'Botswana proposes law for locals to acquire 24% stakes in mines’ 23 July 2024

Botswana is proposing a law that will ask mining companies, once granted a licence, to sell a 24% stake in mines to locals if the government does not exercise its option to acquire the shareholding, a draft bill seen by Reuters on Tuesday shows. The current Mines and Minerals Act allows the government of Botswana, the world's top diamond producer by value and an emerging copper mining hotspot, to buy a 15% shareholding in any mining project upon being licensed. The existing law gives the government an option to negotiate higher stakes in diamond mines. The government has, however, foregone that option in all recent mining transactions, including Lucara's (LUC.TO),acquisition of Karowe Diamond Mine, the purchase of Khoemacau copper mine by China's MMG and the recently opened Motheo Copper mine owned by Australia’s Sandfire.

"Where government does not exercise its option of acquiring a 15% working interest upon granting of a mining licence, the holder shall use his best endeavour to dispose the 24% stake to citizens or citizen-owned companies," reads the Mines and Minerals Amendment Bill due to be tabled in parliament by mines minister Lefoko Moagi. Moagi has previously said the government was proposing that funding for Batswana to acquire the stakes could be sourced from the country's pension funds.

The pension funds have recently been asked, through a change in law, to reduce the amount of funds invested offshore from 65% to 50% over the next three years. The government, through the state-owned Minerals Development Company Botswana, has equity stakes in Debswana Diamond Company (50%), De Beers (15%), Morupule Coal Mine (100%), and indirectly in coal miner Minergy Ltd (MIN.BT), through convertible debt advanced to the mine.