8 June 2017

Botswana: Govt Owns Shares in Local Mines

Gaborone — Mines and Minerals Act gives government an option to own 15 per cent shares in new mines, permanent secretary in the Ministry of Minerals, Green Technology and Water Resources, Dr Obolokile Obakeng has said.

Appearing before the Parliamentary Accounts Committee (PAC) on Tuesday, Dr Obakeng said the same Act however called for negotiations with regard to shares in diamond mining companies.

Government has a 50 per cent stake in Debswana, with De Beers Company holding the rest and the two entities also own the Diamond Trading Company Botswana (DTCB).

Further, the PS said government had 15 per cent shares in De Beers, with Anglo American owning 85 per cent.

Government fully owns Okavango Diamond Company and Morupule Colliery and also owned BCL Mine, which has been placed under provisional liquidation.

Specially elected MP, Ms Bogolo Kenewendo wanted to know if government had shares in mines operating in the country.

The PS said the Minerals Development Company of Botswana (MDCB) had been tasked with managing government's assets in the mining industry and these would be transferred to the company.

However, the MDCB does not have a structure in place, and its founding chief executive officer (CEO), Mr Paul Smith left the company after his contract was not renewed.

Dr Obakeng said they parted with Mr Smith last month for a number of reasons, among them lack of consultation and poor relationship between the CEO and the company board of governors.

He said when decisions were to be made, consultations were not properly done, leading to the CEO making decisions alone.

Dr Obakeng told PAC that the MDCB board was intact, but the board chairperson had resigned for unknown reasons.

He said while the strategy was being developed, the guidelines were adequate.

The PS said government made the decision to place BCL Mine under provisional liquidation and that the liquidator was working on the process assisted by the MDCB.

He said the mines had been placed under care and maintenance, but was not in a position to state whether its assets were depreciating.

The decision to place the copper/nickel mine under provisional liquidation resulted from low commodity prices and further, BCL was heavily indebted, he said.

Gaborone Bonnington South MP, Mr Ndaba Gaolathe asked if the process did not need a legislature to which the PS said did not think was required since they were doing everything right.

Dr Obakeng said they were trying to woo potential investors to take over the mine.

He explained that the liquidation process could not wait for the MDCB strategy as it had its own merits.

Permanent secretary said P980 million had been invested for care and maintenance of BCL Mine by government, adding that the liquidator's charges were not a lump sum, but had paid P27 million to date.

Dr Obakeng also told PAC that his ministry had begun preparations for re-negotiations with De Beers over the mining licences and diamond sales agreement.

He said the whole preparatory process would take eight months to complete and a steering committee had been identified.

MP Gaolathe asked if they intended to keep the contract a secret and the PS said he was not in a position to comment on the matter. Dr Obakeng said the sales agreement expires in 2020 while the mining licences for Debswana mines expires in 2029.

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