A familiar face raises its hand as economy looks for revival
Mbongeni Mguni | Monday July 26, 2021 06:00
Any week from now, a shiny new mine will be officially opened on the sands of the Kalahari Copperbelt in northwestern Botswana, a $600 million investment that is currently supporting more than 2,300 jobs.
Over its 20-year lifespan, Khoemacau Copper Mine expects to pay the government nearly P3 billion in royalties, an amount that excludes taxes and could rise depending on copper prices, which are currently trending high on global markets.Khoemacau began producing copper concentrate this year, marking the first commercial output from the Kalahari Copperbelt since Boseto Mine closed its doors in 2015. The new mine’s establishment, while expected and planned, underlines the mining sector’s continuing central role in underpinning the country’s economy, ravaged by COVID-19.
Since the golden years of the 1970s mineral boom, successive administrations have attempted to wean the country off its reliance on mining for economic growth, with mixed results. Relying on mining for an economy is fraught with dangers, as seen over the decades where cycles in the global economy caused deep fluctuations in Botswana’s fortunes, leading to recessions in 2009, 2015 and last year.
Gross Domestic Product (GDP) figures released last week underline the fact that non-mining activities have increasingly helped prop up growth. Mining, particularly diamonds, still accounts for the majority of foreign currency revenues and the government budget. The latest GDP figures, a measure of economic activity, also show that as mining’s role in driving growth numbers declines, its overall contribution to the economy remains stable.
What does that mean exactly? The numbers tell the story. In the first three months of 2021, known as the first quarter, mining as a sector shrank by 11% in terms of economic activity but still contributed 11.3% to the overall output of the economy.
As fiscal authorities look for growth nodes for budget revenues and economic output, mining is putting its hand up.
Mineral Resources, Green Technology and Energy Security minister, Lefoko Moagi says from the dark days of 2020 when mining shrank by 26.2%, the worst-performing sector in the economy, the gradual recovery of the global economy is lifting commodity markets. “We have seen that maybe there’s a light of hope when we look at the mining industry,” he told a recent televised briefing. “In the market, there are signs of recovery and we are happy about this. “Last year was difficult, everything was down, especially with lockdowns.
“This year, the prices of commodities such as copper, gold, iron ore and diamonds are rising.” Moagi lovingly reels off a list of upcoming projects that make mining the unexpected shining star of the economy’s recovery. The P14.5 billion Economic Recovery and Transformation Plan (ERTP), the government’s blueprint for recovery past and post COVID-19, makes little mention of mining, but Moagi’s list shows the sector will anchor the efforts being made to boost other sectors to revive the economy.
Besides Khoemacau, Sandfire Resources’ $260 million mine on the Kalahari Copperbelt, 80 kilometres from Gantsi, is taking shape with 1,000 workers to be employed during construction and 600 during operations. Maatla Energy and African Energy’s Sese Power Project are advancing towards production, their activities recently fortified by their shortlisting in the government’s coal-fired 300MW-power station tender. Existing mines also have major plans for expansions, including Lucara, which is finalising $514 million funding to take the world-renowned Karowe Mine underground. This year alone, Lucara has raised more than $300 million, an effort helped by the discovery of large stones that have boosted investor confidence.
At Morupule Coal Mine, an operation wholly owned by the government, an open cast mine is due to be operational by October 2021, helping boost production by one million more tonnes. At least 600 people are currently employed at the expansion project, which lies near the existing underground operation first established in 1973.
Minergy Coal, the country’s newest coal mine, enjoyed its first full year of production last year and despite COVID-19 related challenges, produced 204,034 tonnes of coal and sold 127,522 tonnes. This week, the company announced record sale volumes for May and June 2021 and this year, Minergy expects to continue ramping up to its nameplate production of 80,000 tonnes per annum.
Iron ore is a particularly exciting prospect for Moagi. After years of start-stop exploration, the country recently issued its first mining licence to Vision Ridge Investments (Pty) Ltd, which has mapped out rich, shallow and extensive resources in the Shoshong area. “The good thing is that these resources are close to the surface and can be further enhanced to produce steel,” he said. “That’s the idea for that project and we have a lot of hope because the price of iron ore has been rising.
“We have to encourage as much as possible that the mine gets into operation.”
In Selebi-Phikwe, Premier Nickel Resources is finalising due diligence into BCL Mine to make an offer to government for certain or all assets next month. BCL Mine’s closure in 2016 marked the downturn of the base metals sector in the country and the rise of Khoemacau and Sandfire is seen as a rebirth. Director of Mines, Selinah Mogojwa is understandably upbeat about the mining sector’s prospects this year and beyond. “Usually, in a year, you get one large mine being developed, or nothing at all, but this year we have three large mines,” she said. “In terms of revenue to the country, between April and June, the billions of pula we have seen are very comforting when compared to last year. “Even though COVID-19’s impact is still felt, this year we are expecting much better results.