http://www.engineeringnews.co.za/article/29062012-on-the-air-2012-06-29

29/06/2012 (On-The-Air)

Published 29 Jun 12        By: Martin Creamer
Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Gwala: Exciting new copper and silver discoveries could be bigger than diamonds for neighbouring Botswana.

Creamer: That is amazing. They are cock-a-hoop in Botswana because they’ve struck copper and silver in the Kalahari Copper belt.

That has similar characteristics to the very rich Democratic Republic of Congo copper belt as well as the Zambian copper belt. It is not as rich as that, but it still has given a huge encouragement, because you have got the by-product of silver with it.

The Mining Minister Dr Ponatshego Kedikilwe is over the moon about this discovery. It is all part of the plan to diversify because they are so heavily dependent on diamonds it has been the mainstay of their economy. In fact, the one diamond mine, and there is just one of them that is big and that is so important to them so they need to diversify away from that.

They are saying that the outlook for copper particularly is so good this could even be bigger then diamonds in the future. So, its quite exciting.

Gwala: Botswana is gearing up to be an energy corridor for the Southern African region.

Creamer: This is also prominent diversification. They see a lot in coal and there is tremendous enthusiasm by young type of entrepreneurs who have come in there. This is the pattern of Dr Ponatshego Kedikilwe.

He likes to what he says entice, lure and goad companies when they come in. So he has got about 1 000 prospecting licences out there and they are being turned to account now. We see a sort of an energy corridor concept building up.

On the eastern side of Botswana there is a lot of coal and the companies have come in and they are not huge companies and they are not doing massive things at the moment, but it is like planting seeds from which big trees can grow in the future. They are talking big and 400 of them where in a massive conference in Gabarone this week and they were saying that they want to turn this into a major energy corridor.

The opportunity is there because there are energy deficits in the Southern African region. We are now in this Southern Africa power pool and are now being supported from Eskom in South Africa. Will Eskom always have the appetite to do that?

They see gaps, they see opportunities developing. As I say, they are stating small and a lot of them are listed in Australia ASX like African Energy. They are coming up with a 300 MW integrated power project. So they have got their own coal mine and that coal is used to generate power and they are going to put that into the power pool.

They are urging the government of Botswana to become a major energy trader. We also see the South African-linked CIC Energy that is listed in Toronto saying that the business climate is beginning to change positively for their big scheme, they want to send energy into South Africa over the fence.

Quite a big 1 200 MW job. So the planets are starting to align for these people who are mining coal there. They want to mine the coal, export the coal, but they also want to generate the electricity from that coal into the region.

At the same time, they are really enthusiastic about Sasol-type transport fuel development, particularly the Minister Ponatshego Kedikilwe. He is very keen on that sort of development. The jury is still out, will they do it?

There is a lot of work still to do. But what one gathers there is that the private sector has come in very strongly and enthusiastically and you’ve 30-something-type entrepreneurs who listed on exchanges in various parts of the world and they are thinking big.

Gwala: Botswana has lowered taxes for miners to lure investors to the country.

Creamer: Isn’t it a turn up for the books. Most of the mining jurisdictions are saying that they are going to increase taxes. At a conference in South Africa they are saying we should get resource rent tax. What they are saying in Botswana is that they are lowering the taxes.

They have done that, they have moved it down from the previous 25% to 22%. They want to lower the fiscal burden on investors because they are determined to have their diversification programme come off.

This is just part of their plan, because they are not moving away from diamonds. What they see is that their diamond mines are ageing and are becoming more costly. They now that in the mid 2020’s they are going to start losing that revenue.

They are looking for replacements very fast. At the same time they are getting bigger in diamonds downstream. All their aggregation of diamonds from De Beers will no longer take place in London from the end of 2014, it will take place in Gaborone. That means that there are $7-billion worth of diamonds that will be traded, not in London, but in Gaborone.

The spin-off for the banks is huge. The spin-off for the hotel industry is huge, because people will be coming not to London, but will be coming to Gaborone to see the diamonds. So they say our big diamond mines are ageing, but we are still going to be huge in diamonds, because all the diamonds that De Beers mine will be aggregated here in Gaborone.

Just nearby they have more than 24 companies cutting an polishing diamonds. They have also got Indian companies in there making diamond jewellery. So they are looking at the downstream very seriously.

Although they are concerned about their dependence on diamonds they are augmenting beyond the mining stage which is catalytic for the economy, because it starts to float a lot of the boats, even the taxi drivers are happy because they are the people that are going to be coming in at the airport. The caterers are happy. Everybody is starting to say that there can be a lot of linkages from this and its all about facilitating the private sector.

The attitude of Dr Ponatshego Kedikilwe is that you must make sure that the private sector has every opportunity to participate as freely as possible in the economy, particularly in mining.

Gwala: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.