Botswana needs to expand its scope to remain competitive in the African mining and exploration segment and it is doing exactly that, writes Nicolaas C Steenkamp.
Botswana was first established as the Bechuanaland Protectorate. The region was never incorporated into a greater union and finally gained independence in 1964, when the capital moved from Mahikeng in South Africa to the newly-established Gaborone.
Since independence there has been a stable political system and a democratically elected national government that contributed to the high ratings the country has received over the last couple of decades. The election in 2019 was heavily contested and some post-election rumblings endured but it remains peaceful.
The strengths of Botswana
A relatively flat countryside, with the Kalahari Desert covering nearly 70% of the land surface, is a prominent feature. Other significant geographical markers are the Okavango Delta in the northwest and the Makgadikgadi Salt Pan in the centre to northern parts of the country. Most of the Kalahari is dominated by grasslands and savannas with large nature reserves where tourism is a major source of income. Prolonged drought has plagued the entire region over the last couple of years, which has resulted in substantial desertification and erosion of the countryside. Only 5 % of the agricultural activities can be sustained by rainfall and the effects of over-grazing and sustenance farming is taking its toll.
Economically, this landlocked country remains strong, with a competitive and advanced banking system, adhering to global standards in transparency and policies. It welcomes and continues attracting international investors, but certain sectors are reserved for citizens and local content. Oil and petroleum products are imported from South Africa, as well as most of their electricity, with limited domestic production of electricity from coal power stations. Since rail- and road-networks were gradually established after independence, it has been a boon for the economy and especially mining, while the maintenance on roads is given priority. The railway system is well-maintained and continuously expanding, as well as a national airline.
High levels of literacy, and accredited universities and training institutions capable of training and providing most of the required skills in-country makes Botswana one of the top-performing countries in Africa. However, a high HIV infection rate, that the government has been trying to remediate over the last 20 years with varying degrees of success, has hampered more rapid development of the economy and populace.
Mining activities in Botswana
The main economic mining activity is centred around diamonds. Other commodities that are mined to a lesser extent include copper-nickel from the Selebi Phikwe mining complex, gold near Francistown, and a large coal reserve in the deep south of the country. There are also minor deposits of iron, platinum and soda ash more to the north. Mining contributes more than 40% of the current government revenue.
The Department of Mines and Mineral Resources, Green Technology and Energy Security regulates and maintains the mining database of the country. In October last year, the government announced that the country would join the Energy Resource Governance Initiative (ERGI), which supports the discovery of mineral reserves of strategic metals used to make battery electric vehicles (EVs).
Despite its stability and regulatory certainty, the country could not escape the mining downturn of late 2019 and, in fact, reported an 8.7% decline in production. Earlier this year, South Africa regained its number one spot as a mining investment destination, a position previously held by Botswana. Gold production from the Mupane gold Mine was lower as a result of the unstable gold price and notable deteriorating lifespan of the operation. Coal production also decreased, but Botswana did not suffer any shortfall due to stockpiling.
Kibo Energy remains confident in the future and is continuing with the coal power station project following signing the first of a series of agreements to implement the heads of agreement (HoA) with Shumba Energy to reorganise the arrangements for the Mabesekwa coal independent power project (MCIPP) and the associated coal asset. On the other hand, Minergy, which operates the Masama mine, has put its planned listing on the LSE’s Aim on hold as a result of unfavourable market conditions.
The sale of unpolished diamonds also suffered a severe collapse of sales, attributed to the start of the coronavirus outbreak in China, with the luxury shoppers not being active over the first quarter of 2020. This is likely to impact the Debswana diamond mining operations too. The country continues to produce large stones, like Lucara Diamond Corporation that recovered an unbroken 549 carat white diamond ‘of exceptional purity’ from its Karowe mine in February 2020. Other large stones include the 1 758 carat Sewelô diamond, recovered in April 2019. A feasibility study to investigate the viability of underground expansion at Karowe, is underway, which is expected to extend the Life-of-Mine (LoM) to 2040. Botswana, with its long-standing good history of ethical sourcing, may stand to benefit from the increased interest in ethically sourced certified engagement rings.
Copper-nickel-cobalt matte, copper in concentrates and silver recorded zero production, due to the provisional liquidation of the BCL operations. Russia’s Norilsk Nickel (Nornickel) terminated its agreement for the sale but indicated that the company will continue legal processes for financial claims against the state of Botswana. Plans have been floated to re-open the operations but have not been found to be viable. It was estimated that P6.5 billion would be needed to rehabilitate the mine. In order to soften the blow of the mine closure, the Selebi Phikwe Economic Revitalisation Strategy was developed, which has created around 1 600 jobs in the town, but most business have closed or relocated.
Potential in the north
Nonetheless, in the centre and north of the country, the Kalahari Copperbelt is regarded as one of the world’s most promising underexplored copper provinces. It stretches for about
1 000km from central Namibia to the Shinamba Hills in northern Botswana, along the south-eastern margins of the Damaran-Katangan rift basin. Mineralisation is hosted in the D’Kar Formation (DKF) and Ngwako Pan Formation (NPF). The main reason this area has not been fully explored is due to the thick Kalahari Desert sand cover that can be up to 180m in places, that makes it expensive and challenging to delineate any deposits.
A number of companies have applied for exploration licenses and mineral rights, including Rio Tinto, Cupric Canyon Capital, Sandfire Resources, Metal Tiger and Kopore Metals. These companies have invested heavily in new exploration methods such as airborne magnetics and electromagnetics and improved geochemical techniques of partial leaching and hydro-sampling, suited for deep cover exploration.
Botswana Ash (BotAsh), is a 50/50 partnership between the Government and Chlor Alkali Holdings (CAH) Group. The mine has a capacity of 300 000 tons (t) of soda ash per annum and currently produces over 280 000t, making Botswana one of the largest producers in the world, but with the development of the Danakili deposit in Eritrea, that situation may change in the near future. Soda ash was one of the few commodities that showed positive growth in 2019. Salt production also increased, with the country supplying large volumes to neighbouring South Africa.
Giyani Metals will start work on the feasibility study for its K.Hill manganese deposit, which is a new project. This follows on the appointment by the company of Lazenby Holdings to undertake the environmental clean-up work at both K.Hill and Otse prospects. Development work is also underway at the Khoemacau copper and silver project in Botswana. The appointed mining contractor, Barminco, began decline development for the new underground mine in Zone 5 earlier this year. Kavango Resources in November 2019 announced that core and reverse circulation drilling on its Kalahari Suture Zone Project (KSZ), in Botswana, had intersected a high-level gabbroic intrusive, with disseminated sulphide mineralisation at a depth of 53m and later also announced possible intersection of a massive sulphide zone from a magmatic conduit-type deposit.
Botswana appears to have a bright mining future as it moves its focus away from its dependence on diamonds and continues to support the diversification of its exploration and mining.
Geology of Botswana
The eastern and southeastern part of Botswana is underlain by Archean rocks, with the Proterozoic orogenic belt mostly obscured by covering. Most of Botswana is covered by Karoo age rocks but is better preserved in the north and northwest. The Kalahari Basin is covered by the well-known Kalahari Desert sands and recent deposits of the Okavango River.
About the author
Dr Nicolaas Steenkamp has a decade and a half of post-qualification experience in the geological and geotechnical industry. He has been involved in a variety of consultation activities ranging from exploration, geochemistry, geological and geotechnical, desktop studies, due diligence, EPCM contracts and related feasibility studies. www.bowlineps.co.za