Botswana Mining Industry overview

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Botswana Mining Industry overview Outlook

• Nchidzi C. Mmolawa
• Department of Mines

Botswana Resource Sector Conference Gaborone, 25
26 JULY 2007
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Presentation outline

• Role of Mining
• Brief Background
• Attractions for Mineral Investors
• Industry Review
• Economic Contribution of Mining
• Reportable Accidents Trends
• Mineral Beneficiation
• Challenges

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Mining Play an Important Role In

• Employment creation
• Poverty alleviation / reduction
• Technological breakthrough Transfer

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Brief Background of Mining in Botswana

• Mineral rights are vested in the state
• After completion of Prospecting you can apply for
  a
• Retention licence (3 yrs exclusive rights and 3
  yrs renewal for Non exclusive rights)
• Mining licence (25yrs and unlimited renewals of
  25yrs Max).
• Minerals permit (5yrs and unlimited renewals of
  5yrs Max, for Small scale mining).

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Attractions for Mineral Investors

• Excellent infrastructure
• Well-educated and highly trainable workforce
• Good governance
• Excellent track record for dealing fairly with
  investors
• Security of tenure
• A commitment to customer satisfaction

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Strategy to Attract Investment

• Commitment to maintain investor attractive
  Mineral Policies
• Maximizing the economic benefits for the nation
  while enabling private investors to earn
  competitive returns
• Create a competitive environment that will
  stimulate private sector investment in mineral
  exploration and mining operations
• Promote opportunities for linkages to the economy
  to expand value-added activities

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Strategy to Attract Investment

• Commitment to maintain investor attractive
  Mineral Policies Cont
• Generating employment and training for Botswanas
  citizens
• Safe guarding the environment

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Strategy to Attract Investment

• Commitment to maintain investor attractive
  legislation
• Mines and Minerals Act Amended in 1999 to
• Abolish governments right to free 15 equity to
  a mutually-agreed commercial terms
• Downward revision of royalty rates 5 to 3
  (except precious stones and metals)
• Simplification and predicable process for
  granting Mineral concessions and transfers
  (removed Ministerial discretions)

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Strategy to Attract Investment

• Commitment to maintain investor attractive
  legislation
• New Fiscal regime
• Variable Rate Income Tax Rate
• The higher of the standard company rate (25) or
  the tax rate derived from the formula 70-1500/x,
  where x () taxable income/gross income
• Immediate write-of of 100 CAPEX
• unlimited carry forward of Tax losses

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Strategy to Attract Investment

• Commitment to maintain investor attractive
  legislation
• New Fiscal regime
• Mining equipment and spares zero-rated on import
  duty
• Smelters, refineries, and other downstream
  processes classified as Manufacturing attracting
  low and negotiated tax rates 0 15 (tax holiday
  issued to deserving cases i.e. contribution to
  the economy)

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Industry Review -Coal
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Industry Review -Coal
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Industry Review Soda Ash Salt
Growing markets
Declining markets

• Transportation the products to the Northern
  Markets a challenge

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Industry Review Soda Ash Salt

• Northern Markets (DRC) now emerging

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Industry Review Diamonds

• DiamonEx Mining Lincence issued in August 2006
• AK06 expected in 2009
• Production expected to range 30-35 Million Carats
  for the next 10yrs despite the new entrants

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Industry Review Copper Nickel
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Industry Review Copper Nickel

• Messina Copper Botswana
• Subsidiary of African Copper PLC
• Mining Licence issued in December 2006
• Construction commenced

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Economic Contribution of Mining
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Economic Contribution of Mining
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Reportable Accidents Trends
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Mineral Beneficiation

• Historically countries endowed with mineral
  resources, develop mineral based economies
• Irrespective of proper management, most of these
  countries remain poor
• Minerals are exported as raw materials at ore
  and metal stage, limited or no value addition
• Diversification of mining related activities,
  including down-stream mineral beneficiation

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Mineral Beneficiation
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Challenges

• Skills shortages in the country due to high
  demand as new mines open
• Distribution of Power and Portable Water to new
  and existing projects
• HIV/Aids

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Thank You

• Contact
• Department of Mines
• P/Bag 0049
• Gaborone
• Tel [phone] Fax [phone]
• www.mines.gov.bw