mmewr -indaba 2009 - Government of Botswana
mmewr -indaba 2009 - Government of Botswana
mmewr -indaba 2009 - Government of Botswana
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Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong>’s Mineral Sector: “turning<br />
challenges into opportunities.”<br />
Dr. P. H. K. Kedikilwe<br />
Minister <strong>of</strong> Minerals, Energy and<br />
Water Resources
Republic <strong>of</strong> <strong>Botswana</strong><br />
Outline<br />
• <strong>Botswana</strong>’s Investment Climate<br />
• Challenges and opportunities<br />
– Global Economic Crisis<br />
– Power<br />
• Projects already in the pipeline<br />
2
<strong>Botswana</strong>’s Investment Climate<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
• Commitment to Good Governance<br />
– Democracy<br />
– Transparency<br />
– Low Level <strong>of</strong> Corruption<br />
– Successful Partnerships with the Private Sector<br />
– Respect for property rights<br />
3
Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong>’s Investment Climate<br />
• Fiscal and Monetary Policies<br />
– No Exchange Controls<br />
– No Restrictions on the Repatriation <strong>of</strong> Pr<strong>of</strong>its<br />
– Low Level <strong>of</strong> Taxation Prudent Economic<br />
Management<br />
4
<strong>Botswana</strong>’s Investment Climate<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
• Fiscal and Monetary Policies<br />
– Variable Rate Income Tax Rate (Based on Pr<strong>of</strong>itability)<br />
– Immediate write-<strong>of</strong> <strong>of</strong> 100% CAPEX<br />
– unlimited carry forward <strong>of</strong> Tax losses<br />
– Mining equipment and spares zero-rated on import<br />
duty<br />
– Smelters, refineries, and other downstream processes<br />
classified as Manufacturing attracting low and<br />
negotiated tax rates 0 – 15% (tax holiday issued to<br />
deserving cases i.e. contribution to the economy)<br />
5
<strong>Botswana</strong>’s Investment Climate<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
• Competitive Mineral Policy<br />
– Maximizing the economic benefits for the nation<br />
while enabling private investors to earn competitive<br />
returns<br />
– Create an enabling environment for private sector<br />
investment in mineral exploration and<br />
development<br />
– Promote opportunities for linkages with the rest <strong>of</strong><br />
the economy e.g expansion <strong>of</strong> value-addition<br />
activities and local procurement<br />
6
Challenges - Global Economic Crisis<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong> like everybody else not spared by the<br />
global economic crisis<br />
– Sharp decline in commodity prices in the past four<br />
months and remained depressed<br />
– Severe fall to drying up in revenue for mining companies<br />
– Massive drop in demand for diamonds<br />
– Mine closures – 2 <strong>of</strong> our recently opened mines now on<br />
care &maintenance<br />
7
Challenges - Global Economic Crisis<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
– Reduced access to credit<br />
– Deferral <strong>of</strong> new capital projects most mines have<br />
now differed projects, only the stay in Business<br />
projects being considered pending availability <strong>of</strong><br />
funds<br />
– Slow down in exploration to conserve cash – most<br />
<strong>of</strong> exploration funds imported<br />
8
Challenges - Global Economic Crisis<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
Intervention<br />
– <strong>Government</strong> assist individual companies on a<br />
case by case basis<br />
• Long term strategy being developed for<br />
implementation in April <strong>2009</strong><br />
– <strong>Government</strong> guarantees on bridging loans<br />
– Deferral <strong>of</strong> royalties<br />
– Deferral <strong>of</strong> some levies<br />
9
No <strong>of</strong> L icences e<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong> prospecting licences by<br />
origin <strong>of</strong> holder<br />
300<br />
258<br />
250<br />
200<br />
154<br />
150<br />
100<br />
50<br />
90<br />
75<br />
38<br />
57<br />
0<br />
Australia R S A B ritain C anada B otswana Others<br />
Nationality <strong>of</strong> holder<br />
P recious S tones<br />
V arious minerals<br />
10
Million (Pula)<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
Exploration expenditure<br />
300<br />
250<br />
246<br />
257<br />
200<br />
150<br />
100<br />
108<br />
121<br />
??<br />
50<br />
58<br />
0<br />
2005 2006 2007 2008 <strong>2009</strong><br />
11
Challenges and opportunities<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong> power supply situation<br />
– Demand 530 MW, (72% imported)<br />
12
Challenges and opportunities<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
<strong>Botswana</strong> power supply interventions<br />
Strategy<br />
1 250 MW IPP Project<br />
Capacity<br />
(MW)<br />
Timing<br />
Remarks<br />
250 Dec 09 Contract awarded<br />
(Coal Bed Methane Gas)<br />
2 Morupule B Phase 1 (coal fired) 600 2012 Contract awarded to EPC<br />
contractor<br />
3 Morupule B Phase 2 (IPP) (coal<br />
fired)<br />
600 Feasibility ongoing<br />
4 Potential IPP projects for<br />
domestic and export<br />
•1200 MW<br />
•1000MW<br />
Mmamabula coal field<br />
Mmamantswe coal field<br />
13
Challenges and opportunities<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
Coal-Bed Methane<br />
– One <strong>of</strong> the 5-spot exploration boreholes in central <strong>Botswana</strong><br />
14
Republic <strong>of</strong> <strong>Botswana</strong><br />
Advanced Projects in the Pipeline<br />
– Discovery Metals - copper<br />
– Mount Burgess – Lead zinc<br />
– Aviva – coal<br />
– CIC Energy – coal<br />
– A-Cap resources – uranium<br />
– Firestone Exploration - diamonds<br />
– Boteti Exploration – diamonds<br />
– Gope Exploration – diamonds<br />
– Saber Energy – CBM<br />
– Kgalahari Energy - CBM<br />
15
Republic <strong>of</strong> <strong>Botswana</strong><br />
Energy Minerals: Coal and Coal Bed<br />
Methane<br />
16
Thank You<br />
Republic <strong>of</strong> <strong>Botswana</strong><br />
Ministry <strong>of</strong> Minerals, Energy, and Water Resources<br />
PO Box 0018, Khama Crescent,<br />
Gaborone, <strong>Botswana</strong><br />
Tel: +267-365-6600<br />
Fax: +267-372-738<br />
Emails:<br />
ggabaake@gov.bw<br />
jthamage@gov.bw<br />
nmmolawa@gov.bw<br />
tngwisanyi@gov.bw<br />
www.mines.gov.bw<br />
17
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