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  • GDP, US$bn: 15.6
  • GDP per capita, US$: 6,923.0
  • Population, mn: 2.3
  • Inflation, CPI ave: 2.8
  • FX, LCY/US$: 10.9
  • Budget Balance, % of GDP: -4.1
  • Mining GVA, US$bn: 2.6
  • Mining Industry Value, US$bn: 4.4
Regulatory Risk Rating
41
0
100
Score: 41
Severe Risk
Botswana is known for its world-class diamond mines; the government's keen interest in the diamond sector has caused it to adopt mining legislation that leaves it with wide discretion to negotiate terms with any party that has made a new discovery of diamonds in the country; whilst there is evidence that the government has found commercial solutions with developers and producers, its rating has been substantially affected by the uncertainty arising from such discretion.

Corruption Potential Index

Score: 55
Moderate Corruption Potential

Corruption Risk Index

Score: 85
Very Low Corruption Risk

Regulatory Risk Rating

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Mining Overview Commentary plus sign

BOTSWANA MINING REGULATION

GENERAL

The Republic of Botswana (Botswana) is located in southern Africa, with Zimbabwe, South Africa and Namibia bordering. The country’s economy has thrived since Botswana gained independence in 1966 and it is now recognised as one of the most stable countries in the African continent, with a relatively high standard of living. While farming and tourism still contribute to employment and the country’s GDP, the mining industry dominates, reportedly contributing over 35% of GDP. Diamond mining is the main industry operating in the country, which is the world’s largest producer of diamonds, and is often cited as the primary factor behind Botswana’s economic strength. Debswana, a joint venture owned equally by DeBeers (which is now a subsidiary of Anglo American) and the Government of Botswana, is the major diamond mining company operating in the region; owing to its four diamond mines it is also the largest producer of diamonds by value in the world (second largest by volume). The company also owns and operates the Morupule coal mine in Botswana. Other mineral production in the country includes copper, nickel, gold and coal.

Botswana was ranked 14th out of the 109 jurisdictions surveyed in the Fraser Institute’s Policy Perception Index (2015), making it the highest ranking country in Africa.

PRINCIPAL LEGISLATION AND REGULATOR

The primary minerals legislation in Botswana is the Mines and Minerals Act 1999 (MMA), which vests ownership of all mineral rights in the Republic. The Minister in charge of mines is responsible for ensuring that the mineral resources of the Republic are investigated and exploited in the most efficient, beneficial and timely manner and is required to act in the public interest (s.3 MMA); the MMA is administered by the Ministry of Minerals, Energy and Water Resources.

Other relevant legislation includes the Mines, Quarries, Works and Machinery Act 1973, which provides for the health and safety of persons engaged in mining and quarrying activities, as well as for the inspection and regulation of mines and quarries; the Precious and Semi-Precious Stones (Protection) Act 1969 which provides for the protection of the precious stones industry and regulates the discovery of, and dealing in, precious stones (including mining and prospecting activities); and the Environmental Assessment Act 2011 (EAA) which details the environmental impact assessment (EIA) process.

GRANT AND FORMS OF MINERAL TITLE

As mentioned above the MMA vests ownership of all mineral rights in the Republic, while the Minister in charge of mines is responsible for ensuring that investigation and exploitation occurs in the most efficient and beneficial manner.

Mineral concessions are granted subject to certain land restrictions and titleholders must seek the written consent of either the President, the lawful occupier or owner of the land or, for land within a national park, seek permission under the relevant legislation, before exercising their rights under a mineral concession (s.60(1) MMA).

All mineral concession holders are required to pay royalties, based on a percentage of the market value of the mineral, to the Government; the Minister in charge of mines has the capacity to remit or defer payments and, in case of failure to pay, prohibit the disposal of minerals until outstanding royalties have been paid or an arrangement to pay has been agreed. Holders of mineral concessions are also required to pay an annual charge to the Government upon issuance of the licence (s.66-73 MMA). In addition, upon the issuance of a mining licence the Government has the option to acquire a working interest participation (up to 15%) in the proposed mine (s.40(1) MMA).

Section 6 MMA details the qualification requirements for companies and individuals applying for mineral concessions. Mineral concessions can only be granted to individuals who are over the age of 18 and are either a citizen of Botswana or have been a resident of Botswana for over four years. In addition, individuals who have been declared bankrupt (either in Botswana or elsewhere) and/or been convicted of a crime within the last 10 years which involved dishonesty, or an offence under the MMA or a similar law (whether in Botswana or abroad), for which they served time in prison or had to pay a fine over P1000 ($100), cannot be granted a mineral concession. In terms of companies, a company must have a registered address within Botswana and cannot be in liquidation or judicial management (except in certain circumstances) or have a director or shareholders who have a criminal conviction which meets the specification identified above. Companies applying for a mining licence must be incorporated under the Companies Act in Botswana and intend to carry out the sole business of mining under that mining licence.

Several different types of licences may be granted under the MMA, namely:

 

  • Prospecting Licence: This licence confers exploration rights on the holder for an area not exceeding 1000 km2; the validity of the permit is up to three years and it may be renewed twice for a term of up to two years, subject to 50% reductions in land area on each renewal. The licence cannot be granted over land that is already subject to, in whole or in part, an existing prospecting licence, retention licence, mining licence or minerals permit. Titleholders must commence operations within three months of the date of issuance of the licence, unless otherwise agreed with the Minister. The licence is transferable, providing the Minister is notified no less than 30 days before the transfer. The holder of a prospecting licence must submit a report to the Director of Geographical Survey, no later than three months after the end of each year of the licence, which includes an audited statement of expenditures directly incurred under the licence and any moneys required to be spent under the approved prospecting program; any monies not spent constitute a debt due to the Government.

 

  • Retention Licence: The Botswana mining legislation is modern insofar as it provides for the concept of a retention licence, which can be applied for by the holder of a prospecting licence in relation to an area and mineral covered by said licence. Applicants must apply no less than three months prior to the expiry of the prospecting licence and must complete a feasibility study that demonstrates that a mine cannot be operated profitably at that time. The licence has an initial term of no more than three years and can be renewed once for a period not exceeding three years. Retention licences are transferable following approval from the Minister.

 

  • Mining Lease: A mining lease is valid up to 25 years and may be renewed for another period not exceeding 25 years. Applications for renewal must be made more than one year before the expiry of the licence. With the approval of the Minister a mining lease is transferable. Holders can apply to the Minister to include further deposits or additional minerals within the licence and can also make applications to have mining areas enlarged. The holder of a mining licence is required to notify the Minister one year in advance of the proposed cessation of production and six months in advance of any suspension of production; the Minister may order the resumption of production if he or she considers it good mining practice to do so (s.47 MMA).

 

A mineral permit for small-scale operations is also available under the MMA for citizens of Botswana only. Transfers of mineral licences must be notified to the Government, but will not result in the loss of any licence where the pre-conditions to the original licence grant would still be met (s. 23, 36 and 50 MMA).

Mineral concessions can be suspended or cancelled by the Minister in certain circumstances including where the holder fails to make a payment or acts in contravention of the MMA (s.76(1) MMA). The Minister will notify the holder of the failure or contravention and grant them 30 days to remedy the issue; failure to remedy within the set timeframe may lead to cancellation or suspension of rights.

DEVELOPMENT CONSIDERATIONS

The MMA requires the applicant for a mining and retention licence to prepare a comprehensive EIA as part of a Project Feasibility Subject Report. In addition, the EAA requires environmental impact statements (EIS) for certain activities specified within the legislation; the EAA also details the EIA process. Further details on the EIA process can be found within the Botswana EIA Guidelines for Mining Projects, which provide content instructions on what should be addressed in the EIA, including guidance on appropriate consultation processes.

The owner or lawful occupier of any land within the area of a mineral concession retains the right to graze stock and/or cultivate the surface of the land, insofar as such activities do not interfere with the prospecting, retention or mining activities. All prospecting, retention or mining activities should be exercised reasonably so as to have as little impact as possible upon the owner or lawful occupier of the relevant land. Exclusive use of the retention, mining or minerals permit area can be obtained in certain circumstances and rent payments may be required under the terms of a lease. Powers to lease surface rights are provided in the MMA, including the mechanisms for arbitration, albeit the consent of farmers will be needed before such surface rights can be used when the land is used for agricultural purposes (s.60 and 62 MMA). Since agricultural use is based on crops reaped in the year prior to the application for the lease the potential for abuse does exist. The arbitrator is required to determine appropriate rentals without reference to the mineral value of the property (s.62(2) MMA). Titleholders are required, upon request, to pay owners or legal occupiers fair and reasonable compensation for any disturbance of their rights or for any damage to the surface of the land. The President of Botswana is further empowered to expropriate land required for mineral development (s.64 MMA).

The holder of a mineral concession is required to conduct its operations in a manner that preserves the natural environment, minimizes and controls waste and prevents pollution or contamination of the environment. In addition the concession area must be rehabilitated from time to time.

Finally, the titleholder is required, where possible, to give preference to the employment of citizens of Botswana as well as to materials and products made in Botswana and use service agencies located in the country and owned by its citizens or bodies incorporated under the Companies Act.

ENVIRONMENTAL REGULATION

See Botswana Environmental Overview Commentary. 

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BOTSWANA ENVIRONMENTAL REGULATION

GENERAL

Botswana, officially the Republic of Botswana, is a landlocked country located in southern Africa, bordered by Namibia, South Africa and Zimbabwe. The country is primarily flat and is dominated by the Kalahari Dessert, which covers over 70% of the land, with the remaining area mostly occupied by the Makgadikgadi salt pans and the Okavango Delta. The semi-arid climate influences the vegetation, which is mainly shrub land and savanna, although forests and wetlands can be found in the north of the country where rainfall is greater. Botswana has a wide diversity of fauna with over 150 different types of mammals; more than 500 bird species; over 200 different types of amphibians and reptiles; and over 2000 insect species. The country has several vast national parks and game reserves, both private and public, where many of the larger mammals such as lions, rhinos and zebras can be found.

Botswana has a small population (around 2 million) for its geographical size, which makes it one of the least populous countries on Earth. The major environmental challenges faced by the country are droughts, desertification, overuse of limited water and land resources by cattle and livestock farmers, and waste management.

PRINCIPAL LEGISLATION AND REGULATOR

The Mines and Minerals Act 1999 (MMA), which is administered by the Ministry of Minerals, Energy and Water Resources, contains relevant provisions concerning the environment. Part IX covers environmental obligations and includes section 65 which states that: “the holder of a mineral concession shall, in accordance with the law in force from time to time in Botswana and in accordance with good mining industry practice, conduct his operations in such manner as to preserve in as far as is possible the natural environment, minimize and control waste or undue loss of or damage to natural and biological resources, to prevent and where unavoidable, promptly treat pollution and contamination of the environment and shall take no steps which may unnecessarily or unreasonably restrict or limit further development of the natural resources of the concession area or adjacent areas.” It is an offence under the MMA to violate section 65.

Other relevant legislation includes the Mines, Quarries, Works and Machinery Act 1973, which grants the Minister powers to regulate on the protection and rehabilitation of the environment when it is affected or likely to be affected by mining activities, as well as on waste disposal issues; the Water Act 1967, which confers the right to use water for prospecting and mining purposes and makes it an offence to alter water flows or pollute any water to which the public or any domestic animal may reasonably obtain access; and the Atmospheric Pollution (Prevention) Act 1971, which provides for the prevention of pollution, including that which may occur from mining activities.

EIA PROCESS

Under section 65(2) MMA, applicants for a mining licence or retention licence, or the renewal of said licences, are required to prepare and submit a comprehensive Environmental Impact Assessment (EIA) as part of the Project Feasibility Study Report.

In addition, the Environmental Assessment Act, 2011 (EAA), which is administered by the Department of Environmental Affairs, prescribes the EIA process and makes an EIA mandatory for specified projects and activities, which are likely to have an adverse impact upon the environment. Under the terms of the EAA, in cases where the competent authority determines that an EIA is required the developer shall, before beginning the relevant activity, engage a practitioner to prepare an environmental impact statement (EIS) and submit the EIS to the competent authority within specified time scales (s.9(3) EAA). Following receipt of the EIS the competent authority will, within 60 days, examine the EIS and, if the EIS is found to be compliant with the terms of the EAA, place a notification in the Gazette, for four consecutive weeks, so as to notify and invite comments from those most likely to be affected by the activity; any comments made in response to such notice will be considered when reaching a decision on the EIS (s.10(1)-(3) EAA. The competent authority will then approve or reject the EIS and, in the latter case, provide a written statement outlining the reasons behind the decision (s.12(1)-(4) EAA.

Failure to submit an EIS, in cases where the competent authority have determined that an EIA is required, is an offence under section 9(5) EAA and is liable to a fine of up to P1, 000, 000 (around $100,000), or to a term of imprisonment not exceeding 15 years, or to both.

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