Botswana is set to introduce a new law that would require mining companies to offer a 24% stake in their operations to local citizens if the government opts not to exercise its purchase option, according to a draft bill seen by Reuters.
Currently, under the Mines and Minerals Act, the government of Botswana, a leading diamond producer and an emerging hub for copper mining, has the right to acquire a 15% stake in any mining project upon licensing. The law also allows the government to negotiate higher stakes in diamond mines. However, the government has not taken advantage of this option in recent transactions. Notable examples include Lucara’s acquisition of the Karowe Diamond Mine, the purchase of Khoemacau Copper Mine by China’s MMG, and Sandfire’s opening of the Motheo Copper Mine in Australia.
The proposed Mines and Minerals Amendment Bill, to be presented to parliament by Mines Minister Lefoko Moagi, stipulates that if the government does not exercise its 15% acquisition option, the mining company must endeavor to sell a 24% stake to local citizens or citizen-owned companies.
Minister Moagi has suggested that funding for local acquisition could potentially come from Botswana’s pension funds. Recent legislation requires these funds to reduce their offshore investments from 65% to 50% over the next three years.
The government, through the state-owned Minerals Development Company Botswana, holds equity stakes in several major operations, including a 50% share in Debswana Diamond Company, a 15% share in De Beers, and full ownership of Morupule Coal Mine. It also has indirect interests in coal miner Minergy Ltd through convertible debt.