Botswana Proposes New Law Requiring Local Stake in Mining Operations
Botswana is proposing a new law that mandates mining companies to sell a 24% stake in their operations to local citizens or citizen-owned companies once a license is granted, should the government choose not to exercise its option to acquire the shareholding.
Botswana, renowned for its rich natural resources, particularly diamonds, saw its diamond production valued at $3.28 billion in 2023, making it the leading diamond producer in Africa and the second globally, only behind Russia, which had a production value of $3.60 billion.
The proposed amendment to the existing Mines and Minerals Act aims to ensure greater local participation in the mining sector, according to a report by Reuters.
Currently, the Act permits the government to acquire a 15% shareholding in any mining project upon licensing, with the option to negotiate higher stakes in diamond mines.
However, the government has not exercised this option in recent transactions, including Lucara’s acquisition of the Karowe Diamond Mine, the purchase of the Khoemacau copper mine by China’s MMG, and the opening of the Motheo Copper Mine owned by Australia’s Sandfire.
The Mines and Minerals Amendment Bill, to be presented in parliament by Mines Minister Lefoko Moagi, stipulates, “Where government does not exercise its option of acquiring a 15% working interest upon granting of a mining licence, the holder shall use his best endeavour to dispose of the 24% stake to citizens or citizen-owned companies.”
Moagi has suggested that the government proposes sourcing funds from the country’s pension funds to facilitate Batswana in acquiring these stakes. Recent legislative changes have required pension funds to reduce their offshore investments from 65% to 50% over the next three years.
The state-owned Minerals Development Company Botswana holds equity stakes in several mining ventures, including 50% in Debswana Diamond Company, 15% in De Beers, 100% in Morupule Coal Mine, and indirectly in Minergy Ltd through convertible debt advanced to the coal mine.
