Botswana is proposing a new law requiring mining companies to sell a 24% stake in their operations to locals once a license is granted, should the government choose not to exercise its option to acquire the shareholding.
Botswana is a country rich in precious natural resources, especially diamonds. In 2023, Botswana’s diamond production was valued at 3.28 billion U.S. dollars, making it the leading diamond producer in Africa and second globally, only to Russia, which had a production value of 3.60 billion U.S. dollars.
This proposal seeks to amend the existing Mines and Minerals Act, Reuters reported. Currently, the Act permits the government of Botswana to acquire a 15% shareholding in any mining project upon licensing. The existing law also permits the government to negotiate higher stakes in diamond mines.
However, the government has not exercised this option in recent mining transactions. This includes Lucara’s acquisition of the Karowe Diamond Mine, the purchase of the 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 indicated that the government proposes sourcing funds from the country’s pension funds for Batswana to acquire these stakes. Recent legislative changes have required pension funds to reduce their offshore investments from 65% to 50% over the next three years.
Through the state-owned Minerals Development Company Botswana, the government holds equity stakes in several mining ventures: 50% in Debswana Diamond Company, 15% in De Beers, 100% in Morupule Coal Mine, and indirectly in Minergy Ltd through convertible debt advanced to the coal mine.
