Botswana is moving forward with a new legislative proposal designed to enhance local ownership in its mining sector. According to a draft bill reviewed recently, the government intends to require mining companies to sell a 24% stake in their operations to local citizens if the government chooses not to acquire this share itself.
The proposed Mines and Minerals Amendment Bill will be presented to Parliament by Mines Minister Lefoko Moagi. This bill is set to overhaul the current Mines and Minerals Act, which allows Botswana, the leading diamond producer globally and an emerging copper mining hotspot, to acquire a 15% share in any mining venture upon licensing. The existing law also provides an option for the government to negotiate a higher stake, particularly in diamond mines. However, the government has consistently opted not to exercise this option in recent mining transactions.
Notably, in recent years, the government has declined to exercise its purchase rights in several significant deals. These include Lucara’s acquisition of the Karowe Diamond Mine, MMG’s purchase of the Khoemacau copper mine, and the opening of the Motheo Copper mine, owned by Australia’s Sandfire. This trend of bypassing the option to buy additional shares has led to the current legislative proposal.
The new bill stipulates that if the government does not opt to acquire the 15% stake, the mining company must endeavor to sell 24% of its stake to citizens or companies owned by citizens. This move aims to significantly increase local involvement in the mining sector, ensuring that the benefits of Botswana’s mineral wealth are more broadly shared among its people.
Minister Moagi has suggested that the necessary funding for Batswana to purchase these stakes could be sourced from the country’s pension funds. Recently, a change in law has instructed pension funds to decrease their offshore investments from 65% to 50% over the next three years. This adjustment in investment strategy could provide the necessary capital to support local participation in mining ventures.
The government, through its state-owned entity, Minerals Development Company Botswana, already holds substantial equity stakes in several key mining operations. These include a 50% stake in Debswana Diamond Company, a 15% interest in De Beers, full ownership of Morupule Coal Mine, and an indirect stake in coal miner Minergy Ltd through convertible debt.
By increasing local ownership in mining projects, the government hopes to strengthen economic growth and ensure that the wealth generated from Botswana’s mineral resources benefits a broader segment of its population. The legislative move reflects a growing trend towards local empowerment in resource-rich nations, aiming to balance the interests of foreign investors with those of the local populace.
