An MBendi Profile: An MBendi Industry (Sector) Profile for Botswana: Mining including economic overview and directories of companies, personalities, industry sectors, projects, facilities, news and events.

Mining contributes 34.2% of the country's GDP and 50% of its tax revenues, representing a dramatic growth in the mining industry since Botswana’s independence, where mining contributed just 1% to GDP. This is attributable to the development and discovery of several major diamond deposits. Botswana’s mining industry provides employment for approximately 13 000 people, of which 80% are employed by the two biggest mining companies, Debswana and BCL.

Botswana is now the world’s leading diamond producer in terms of quality and grade of its diamonds. Botswana also has significant copper, nickel, cobalt, gold, soda ash and coal deposits which are currently being exploited and developed.

Due to Botswana’s poorly exposed geology, exploration techniques rely on geophysics to a large extent. The Kalahari group covers most of Botswana, increasing in depth from East to West. Karoo age flood basalts also cover most of Botswana, underlying the Kalahari sand to a large extent. As a result, the basement geology of most of Botswana is poorly exposed and understood, and information is based on drilling. The presence of the large kimberlite mines in central and south central Botswana lead geologists to believe that the Zimbabwe craton underlies Botswana to a major extent. The position of the southeastern edge of the Angolan craton is uncertain, and is thought to be marginal along the northwestern margin of Botswana. Previous kimberlite exploration has located and identified several non-diamondiferous kimberlites in this region.

Because the Government’s partnership with De Beers in the diamond industry has proved so mutually beneficial, it has approached the perceived need to update existing mineral legislation pragmatically. The Mines and Minerals Act of 1977 has been revised to incorporate changes designed to facilitate the issuing of exploration and mining licences and to make Government participation in new developments more attractive to investor. The new Mines and Minerals Act was passed in July 1999.

The key feature of the revised licencing regime is that the whole process from prospecting to mining will be automatic and predictable, removing some of the uncertainty and stages of negotiation which previously existed. Concession types which had become irrelevant to the industry (such as the non-exclusive reconnaissance permit, and the restricted prospecting and mining leases) have been done away with. The main innovation is the introduction of the retention licence, designed to accommodate explorers who on making a discovery may find it cannot immediately be mined economically.

Previously, prospective mining investors would have lost their entitlement if not able to bring a resource into production, but will now be able to defer development for two successive three-year periods. In the first, their rights will remain exclusive subject to confirmation that viable development remains impracticable, while in the second, with an escalating licence fee, limited rights of access to third parties to reassess the prospect will be allowed.

While the Government will retain the right to acquire a minority interest in new mines, this will now generally be up to a maximum of 15%, and will be on commercial terms with the Government paying its pro-rata share of costs incurred. Taxation of mining companies outside the diamond industry has also been revised with a new variable rate income tax replacing project-specific rates. The new rate will normally be 25%, increasing on a sliding scale for very profitable projects up to a theoretical maximum of 50%, determined annually by reference to the mining company’s profit ratio.

Procedures for small-scale mining are also being simplified and some royalty rates will be reduced. For diamonds, the new act will apply only as far as the discovery stage, and thereafter the process of individual negotiations will remain applicable to the development of new mines. Royalty rates, calculated as a percentage of the gross market value of the mineral, are currently 10% for precious stones (including diamonds), 5% for radioactive minerals, precious metals, semi-precious stones and coal, 3% for all other minerals, including building and industrial mineral products.

Botswana's general mining policy aims at maximising the national economic benefit from development of mineral resources.

This is to be achieved through:

Encouraging prospecting and new mine development.
Negotiating mining agreements which maximise the net national economic benefits resulting from mine operations.
Generating linkages with the rest of the economy and increasing local value added.
Creating employment and training opportunities for Botswana.
All the mineral rights are vested in the Republic. The Mines and Minerals Act regulates mining activities in Botswana.

Applications for mineral rights are made to the Minister of Mineral Resources and Water Affairs through the Geological Surveys Department (exploration) or the Department of Mines (mining). There are three types of mineral rights in Botswana (a reconnaissance permit, a prospecting licence and a mining lease). The rights may be granted to an individual or company as provided for in the Act.

Types of Licenses and general conditions

A Reconnaissance Permit does not confer exclusive rights on the holder but allows the holder to look over a wide area in the country without any financial obligation. The validity of the permit is one year and the permit itself is not an entitlement to a prospecting licence. A permit is not transferable.

A single Prospecting Licence is restricted to a maximum area of 1000km² and confers exclusive rights on the holder over the mineral applied for and as specified in the licence. The law permits for one company to hold a number of licences. The licence holder is obliged to remain committed to the proposed work programme and estimated expenditures. The holder is also obliged to notify the Minister of the discovery of any mineral of possible economic value within 30 days following the discovery. The holder of the prospecting licence may apply for a mining lease, but this in itself, the prospecting licence, does not guarantee that a mining lease will be given. Reports are required once every three months to be submitted to the Geological Survey Department.

A Prospecting Licence is valid for three years and may be renewed for further two periods of two years each. A reduction by 50% of the licence area is made at each renewal. With the approval of the Minister a prospecting licence may be transferable. Annual charges are P1/km²/y with a minimum of P250.

A Mining Lease is only issued to a prospecting licence holder over the ore deposit in question. The lease is valid up to 25 years and may be renewed for another period not exceeding 25 years. With the approval of the Minister a mining lease is transferable. Mining lease charges are P12/km²/m for precious and semi-precious stones and P6/km²/m for other minerals.

Restricted prospecting licences are issued for building or industrial minerals for an area not more than 10km².

A restricted mining lease is issued to an applicant who is a holder of a restricted prospecting licence or a prospecting licence. The intended capital expenditure will not be less than P50,000. The licence is issued for a period not exceeding 15 years and renewal for the same period.

A mineral right holder must obtain a written consent of the owner or lawful occupier of the land before commencing operations.

Building and industrial minerals permits are restricted to citizens of Botswana and to areas not exceeding 0.5km². Non-Botswana citizens may be issued with such a licence if it is in the national interest or for special works. The permits are issued for periods not exceeding five years and renewed for a period not exceeding five years. These permits are not transferable. Annual reports must be submitted to the Minister.

The Government of Botswana also insists to have an effective participation in the mineral sector through equity participation and board representation. Generally for large projects Government participation falls within the range 15 to 25% issued free of cost. Minimum controls are exercised on business oper ations and the management is left entirely to the private sector partner. Government normally requires some representation at board level.

Botswana has a National Conservation Strategy Coordinating Agency which promotes the use of environment impact assessment. Sectorally the regulations under the Act contain detailed requirements for environment control.