Botswana Ranked No. 1 In Africa For Mining Investment

BUSINESS CORRESPONDENT | Tuesday March 17, 2009 00:00

 

This year's Fraser Institute Survey of Mining Companies involved more than 3 000 mining entities representing 71 jurisdictions on every continent except the Antarctica. Botswana was ranked 18th overall in the world, coming behind global leaders mainly concentrated in North America. 2009 thus marks the fourth year in a row Botswana has been ranked the preferred mining destination in Africa, starting from the 2005/06 survey. All respondents who commented on Botswana said it had the most favourable policies towards mining.

Botswana, with an index score of 64.9, was ahead of other African states such as Mali (53.6), Namibia (52.5), Ghana (51.3) and Burkina Faso (45.1). South Africa was ranked 10th in Africa with 40.4. Botswana also eclipsed many more developed jurisdictions such as several states in the United States, several Australian provinces, most European countries and most Latin American countries. The index score is extracted from several criteria that the survey looks at. Respondents are asked to comment on individual countries' performances in terms of criteria such as current mineral potential, political stability, labour regulations, geological database, security, supply of labour, environmental regulations, availability of infrastructure, taxation and others.

According to the survey, mining companies throughout the world ranked Botswana first in Africa in terms of political stability and labour regulations/employment agreements.

Botswana was ranked second in Africa, behind South Africa, for its geological database, which includes quality and scale of maps, ease of access to information and others. This ranking is expected to improve in years to come as the Department of Geological Survey (DGS) in Lobatse is currently in partnership with the Japan Oil, Gas and Metals Corporation (JOGMEC) in a remote sensing project. Under the five year project, Batswana geologists are undergoing training from their Japanese counterparts in remote sensing - the technology of detecting the presence of minerals using satellites in space.

The country was also ranked first in Africa in terms of security, which includes the threat of terrorism, criminal attacks or guerrilla groups disrupting mining activities. Second in this category was Namibia. Botswana was also ranked highly in terms of taxation and environmental regulations. However, the country ranked poorly in the infrastructure development category.

One of the respondents in the Survey said: 'Botswana is the shining star of governance and lack of corruption in Africa!' Another said: 'There is a six-week approval period for prospecting licences in Botswana, compared to 12 months in South Africa.' The latter respondent is the company president of a producer company with less than US$50 million revenue annually.

When asked what 'good policy' means, one respondent said: 'Rules and regulations which are not continually changed to satisfy various interest groups. As long as the application complies with the rules and regulations, permits are granted accordingly. Example of jurisdictions are South Africa, Namibia, Botswana, Sweden and Mexico.' This particular respondent is the president of an exploration company.

The Fraser Institute Survey of Mining Companies 2008/2009 also indicates that mining companies have a gloomy outlook for the industry, with at least 30 percent of exploration companies expected to shut down this year and in years to come. According to the Survey, 90 percent of respondents believe the exploration and development activities of exploration companies will be curtailed for 2009, with 57 percent saying the activity will decline 'a great deal.'

'Nearly 85 percent of respondents say that activities of production companies will be curtailed though only 31 percent believe that the activity of production companies will decline a 'great deal,'' reads the Survey.

Fraser Institute's Survey Coordinator and Director of Trade and Globalisation Studies, Fred McMahon was quoted as saying survey responses showed that the global mining sector expected 'dramatically decreased' investment plans with a large number of production cut-backs or shut-downs.

'All this is bad for a (world) economy looking forward to recovery. With large numbers of exploration companies expected to go out of business and a vast majority of companies planning to curtail exploration and development investment in 2009, the world may face a shortage of raw materials and skyrocketing commodity prices as the world economy moves past the recession and into renewed growth,' he said.

The Fraser Institute, an independent Canadian research organisation, has conducted the Mining Survey since 1997 involving increasing numbers of respondents and jurisdictions. Survey results represent the opinions of executives and exploration managers in mining and mining consulting companies operating around the world.