Botswana touts 24% stake in new mining companies for citizens

Bloomberg News | July 23, 2024 | 

Lucara Diamond’s Karowe diamond mine in Botswana. Image from Lucara Diamond.

Botswana’s government will encourage new mining ventures to offer citizens the right to buy as much as 24% of projects in which the state hasn’t exercised its right to purchase a stake.


The proposals are contained in amendments to the southern African nation’s Mines and Minerals Act that will be debated by lawmakers on Wednesday. Because of the ruling Botswana Democratic Party’s numerical dominance in parliament, bills tabled by the government are rarely changed or rejected.

Under current legislation, the government is entitled to offer to buy as much as 15% equity in any new mining entity. The amendment seeks to encourage, rather than compel, new ventures to invite citizens to purchase a shareholding, according to the bill.

“Where government does not exercise its option of acquiring 15% working interest upon the granting of a mining licence, the holder shall use his best endeavour to dispose the 24% to citizens or citizen-owned companies,” the draft legislation shows.

Botswana, the world’s largest producer of rough diamonds by value, rarely changes its mining legislation and frequently ranks as Africa’s best country for minerals investment. That’s largely because of the nation’s policy predictability in an industry that is the nation’s economic mainstay, making up about a third of budget revenue and the bulk of foreign-currency receipts.

Resource nationalism is strengthening across the world as developing countries seek a greater share of the profits from their commodities, while addressing historic inequities in the wealth flows from mining. In recent years, Botswana citizens have brought increased pressure to bear on the government to provide them with direct equity access to the mining industry.

The proposed changes to Botswana’s legislation date as far back as 2016, when the government proposed that the 15% equity entitlement be increased and that in cases where the state opted not to exercise its right, citizens be invited to do so.

Other proposed amendments include requiring mining companies to process their minerals within the country “as far as is economically feasible” and to “the satisfaction of the minister.” Minerals-license holders will also be required to give preference to local citizens and their companies in procurement.

While the Botswana government rarely exercises its 15% equity options, it owns shareholdings of that magnitude in diamond producer De Beers, Morupule Coal Mine and salt and soda ash producer Botswana Ash Ltd.

(By Mbongeni Mguni)