings 32
Competitive Landscape 36
Company Profiles 38
African Copper 38
De Beers Botswana Mining (Debswana Mining) 40
Lucara Diamond Corporation 42
Business Environment Ratings Methodology 44
Table: Mining Business Environment Indicators 45
Table: Weighting Of Components 46