Gov’t approves mining restart at Lerala

Chakalisa Dube | Monday March 11, 2024 06:00

Maroon Capital, owned by Israeli investor Gilad Shabtai, will be required to recommence operations at the mine, potentially bolstering the local economy and employment opportunities. The mine, previously owned by various international firms, is anticipated to restart operations imminently, with plans to commence by mining Lerala’s tailings dump.

Minerals and Energy minister, Lefoko Moagi confirmed the latest development this week when laying his ministry’s 2024–2025 budget before Parliament. Maroon Capital bought Lerala Mine in 2017 but did not start production immediately owing to licensing issues.

“The anticipated resumption of operations has the potential to benefit the local economy, create employment, and contribute to the mining sector and the government," Moagi said.

“As part of this noted positive benefit, my ministry will undertake engagements with the parties to ensure increased benefit for and participation by Batswana."

Lerala Mine started operations in 2008 under the ownership of an Australian firm, DiamonEx. The mine struggled to entrench itself in the diamond market before being sold to United Kingdom junior, Mantle before passing to another Australian firm, Kimberly Diamonds in 2013. Lerala Mine, located in the Tswapong area, closed at the end of May 2017 after Kimberly Diamonds ran out of operational cash amidst weak sales. At least 130 workers lost their jobs, with a few others retained for care and maintenance activities.

Maroon Capital snapped up the mine in 2020 but maintained it under a retention licence while preparing to move to the mining licence, which requires active production.

The government has been under relentless pressure from the Lerala leadership and village elders to ensure that the mine resumes operations as a matter of urgency.

Lerala’s imminent return comes as the broader diamond sector struggles to shrug off the effects of a deep slump last year, which saw prices and retail demand drop by double digits.

Meanwhile, also at Parliament, Moagi announced progress in the government's acquisition of Botash, the country’s leading producer of soda ash and salt. Following South Africa's Chlor-Alkali Holdings' decision to divest its 50% shareholding in Botash, the government aims to acquire full ownership.

“The ministry has appointed the Minerals Development Company Botswana as its Transactional Advisor in the Bud Group/Chlor Alkali Holdings (CAH) divestment from Botswana Ash (Botash)," Moagi said. “MDCB is currently reviewing the business performance and valuation to guide government on the sale process and the best course of action.”

He added that part of the evaluation by MDCB will be the value chain business offshoots to be created locally from soda ash, especially in the detergent, glass, and ammonia amongst others. The Botswana Mine Workers Union (BMWU) has said that it has been given assurances that there will be no job losses at Botash once the transaction has been concluded.

In September 2022, South Africa's Chlor-Alkali Holdings (CAH) announced plans to exit its 50% shareholding in Botash, the country's sole producer of soda ash and salt.

Owned by the Bud Group, CAH came in as a technical partner for Botash in 2009 after buying shares that De Beers, Anglo American, AECI, and various financial institutions owned. The Government of Botswana has maintained a 50% shareholding in Botash over the years.

Soda ash is a vital commodity in industries such as glass production, chemicals, and detergents, while salt finds diverse applications spanning food to water treatment. Botash's strategic market is primarily in SA.

Last September, Botash launched a new strategy aimed at increasing its soda ash production capacity to 430,000 tonnes per annum, from the current 300,000 tonnes, by 2027, while fine salt production capacity will double to 220,000 tonnes per annum over the same period.