Botswana continues to value exploration activity, mining

Exploration for minerals in diamond- dependent Botswana continues despite the tough economic conditions its mining industry faces, which has impacted negatively on the country’s economic health, says mining and exploration organisation Botswana Chamber of Mines CEO Charles Siwawa.

These minerals, he outlines, include coal, copper, silver, lead, zinc, manganese and iron-ore, and remain attractive because of “the volumes of ore being uncovered and as they are economical to exploit”.

He notes that financial analysts assure the chamber that Botswana’s mineral net worth still has some positive contributions to make to the country’s economy.

“There is reason to believe that, while mining is taking place – implying a reduced net worth – prospecting for minerals continues to uncover more economic mineral deposits.”

Some of these, he adds, will have the potential to replace the value that has been taken out of the ground.

To improve the mineral net worth of Botswana, Siwawa notes that enabling policies within government structures encourage mining investment from an exploration and acquisition perspective.

“These policies will have to be alive to the ever-changing world economic and business situation to ensure the flow of investment, into rather than out of, the country.”

Botswana’s mining industry, however, still faces challenges, such as the high input costs associated with mining processes and lower-grade deposits, which position its operations at the higher end of the cost curve.

These challenges, Siwawa explains, can be mitigated by mines reviewing their operations to make them more efficient and productive, thereby lowering running costs.

“The global minerals market is quite volatile, causing those operations at the high end of the cost curve to decrease production at the slightest change in commodity prices.”

Siwawa notes that commodity prices remained subdued for most of the last 12 months; however, indications are that the market is picking up, as an increase has been observed in the coal, copper and nickel prices seemingly pointing towards stabilisation of the market.

“Should there be an upswing in commodity prices, such as that of diamonds and coal, the country’s economy will rebound.”

Mining, he notes, contributes 34% to the country’s gross domestic product (GDP) and 50% of its taxes.

He stresses that it is also imperative that Botswana develop beneficiation as a value-add to the overall mineral process chain.

The industry is considering the beneficiation of any mineral to create employment and boost the country’s economy. The country’s diamond cutting and polishing industry is an example of such beneficiation efforts, involving companies like Diacore Botswana and Eurostar Botswana.

“The diamond beneficiation success has been lukewarm, as some factories [started] operational activities but relocated within a short space of time, while the others that remain have had some success,” Siwawa notes, adding that base metals and coal have also been identified for beneficiation.

The need for beneficiation has been identified primarily owing to the low commodity prices, he explains, but adds that any mineral beneficiation should be considered, provided it makes economic sense.

“The downturn will, [however], come to pass and the industry will be back on its feet once more,” he enthuses, emphasising that there are still high expectations for the mining industry, which continues to drive Botswana’s economy.

However, the significance of this industry has dimmed over the years – primarily as a result of the resurgence of other sectors of the economy, such as tourism and financial services.

Speaking to Mining Weekly, Siwawa explains that the muted growth of the country’s mining sector is partly, ironically, the result of government’s efforts to diversify away from the industry.

Botswana’s base metals sector, for instance, is nonexistent, owing to the temporary closure of existing mines, with only the Mowana African Copper mine, owned by mining company African Copper, in Francistown, attempting to resume production. The mine was acquired in 2017 through an entity that bought the liquidated company.

“All the other base metal mines in Botswana are either on care and maintenance or have been shut down,” states Siwawa, highlighting that the base metals sector has the significant critical mass needed to anchor the beneficiation process in Botswana.

Preparations are being undertaken to restart copper ore company Discovery Metals’ copper and silver mine, through copper mine company Khoemacau, which it bought after Discovery Metals’ liquidation.

A 600 km power line is being constructed to supply electricity to the Khoemacau copper mine.

Current trends are pointing towards the stabilisation of Botswana’s mining sector, despite it having lost a significant number of employees owing to the closure of mines since 2014 – for example, the African Copper mine, and Botswana State-run mining company BCL’s Tati Nickel mine.

Confidence Boost

Botswana has been named the most attractive economy in Africa, scoring highly on factors that include an improved credit rating, current account ratio, import cover and ease of doing business in the country.

This is according to Africa Investment Index 2016, compiled by investment management and advisory services provider Quantum Global’s independent research arm, Quantum Global Research Lab.

This rating, Siwawa believes, is a welcome boost to the country’s economy: “This will certainly improve the flow of investment funds into the country, aimed at all levels of the business community. It can only be good business for Botswana.”

The minerals industry, he adds, still plays a significant role in the development of the economy and should be encouraged to drive the country further in its development path.

http://www.miningweekly.com/article/botswana-continues-to-value-exploration-activity-mining-2017-05-26

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