Mining & Energy Profile profiles/Mining & Energy profile_Final_V3.0.pdf · Mining & Energy Profile ABBREVIATIONS AND ACRONYMS AIDS Acquired Immune Deficiency Syndrome BCL Bamangwato

Creating Centres of Excellence

Mining & Energy Profile

TECHNICAL SCHOOL OF MINING AND ENERGY

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GENERIC INFORMATION ON BOTSWANA



ABBREVIATIONS AND ACRONYMS

AIDS Acquired Immune Deficiency SyndromeBCL Bamangwato Concession LimitedBEDIA Botswana Export Development and Investment Authority BOTA Botswana Training AuthorityCKGR Central Kalahari Game Reserve DTCB Diamond Training Company Botswana GDP Gross Domestic ProductHDI Human Development IndexICT Information Communication TechnologyMEP Mmamabula Energy ProjectNBFIRA Non Bank Financial Institutions Regulatory Authority NDP National Development PlanOECD Organisation for Economic Cooperation and Development PPP Purchasing Power ParitySADC Southern African Development CommunitySSA Sub-Saharan AfricaTEC Tertiary Education CouncilVAT Value Added TaxWHO World Health Organization



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125k 100k 75k 50k 25k 0 25k 50k 75k 100k 125k

Age unknown

95+

90-94

85-89

80-84

75-79

70-74

65-69

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-9

4

COUNTCASE WEIGHT BY WEIGHT 2

AGE

GRO

UP

SEX

Age unknown

95+

90-94

85-89

80-84

75-79

70-74

65-69

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-9

4

AGE

GRO

UP

MALE FEMALE

Population Projection (1000)

Year Male Female Total

2006 837 882 1 719

2007 847 888 1 735

2008 859 896 1 755

2009 871 904 1 755

2010 885 914 1 799

Source: Central Statistics Office Botswana Demographic Survey 2006

ABOUT BOTSWANA

OVERVIEW

Botswana, a landlocked country in southern Africa bordered by South Africa, Namibia, Zambia, and Zimbabwe, achieved independence in 1966. At that time Botswana was considered one of the poorest countries in the world. Shortly after, the government was able to maintain a balanced budget with-out donor assistance. Within the last forty years Botswana has established itself as a model of development in Africa, with middle income status and an average annual growth rate of 9%.

Botswana’s total area of 581 730 sq km is comparable in size to France and slightly smaller than the state of Texas. It is a semi-arid country, with a sub-tropical climate due to the rela-tively high altitude. The average temperature is 21.2 °C (70 °F) with an average range of 10.5 °C.

Botswana is a multi-party democratic republic recognised for its democracy, political stability, good governance and economic management. Elections are held every five years on the basis of universal adult suffrage and the president is elected by the National Assembly for a concurrent term of office. Opposition parties operate freely and are represented in the National Assembly.

Consistent with its reputation for democratic and constitutional governance, Botswana has maintained a sound hu-man rights record. Freedom of opinion is guaranteed, with a culture of open consultation that is characterised by lively discussions.

The judiciary is independent of the executive and the legislature and it provides strong protection of property rights. Botswana’s population has increased over the years largely as a result of improved health. The 2010 population projec-tion is 1 799 000.

The Gross Domestic Product (GDP) for 2009, based on Purchasing Power Parity (PPP), was estimated to be $26 520 mil-lion. With a per capita income of $13 992, Botswana’s global ranking by the International Monetary Fund is 58th.

The mining sector contributes 26.0% to the GDP, followed by banks, insurance and business services at 12.4%, hotels and restaurants 4.9%, and agriculture 3.0%.




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INTERNET SUBSCRIBERS

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LIVING IN BOTSWANA

Visa Requirements

Entry visas are not required for citizens of the countries of the European Union, the United States of America and the Southern African Customs Union member states, of most Commonwealth countries and some of the Southern Af-rican Development Community. Citizens of other nations must obtain a visa prior to arrival from Botswana Embas-sies and High Commissions.

Personal Taxation

Botswana’s tax rates remain among the lowest in southern Africa. Both the top income tax rate and the top corporate tax rate are 25 per cent. Income tax is levied on personal income and gains for each tax year. It is source-based, lev-ied on income generated or deemed to be generated in Botswana, and it is administered under the Income Tax Act.

Quality of Life

In 2010 Botswana is currently ranked 2nd after Mauritius within Sub-Saharan Africa, and 93rd globally, according to the Human Development Index. Botswana’s score is 0.655 while Mauritius is 0.748. The HDI is a comparative measure of life expectancy, literacy rate, education and standards of living for countries worldwide.

Over the five-year period between 2005 and 2009 the av-erage inflation rate was 9.34%. The Bank of Botswana’s objective is to maintain inflation within the 3-6 per cent range, although Botswana’s high dependence on imports of food and petroleum products contributes significantly to raising inflation beyond the national targets.

Crime Rate

Botswana has one of the lowest crime rates in the region. The government has enacted the necessary legislation to support the law enforcement agencies to fight local and trans-national organised crime.

Drinking water

Potable water across the country is treated to meet the WHO Guidelines for Drinking Water.

Electricity

The bulk of Botswana’s energy capacity is thermal, mainly coal fired. More than half of Botswana’s power require-ments are imported from South Africa and Zambia. How-ever, the establishment of a major coal fired power sta-

tion, taking advantage of vast coal reserves, will position Botswana as a net exporter of electricity by 2013, with an estimated total supply and demand of 1 070 and 790 MW, rising to 1 730 and 880 MW by 2016.

Telecommunications and Information Communication Technology

A range of communications products and services include wired and wireless networks, basic voice telephony and voice messaging, Internet Protocol-based networks and solutions, high speed internet access, data networks, cus-tomer premises equipment, fibre optic connectivity solu-tions and online directory services. The liberalisation of the telecommunications market in 2006 increased efficiency and led to the establishment of the three national mobile operators, Mascom Wireless Botswana, Orange Botswana and BeMobile. The service neutral licenses enabled the na-tional operators to offer a broad range of telecommunica-tions services under one license.

Internet Subscribers by Country

Source: The United Nations Information and Communication Technologies Task Force

The connection of Botswana to the undersea fibre optic cables on the east and west coasts of Africa will position Botswana for a more efficient high speed broadband in-ternet, data transmission and internet penetration, consis-tent with the objectives of the national Information Com-munication Technology policy.



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Family Health

In addition to an extensive network of close to 300 clinics, 400 health posts and 850 mobile posts, primary health care services in Botswana are integrated within overall hospital services provided to the population in the out-patient sections of primary, district and referral hospitals. There are public and private health care services, including Gaborone’s newly commissioned state-of-the-art Boka-moso Private Hospital, which has been designated the national referral centre.

Botswana has a national policy on HIV/AIDS prevention and care that outlines government’s response to the epi-demic.

Pre-Primary to Secondary Schooling

Botswana offers opportunities for enrolment in pre-prima-ry, primary through secondary schooling, leading to the country’s internationally recognised public and private ter-tiary institutions.

Attractions

The game reserves of Botswana are popular destinations for animal viewing and photographic safaris. The Central Kalahari Game Reserve (CKGR), the world’s second largest protected area, Chobe National Park, Khutse and Moremi Game Reserves and the Kgalagadi Trans-Frontier Park are popular for their different species of animals, reptiles and birds. They contain a diversity of wildlife including lions, African elephants, buffaloes, leopards and rhinoceros.

The Okavango Delta, the Kalahari Desert and the grass-lands and savannas are home to the blue wildebeest, many antelopes and other mammals and birds. Botswana still has a few of the endangered animal and bird species which are almost extinct in other African countries, such as rhinos, which are found in the Mokolodi Game Reserve near Gaborone and the Khama Rhino Sanctuary near Se-rowe village.

The Chobe National Park has the world’s largest concen-tration of African elephants while the Okavango Delta, with its exceptional natural beauty, is the world’s largest inland river mouth. It is formed where the Okavango River empties into a swamp in the Kalahari Desert, where most of the water is lost to evaporation. The Makgadikgadi Pan, a large salt flat in the middle of the dry savanna of north-eastern Botswana, is one of the largest salt pans in the world.

Botswana is notably well endowed in wildlife resources and is experiencing a significant growth in tourist demand. The country ranked fifth in southern Africa in 2008, with 2.1 million tourist arrivals in comparison to South Africa which ranked second with 9.5 million tourist arrivals.

It is of interest that about 20% of Botswana has been set aside as National Parks and Game Reserves, all of which are surrounded by, where possible, areas designated as Wildlife Management Areas in which the interests of wild-life have preference. In fact more than 34% of the country is preserved for conservation of wildlife. None of these protected areas are fenced, allowing game complete free-dom of movement.

BUSINESS IN BOTSWANA

Corporate Registration

The Companies Act, which imposes strict obligations on corporate governance, requires that all entities must be classified as a private company, exempt private company, public company or a close company. The Companies Act provides for compulsory compliance for the accounting records of businesses to be maintained in Botswana, and for a qualified company secretary and auditor to be ap-pointed for non-exempt private and public companies, among others.

The process for company registration, from the initial res-ervation of a company name through to the issue of the registration certificate by the Registrar of Companies and Intellectual Property, has a turn-around time of ten work-ing days. The Botswana Export Development and Invest-ment Authority (BEDIA) plays a facilitative role in assisting potential investors to set up in Botswana through its One-Stop Service Centre.

Business Taxation

Botswana’s tax rates remain among the lowest in southern Africa. Both the top income tax rate and the top corporate tax rate are 25%. Company tax is levied at 15% and Ad-ditional company tax at 10%. Other taxes include value added tax (VAT) and inheritance tax. VAT is an indirect tax levied at 12% on the supply of goods and services consumed within Botswana. It is not a business expense because it is borne by the consumer.

Regulatory Environment

Botswana operates a best practice and international stan-dards-compliant legal and regulatory environment, has ac-ceded to international conventions, and strictly observes internationally accepted guidelines on combating money laundering and financial crimes.

The Bank of Botswana and the Non Bank Financial Insti-tutions Regulatory Authority (NBFIRA), individually and in collaboration, ensure maintenance of a robust supervisory framework for financial stability. The NBFIRA is the regu-lator of Botswana registered and domiciled non-banking financial entities including pension funds, asset manage-ment, consumer/micro lending, insurance and collective




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investment undertakings. The Bank of Botswana regulates the banks and banking operations.

The regulatory authorities in the education sector are the Tertiary Education Council (TEC) and the Botswana Train-ing Authority (BOTA) with the mandate to, respectively, register tertiary institutions and monitor the performance of the vocational training system. For registration of a new institution, from the time of submitting an application through to a final decision being taken, the turn-around time is approximately 3 months. The two organisations will be merged to operate under one legislation by 2012.

Work and Residence Permits

Work and residence permits are required for the employ-ment of non-citizens. To make it easier to acquire skilled human resources, the Immigration and Citizenship Act and the Employment of Non-Citizens Act, which govern the requirements for permanent residence and citizenship, are continually reviewed.

ADVANTAGES OF INVESTING IN BOTSWANA

The Ease of Business Start-up and Operation

Botswana has investor-friendly business reforms. BEDIA is an autonomous organization established in 1998 to promote investment in Botswana, with a special empha-sis on export-oriented manufacturing industries. Through its One Stop Service Centre, BEDIA provides services for investor needs and aftercare. The Centre focuses on en-abling investors to secure all clearances and approvals as quickly as possible under one roof.

Investment Climate and Competitive Investment Incentives

Botswana is a free market economy with liberal foreign exchange controls and a liberal private foreign investment incentive scheme that welcomes joint venture operations. There are no restrictions on reinvestments or repatriation of earnings and capital. The government has never na-tionalised or expropriated any foreign business. Instead, it is pursuing a privatisation strategy that seeks to balance the strengths and limitations of markets and government so as to achieve sustained economic growth.

The country’s credibility and credit-worthiness rating by Standard and Poor’s and Moody’s is higher than any other sub-Saharan African country. It is considered the most transparent country on the African continent, according to Transparency International.

There is a well-developed legal system, based on Common Law, which facilitates business and commercial activities. There are no foreign exchange controls, and profit, divi-dends and capital can be readily repatriated.

Political Stability, Good Governance and Sound Macro-Economic Policies

Since independence, political stability and sound macro-economic policies have provided the foundation for the country’s successes. According to the 2006 Gallup poll, Botswana stands out among many other African nations with regard to the level of investor confidence toward the country’s social and political institutions.

Effective Business Infrastructure

The country has a reliable digital telecommunications in-frastructure that is spread throughout the country and facilitates efficient business operation. Business conduct is highly computer based and relies on the internet as a business tool, in both the public and private sectors. The Botswana Telecommunications Corporation and other companies offer a range of different technology and busi-ness services.

Botswana participates as a shareholder in the undersea fibre optic cables running on the east and west coast of Africa, which will link up to international telecommunica-tions networks. When this network infrastructure is op-erational, communication (internet and data transmission) will be efficient, fast, reliable and affordable.

THE EDUCATION SECTOR

The policy framework for the implementation of the edu-cation sector is based on the National Policy on Education, the Revised National Policy on Education, the new Tertiary Education Policy, the National Vocational Training Policy, the National Credit and Qualification Framework, the Mai-tlamo ICT Policy, Vision 2016, and the Science and Tech-nology Policy, together with other government policies.

The key objectives of the education sector include the fol-lowing:

• tenyearsofuniversalbasiceducation

• increasingaccesstoseniorsecondaryeducation

• expandingvocationalandtechnicaltraining

• promotinglifelonglearning

• increasingaccessandequityattertiarylevel

• improvingaccesstoeducationservicesbychildrenwith special needs.



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25 000

20 000

15 000

10 000

5 000

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

External

Botswana

Student Placement 2000-2010

Destination 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TOTAL

Botswana 5 984 6 228 6 435 6 583 5 803 5 200 5 455 14 500 17 300 8 141 8 024 89 653

External 727 5 274 3 049 1 797 1 631 1 672 1 946 2 317 1 751 501 315 20 980

Total 6 711 11 502 9 484 8 380 7 434 6 872 7 401 16 817 19 051 8 642 8 339 110 633

The education sector receives the largest share of total government expenditure. Recurrent expenditure on edu-cation averaged 28% of the total in the three years to 2009/10. Investment in education continues to be a prior-ity even in the current planning period, NDP 10, in order to achieve the aspirations of Botswana’s Vision 2016.

Over the past 10 years, 2000 - 2010, almost 110 500 students were sponsored by government, nearly 20% of whom were placed in foreign institutions. The highest peak was observed during 2007 and 2008 with between

15 000 and 20 000 students placed in both local and for-eign institutions. Since 2000 there has been a gradual de-cline in the number of placements in foreign institutions, resulting in 5% and 4% respectively for 2009 and 2010.

During the same period there was a significant increase in government sponsorship of students to local private institutions. Although the global economic recession has impacted on the government’s ability to maintain sponsor-ship volumes, the government remains committed to fully supporting the education of its citizens.




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TERTIARY ENROLMENT IN REGISTERED INSTITUTIONS FROM 2003 TO 2008

SOURCE: TERTIARY EDUCATION COUNCIL

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EN

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60 000

50 000

40 000

30 000

20 000

10 000

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2003/4 2004/5 2005/6 2006/7 2007/8 2008/9

Education Landscape in Botswana

The Government emphasises the development of human resources by investing in education and training to raise productivity. Botswana has both private and public institu-tions of international standard that meet the increasing demands of the rapidly growing economy.

The primary school enrolment in Botswana is consistent with targets set for the Millennium Development Goal of achieving universal primary education by 2015. In 2004 the net enrolment rate for the primary school age group, those between 7 and 13 years, was 98.5%.

The transition rate from primary to junior secondary school is 96.9% and there has been an increase in the junior to senior secondary school transition rate as a result of gov-ernment’s systematic investment in education and expan-sion of senior secondary schools.

As a result of the government’s efforts and overall strat-egy to ensure an informed and educated nation, student enrolment increased considerably from 20 000 to nearly 50 000 between 2003/04 and 2008/09.

Botswana Education Hub

Botswana provides a unique investment opportunity based on its background and distinctive historical, cultur-al, geographical, political and economic characteristics. It has a unique investor value proposition to fully leverage and transform itself into an education investment destina-tion of choice, and a centre of excellence in education, by attracting leading tertiary institutions, scholars, research-ers and students into the country. The Government of Bo-tswana is fully committed to the establishment of centres of excellence in selected educational opportunities.




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MINING INDUSTRY

MINERALS IN THE BOTSWANA ECONOMY AND THE REGION

Since the 1970s the mining industry, especially diamonds, has been the mainstay of the economy. In 2009 it con-tributed 26% of Gross Domestic Product (GDP), about 50% of government revenues, 70% of exports and 5% to employment. It is expected to contribute 50% of GDP by 2016.

The Government’s mineral policies aim at maximizing the economic benefits for the nation and enabling private in-vestors to earn internationally competitive rates of return. The mining environment makes Botswana a favoured in-vestment destination in Africa. The 2010 Mid-Year Survey by the Fraser Institute, an independent Canadian institu-tion, ranks Botswana as the number one preferred mining investment destination in Africa. This is the sixth year in which Botswana has been ranked first. The Survey ranks Botswana eighth in the world.

The high international rankings are a result of, among other things, an attractive investment climate that in-cludes the following:

• Governmenthasanoptiontoacquireupto15%shareholding in a project on mutually agreed com-mercial terms;

• A3%royaltyrateontheproduction/exportvalueof all minerals, with the exception of diamonds and other precious metals which attract 10% and 5% respectively;

• Variable income tax formulae which are negoti-ated between Government and the investors, with the exception of diamonds;

• Simplifiedrenewalandtransferofmineral licens-es;

• Liberalrulesregardingthetransferofmineralcon-cessions;

• Retention licenses that allow investorswhohavecompleted exploration activities to stop further de-velopments in cases where market conditions are not favourable.

The minerals that are mined in Botswana include dia-monds, copper, coal, nickel, soda ash, salt and uranium.

Diamonds

The Botswana economy is highly dependent on diamonds for export and government revenues. The big diamond mines are owned by Debswana, which is a 50-50 part-nership between the government and de Beers. It owns four mines: Orapa, Jwaneng, Letlhakane and Damtshaa. The combined production in 2008 was 32.6 million car-ats. This fell to 17.7 million in 2009 on account of the economic recession. Full recovery of the diamond market is expected in 2012/2013. Debswana has also embarked on the Jwaneng Cut 8 underground mining project, which is expected to increase the life of the mine by seven years to 2024.

Firestone Diamonds started commercial operations at their BK-11 site in 2010 and have been given a twelve-year mining license. Their output will be one million carats over a current estimated life of ten years. African Diamonds are expected to start commercial production at their AK-6 site in 2011. They are also continuing with exploration at their AK-8, AK-9 and BK-5 sites. Other companies that are actively involved in the exploration of diamonds are Petra Diamonds and Gem Diamonds.

Due to the extensive exploration for diamonds across the country using modern technologies, it is expected that a number of kimberlites will be discovered and new mines will be developed in the foreseeable future.

In order to reduce excessive dependence on diamonds, the government has decided to focus on value addition through beneficiation of diamonds and other minerals. To this end, a Diamond Hub has been established. Among other things, it will provide a diamond trade centre for rough and polished diamonds, and establish downstream industries in cutting and polishing as well as jewellery manufacturing. As of September 2010 there are sixteen diamond cutting and polishing factories, a majority of which started operating in 2007. Some are planning to progress to the jewellery manufacturing stage. The aggre-gation function which had previously been carried out in London has been transferred to Gaborone through the es-tablishment of the Diamond Training Company Botswana (DTCB), which is responsible for the sorting, valuing, mar-keting and selling of diamonds.




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There is currently no training school for diamond cutting and polishing in the country, and therefore all training is the responsibility of the companies. It is critical to have the skills available locally, which include: rough evalua-tion, planning/preparation, rough grading, rough marking and planning, rough to polished evaluation, rough trad-ing, polished trading, jewellery design and manufactur-ing, enterpreneurship and business management and sales and marketing (polished sales, branding and sales programmes).

Training currently takes place in South Africa, India, Thai-land and Belgium, where there are established institutions. There is therefore a need for a technical school focusing on the industry needs. The training of technicians is car-ried out at the Diamond Technology Park. In addition, Odi College will soon offer tailor-made courses that were de-veloped in conjunction with the industry, including jewel-lery design.

Coal

The country’s coal reserves are estimated at 212 billion tonnes. Despite these large resources, there is only one coal mine that is operating, namely Morupule Colliery, whose coal is used to generate power for the 120 MW power stations. However, there are a number of projects in the pipeline, some of which are summarized under the Energy Projects section.

The government is planning to develop a Coal Road Map which will outline options for beneficiation of coal (coal to hydrocarbons, coal for export and coal for power genera-tion). This will be done in order to ensure that the country plays a meaningful role in meeting the projected energy demands of the region.

Gold

Currently there is one gold mine in north-eastern Botswa-na, namely Mupane Gold Mine, which is a subsidiary of I Am Gold Corporation. In 2008 gold exports accounted for 1.1% of total export earnings. As a result of ongoing prospecting across the country, some small mines may be opened in the near future, creating a demand for various skills.

Soda Ash and Salt

The country has abundant resources of soda ash and salt in the Makgadikgadi salt pans. Botswana Ash (formerly Soda Ash Botswana) has been extracting salt and soda ash since 1991. In 2009 it produced 266 000 tonnes of

soda ash, and there are plans to increase this to 300 000 tonnes. The soda ash is mainly exported to South Africa for use in the glass making industry, inter alia. The salt is exported to countries such as Malawi and Zimbabwe.

This resource presents ample opportunities for beneficia-tion and downstream activities in industries such as pa-per and glass manufacturing, which are currently under-exploited.

The country has abundant silica sand resources suitable for glass making, which are estimated at 23 million tonnes. There is currently one glass-making factory at Palapye. This project, as well as others that may come on stream in the future, will require soda ash for their production.

Copper-Nickel

There are currently two sizeable mines in eastern Botswa-na that are operated by BCL Limited and Tati Nickel Min-ing Company. There is also a smaller mine operated by African Copper in the north east. In addition, there are a number of copper projects that are expected to come on stream in the near future, such as the BOSETO project near Maun.

Uranium

A-Cap Resources have discovered uranium in Letlhakane, south of Makgadikgadi pans. It is the twelfth largest un-explored uranium deposit in the world. The resource is estimated at 280 million tonnes. They plan to develop an open pit mine that will produce 1 000 tonnes per year. Other deposits have been discovered at Serule. Demand for uranium is expected to grow globally in response to an increase in the use of nuclear power as a source of energy.

ENERGY INDUSTRY

Access to modern forms of energy plays a critical role in the attainment of sustainable economic growth. Major projects in key sectors such as agriculture, mining, tele-communications, manufacturing and transport require re-liable and competitively priced energy supplies.

Sub-Saharan Africa (SSA), which comprises 47 countries, has large reserves of proven oil, gas, and coal. It also has large hydro power potential, as well as uranium and solar resources. Yet despite these energy resource endowments, commercial energy use is the lowest in the world.




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The Organisation for Economic Cooperation and Develop-ment (OECD) estimates that only 31% of the population of the region has access to electricity. If South Africa is ex-cluded, the rate drops to 28%. In Botswana the national access rate to electricity is 58.4%, of which the rural rate is 53.2% and the urban rate 81.2%.

The low access rate in SSA is explained in part by the em-pirically proven close correlation between income levels and access to modern energy sources. Countries with large proportions of their population living on an income of less than $2 per day tend to have low electrification rates and heavy reliance on traditional biomass. The other reason for the low access rate is the absence of the requi-site infrastructure, especially in rural areas, which requires large capital investment which most countries cannot af-ford. This situation is not helped by the unattractive in-vestment climates in some countries.

However, this situation is changing, as more countries are democratising their political and economic governance structures and are putting in place meaningful measures to improve their investment climates. As a result, econom-ic growth rates in SSA are gradually moving upwards and prospects for sustainable growth are encouraging. This augurs well for increased local and foreign investment in the sector, which will generate demands for professionals and technicians.

The demand for electricity in the SADC region continues to grow at an estimated 4% per annum, exceeding sup-ply, and this situation is expected to continue for many years to come. The Southern African Power Pool, as well as individual countries, continues to identify and imple-ment projects such as power inter-connections and expan-sion of existing power plants, as well as new projects. One of the major new projects is the Inca hydro power project in the Democratic Republic of Congo.

Due to strong economic growth, rapid industrialization and a massive electrification programme, South Africa started to experience shortages in 2008/2009 which com-pelled Eskom to introduce load shedding as a demand management. This has adversely affected large consumers such as mines in South Africa and in countries like Bo-tswana which import electricity from Eskom. Eskom also recently introduced heavy tariffs.

As a long-term solution, Eskom has embarked on a mas-sive expansion programme. They have started work on

two new coal powered power stations, and they are plan-ning to build a new conventional nuclear power station. They also plan to re-open nuclear power stations that were closed some time ago. There will still be a shortage, however, which is expected to be covered by independent power producers such as the Mmamabula Energy Project (MEP) and Mmamantswe, mentioned below.

Botswana imports the bulk of its electricity from South Af-rica. This is regulated by a five-year power purchase agree-ment with Eskom which became operational in 2008 after the expiry of the previous one in 2007. It provides for the supply of 350 MW in the years 2008 and 2009, 250 MW in 2010 and 150 MW in 2011 and 2012. The reduced power supply has been addressed by importing 90 MW from Mozambique and reopening a diesel powered sta-tion in Francistown. It is expected that with the coming on stream of Morupule expansion projects, the expanded use of renewable energy and the realization of the Mookane Domestic Power Project, the country will become self suf-ficient in electricity supply.

ENERGY PROJECTS

Morupule B Expansion Project

Plans are at an advanced stage to increase the mine pro-duction for a two-phased electricity expansion project. It will start with 600 MW as phase one and is expected to be operational in 2012.

Mmamabula Energy Project

A major mine and power project, Mmamabula Energy Project (MEP), is also planned and will be operated by CIC Energy Corporation. Its implementation will commence once the requisite agreements have been concluded be-tween the promoters and off-takers for the project, name-ly Eskom of South Africa, the proposed main customer, and the Botswana Power Corporation (BPC). The first phase will include a 1200 MW power station and a mine. Commencement of commercial production will depend on the agreed combinations of electricity supply sources of the South African Integrated Electricty Resource Plan (IRP 2010). There is also a planned 300 MW power sta-tion and associated coal mine project, Mookane Domes-tic Power Project, which will supply the local market. This project is expected to be operational by 2013. With the export coal project the MEP also includes a potential coal-to-hydro carbon project




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Mmamantswe Energy Project

This project is located in the Kgatleng District, 15 km from the South African border and 250 km north-west of Jo-hannesburg. The indicated resource is 1.3 billion tonnes. This will be an open pit mine capable of supporting a 6 million tonnes/annum power station plus a similar amount for export. Aviva Corporation Limited is proposing a 12 million tonnes/annum coal mine to support a 1 000 MW integrated power station and 8 million tonnes/annum exports. Eskom will be the main off-taker. The project is expected to commence once the South African govern-ment has taken a decision on the amount of electricity that should be procured from independent power pro-ducers, following completion of their Integrated Resource Plan 2010.

Coal Bed Methane Projects

The projects involve the development of an integrated 250 MW open-cycle gas turbine and coal bed methane power plant, fed by substations situated at Orapa for 90 MW and Mmashoro area for 160 MW. They will be con-nected to the national grid. The projects are expected to come on stream in 2010/2011.

RENEWABLE ENERGY

In order to improve energy security and to bolster existing energy sources, the government is committed to increas-ing the use of renewable energy and the role of private sector in this endeavour. The requisite regulatory environ-ment will also be put in place. Training of professionals and technicians will be provided to facilitate the use of the technologies in this sector.

Solar Energy Power Station

Botswana is well endowed with solar energy with an esti-mated 3 200 hours of sunshine. Despite this, the resource is highly under-utilized. Estimates show that the uptake of solar energy nationally stands at 0.23%. Promotion and research efforts by institutions such as the Botswana Tech-nology Centre have so far yielded minimum results. Some of the constraints are said to be high initial capital costs and the poor quality of systems.

The Japanese Government is financing the construction of the first solar power station with a capacity of 1 MW in Phakalane. It will be connected to the national electricity grid. The project is expected to be operational by 2011.

Bio-Fuels

The trend of increases in crude oil prices helps to increase the viability of bio-fuels, and a recent study has confirmed the economic viability of bio-diesel and methanol produc-tion in Botswana, with marginal land available throughout the country that can be used for proposed projects. The long-term government plan is to have bio-fuels account-ing for about 10% of fuel consumption. Any future proj-ects will have to contend with the shortage of technicians and artisans in this field.

Exploration

Significant prospecting work is being carried out across the country. At the end of March 2009 there were 29 companies exploring for precious stones, and 64 for vari-ous other minerals. On the basis of the geological infor-mation, more minerals are expected to be discovered and developed, which will put a strain on the available skilled manpower.

THE ROLE OF MINING IN AFRICAN ECONOMIES

Africa is well endowed with mineral resources, with an es-timated 90% of global reserves of platinum, 65% of dia-monds, 40% of gold and 60% of manganese and cobalt. Some countries are highly dependent on a single or few commodities. These countries include Angola (diamonds and oil), Botswana (diamonds), Democratic Republic of Congo (diamonds, copper and cobalt), Zambia (copper and cobalt), Nigeria (oil), Sierra Leone (diamonds), Namibia (diamonds), Gabon (oil), Equatorial Guinea (oil), Libya (oil), Ghana (gold), and South Africa (gold, diamonds, platinum, etc). Despite major diversification efforts, these countries and others that are not mentioned will take many decades to substantially reduce their dependence on mining. As a result, they will continue to have a significant demand for mining skills at all levels.

Africa has not always been top of the list as an investment destination, except for a few success stories like Botswa-na, Namibia and South Africa. This was a result of, inter alia, armed conflicts, poor political and economic gover-nance, unattractive investment climates and inadequate infrastructure. Fortunately this is changing, as reflected in improving fundamentals such as rising economic growth rates, increasing political stability, and a world hungry for commodities. These favourable developments have been assisted in part by policy interventions such as the Kim-




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berley Process and the Extractive Industries Initiative. The former aims at ensuring that proceeds from diamonds are not used to fuel conflicts, as happened in the Democratic Republic of Congo and Sierra Leone, for example. The lat-ter aims to ensure that there is transparency in the report-ing on the use of proceeds from industries such as oil.

There is consensus that enhanced management of mineral resource revenues will assist the continent in its ongoing efforts to catch up with the rest of the world economically. Now that the recession is subsiding, there are indications that the demand for mineral commodities will improve. The key driver in this anticipated growth is the increase in urbanization, particularly in India and China. These coun-tries also have large appetites for diamonds. The com-modity boom is therefore likely to continue for some time, as long as China and India continue to grow, and as long as growth needs to be underpinned by the constant sup-ply of commodities.

As a result of a decrease in conflicts in some mineral-rich countries, exploration activities in those countries have in-creased, and it is expected that significant mineral discov-eries will be made.

Exploration has also peaked in other countries, due to im-provements in their investment climates and prices of vari-ous mineral commodities. These developments, coupled with the projected demand for such commodities, bode well for vigorous efforts to tackle the endemic poverty across the continent. Clearly, skills development will con-tinue to be critical for sustainable socio-economic devel-opment and transformation in Africa for many years to come.

EDUCATION IN THE MINING & ENERGY SECTOR

MINING SECTOR

Training Developments at Artisan and Technician Level

Training at this level is carried out mainly at the govern-ment-owned brigades and technical colleges. There are 41 brigades and eight technical colleges, four of these offering certificate courses only. However, they will be up-graded in National Development Plan 10 (NDP 10) to offer diploma programmes. Mining-related courses at technical colleges are heavy plant engineering, electrical and me-chanical engineering, welding, fabrication and instrumen-tation. However, the products from these colleges are not

aligned to the requirements of the mining sector.In order to address mining industry skills shortages, plans are in place to increase the intake of apprentices, evalu-ate and up-skill unemployed artisans, and increase invest-ment in the training of technicians and artisans. The mines also have training facilities of their own and offer training programmes that specifically address the industry skills re-quirements.

Regional Training Situation at Artisan and Technician Levels

It is evident that most of the training at these levels takes place locally in many countries. South Africa faces an acute skills shortage in the mining industry, with the structure of the mining industry set to change dramatically follow-ing the introduction of South Africa’s new Mining Charter that cedes all mineral rights to the State, as well as intro-ducing an empowerment component for all future mining developments in the country. As a result, South Africa has embarked on a massive training programme to address the skills shortage and has become the main destination in the region. However, Botswana sent only 200 students there for training between 2000 and 2010.

ENERGY SECTORThe situation in Botswana is representative of those African countries which are yet fully to respond to the increasing demand for skills created by the current and future growth in the industry which, despite its rapid recent expansion, is still relatively immature. A wide range of skills is required in the renewable energy industry, due to concerns about mitigation of climate change, greenhouse gases of fossil fuels and the environmental, social and/or political risks of extensive use of fossil fuels and nuclear power. Technical and artisan skills are obviously in demand by manufactur-ers and installation/maintenance contractors. The required skills include civil, mechanical and electrical engineering, as well as software and process control.

REGULATORY ENVIRONMENT

All academic programmes offered by the technical school will have to be accredited by the Botswana Training Au-thority (BOTA).

The SADC Protocol on Education and Training provides for cooperation in higher education and training (art. 7), and below are two provisions that are relevant to the oppor-tunity:




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• MemberStatesagree to recommend touniversi-ties and other tertiary institutions in their countries to reserve at least 5% of admission for students from SADC nations other than their own.

• MemberStatesagreethatwithintenyearsofthedate of entry into force of this Protocol, they shall treat students from SADC countries as home stu-dents for purposes of fees and accommodation.

OPPORTUNITY

CONCEPT AND OBJECTIVE

The Strategy for Economic Diversification and Sustainable Growth of 2008 advocates for the creation of centres of excellence in sectors where the country has a compara-tive advantage, and as such, has achieved levels of quality and competitiveness that meet the highest international benchmarks. Mining has been identified as one of the qualifying sectors. Equally significant is the recognition of the strategic importance of energy and the growing im-portance of renewable energy.

The pressure to develop alternative energy sources has led to the emergence of new concepts and systems that posi-tion renewable energy as the strategic source of power for the future. Investment in developing new technolo-gies is increasing, as industries become more efficient and competitive and expand their markets. For Botswana, the value of renewable energy is in power generation to run primary schools, health clinics, local government centres, rural businesses and households, as well as in the general improvement of the quality of life due to reduction in car-bon emission associated with coal power generation

The courses to be offered by the proposed Technical School of Mining and Energy will be developed in partner-ship with relevant stakeholders such as the mining indus-try, taking into account the needs as well as the socio-eco-nomic realities of Botswana and other African countries. The school will develop and offer a number of training courses to address many unique factors of the mining in-dustry. Training can be client-sponsored and targeted to their requirements.

This project is intended to position Botswana as a regional mining and energy knowledge centre. This will result in a number of qualitative socio-economic benefits, some of which are that:

• Theproductionofhighqualitytechnicianswillas-sist in making the country competitive in the glob-

al market for goods and services, thus enhancing sustainable economic growth. Experience from successful countries such as the ‘Eastern tigers’ shows that technological progress and human resource development are key foundations for sustainable economic growth, which comes with attendant benefits such as job creation, reduction in poverty and social inequalities, increased tax revenues, creation of new economic activities, in-creased ability to extend coverage of physical and social infrastructure, and the creation of good prospects for dealing with contemporary and fu-ture social challenges.

• The proposed schoolwill also play an importantrole in transforming the country from a resource-based economy to a private sector and innovation-led one, as envisaged in Vision 2016, the Tertiary Education Policy, and the National Human Resource Development Strategy, among others. In addition, it will increase the choice of locally available artisan and technician courses, as well as reducing current expenditure on external training by the govern-ment and parents. Furthermore, it will address lo-cal and regional future skills needs.

The main objectives of the Technical School of Mining and Energy are:

(i) To provide technical training in disciplines where there are current and projected shortages in supply locally and regionally, as well as others that will be identified due to technological changes;

(ii) To take advantage of Botswana’s experience in effectively utilizing the proceeds from mining re-sources in order to underpin broad-based and sus-tainable socio-economic development in the train-ing of professionals from other African countries.

(iii) To produce a skilled workforce ready to deliver energy-saving programmes for the region, and to update skills in energy efficiency or renewable en-ergy disciplines.

PRODUCT DESCRIPTION

Recognising that exploration and mining activities are a sophisticated science, the search for greater operational efficiency is relentless. Mining, in particular, demands continuous technological innovation from every field of research and engineering – physical, electrical, mechani-cal, geological, biological and chemical. This will be the strategic focus of the school.




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Concerning renewable energy, it is noteworthy that the sector consists of lots of different technologies, some of which are well established while others are in the early stages of development but expected to continue to grow in the future. The school will also focus on bio-fuels, elec-trical power and networks, wind, photovoltaic and ther-mal technologies, as well as on physical and engineering sciences governing both natural processes and power conversion technology.

The school will commence with an initial enrolment of two hundred and fifty in the first year, and reach five hundred in the second. It will be expanded after establishing itself as a strong competitor in the local market. The courses offered will include diplomas in the following branches of engineering: mining, metallurgy, mechanical, chemi-cal, industrial, civil engineering and electrical. Courses will run from 12 to 24 months. The school will also offer short-term courses of three and six months, each with an intake of 100 students per year.

The school will initially focus on mining and energy pro-grammes at technical and artisan level, where the great-est skill shortage has been identified, and will upgrade to degree courses without the need for additional infrastruc-tural investment.

The school will ensure that, for Botswana, there is a steady flow of qualified personnel capable of entering the mining industry; with other government strategies in place, this will enable the mining industry to perform with greater operational efficiency and Botswana to compete globally, based on the availability of a skilled and efficient work-force.

VALUE PROPOSITION

Botswana ranks as the most favoured mining investment destination in Africa. It is also the least corrupt country in Africa according to Transparency International’s Cor-ruption Perception Index. It was ranked 37 out of 180 countries in 2009. In addition, the country scores highly in the World Bank’s “Ease of Doing Business”, where it is ranked 45 out of 183 countries in 2010. Only two Af-rican countries scored higher, namely Mauritius (17) and South Africa (34). Furthermore, the country enjoys high credit ratings from agencies such as Standard and Poor’s and Moody’s.

STUDENT MARKET

The market for artisans and technicians continues to grow as existing mines expand their operations and new ones come on stream locally and regionally. Currently the eight technical colleges and 41 brigades are the main sources of artisans and technicians, but are not able to satisfy local demand due to the rapid growth of the mining industry and the specialized nature of skills requirements relative to the type of training offered. The technical colleges are cur-rently operating at 76% capacity due to human resource constraints; the worst affected is Francistown Technical College, which is operating at 15% capacity.

Between 2000 and 2010 the government sponsored ap-proximately 3 000 students in mining and related disci-plines at both certificate and diploma level locally. Ap-proximately 200 were sponsored in South Africa over the same period. Other students have been placed in Australia, Canada, Cuba, Japan, Malaysia, Namibia and Thailand. The engineering courses included diplomas in mining, metallurgy, mechanical, chemical, industrial, civil and electrical.

In the mines at BCL, Jwaneng and Tati Nickel there are still significant numbers of expatriate personnel at the artisan and technician levels, demonstrating the local skills gap and the potential student market for the proposed school. The latest mining industry manpower survey estimates a vacancy of nearly 279 at these levels.

At Morupule, due to local skills shortages, the Govern-ment has granted permission to China National Electric Equipment Corporation, a construction contractor, to im-port around 1 400 personnel, the majority of whom are technicians and artisans. Some of the areas where there are shortages are thermal insulation, water treatment, welding, civil works and electrical engineering. The re-quired personnel include steel fixers, masons, plumbers, electricians, etc. These skills will obviously be needed for the operational phase, and as such they should be deliv-ered in good time.

The table below shows the estimated number of expatri-ates at Mookane Domestic Power Project for the period 2011 to 2020. Most of these are in the technician and artisan categories.

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Expats at mine 113 113 93 74 60 41 36 30 30

Expats at power station 141 141 141 141 140 115 111 100 85 67




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The government had planned to construct four tech-nical schools during NDP 10 (2009-2016) at a cost of P280 million with a capacity of 1 500 students, although the project has now been kept in abeyance due to re-source constraints. The proposed private technical college should therefore be able to absorb some of the students that would otherwise have gone to these schools.

Generally, the government is committed to expanding general education opportunities in order to, inter alia, achieve a tertiary participation rate of 20% by 2016, as compared to the current 11%. A low tertiary participation rate has been identified as one of the factors that hamper efforts to achieve a knowledge-based society.

There will be a great demand for adequately trained and highly skilled manpower at all levels in the African mining sector in the long term, for the following reasons:

• thecurrentglobalshortageofminingskills

• current and planned mining projects locally andregionally, as well as ongoing prospecting projects

• thegovernment’scommitmenttofocusonbenefi-ciation

• theprojectedregionaldemandforenergyresourc-es

• theprojectedincreaseinglobaldemandforothermineral commodities.

Regional

The mining industry in Namibia is the mainstay of the economy. It is against this background that the Chamber of Mines is concerned about the acute shortage of skills in the sector. It is estimated that there is a deficit of 37% for mining professionals and 15% for artisans. These gaps are filled by expatriate labour. The situation is not expected to abate in the near future, and in consequence, the industry is working hand in hand with the government to make it easier to recruit expatriates by issuing work permits within a reasonably short time and increasing their validity period to five years instead of the current three.

The mining sector plays a vital role in the economy of South Africa as it accounts for 8% of GDP. There is concern that factors such as skills shortages have denied the country the opportunity to reap the benefits of the metal prices boom of a few years ago. Skills shortages result from:

• competitionwithothersectorssuchasinfrastruc-ture development and manufacturing

• thehighmobilityofengineersandartisansduetotransferability of their skills

• poaching of skilled workers by developed coun-tries offering attractive remuneration packages

• thecountry’s inabilitytoreplacetheageingengi-neering and artisan population.

As a result, the country’s future skills needs will be difficult to meet.

In order to address skills shortages, the industry advocates a focused skills development programme that will pro-duce enough graduates to meet the current and projected needs of the market.

The above situation shows that scope exists for Botswana to train technicians and artisans from South Africa and to export them to that country. For this to happen, an ag-gressive marketing campaign will be necessary.

Competition

Locally the main competitors are the eight technical col-leges, as well as the 41 brigades (once they have been upgraded). However, the technical colleges are not able to cope with the current demand, partly because of the inability to attract qualified lecturers. This is not likely to abate in the foreseeable future. A good private school should be able to attract high calibre staff and students.Regionally, the main competitor is South Africa. However, the number of students sent to that country for technician courses from Botswana is relatively low.




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COST / BENEFIT

All monetary values in this section are presented in Botswana Pula (BWP) with a convertible rate of 1BWP = 0.15USD (as of November 2010).

The following table shows that this project is viable. South Africa is our main competitor. The pre-eminent factor will be the quality of the products, followed by the cost. The proposed tuition fees of P35 000 for full time students compares favourably with those charged at similar South African facilities.

The following table is with discounted rate of 10%:

Capital Investment (CI) - Initial Investment P45 000 000

Operational Cost (OC) per year P10 000 000

Revenue per year P20 000 000

NPV over a 10-year period P14 950 610

IRR over a 10-year period 18%



The following table is with discounted rate of 12%:

Capital Investment (CI) - Initial Investment P45 000 000

Operational Cost (OC) per year P10 000 000

Revenue per year P20 000 000




IRR over a 15-year period 21% Revenue assumptions (annual)

No of Students Cost per Student Total (PULA) (PULA)

500 35 000 17 500 000100 17 000 1 700 000100 8 000 800 000

Total 20 000 000

MARKETING STRATEGY

The project will initially target the local market in order to create the necessary critical mass. It will then progressively target the SADC region and other English speaking coun-tries. The main beneficiaries will be the mines, government departments of mining, exploration companies, etc.

Partnerships must be formed with the mining industry, and the curriculum should be aligned with industry require-ments to offset the load on the mines training facilities. A rigorous marketing programme will start with the pro-duction of an information booklet that will be sent to all senior secondary schools, government departments of mining, government human resource departments such as the Directorate of Public Service Management, Depart-ment of Tertiary Education Financing, etc. This will be fol-lowed by visits to schools to address potential students, and visits to the mines to hold discussions with human resource managers. Visits should also be made to neigh-bouring countries.

Other measures include participation at annual math-ematics and science and consumer fairs, locally and re-gionally. The internet will be used, as well as local and regional newspapers and mining journals. The Botswana embassies and consulates are also available to assist in the crusade. Advantage should also be taken of the regular BEDIA promotion missions, and major stakeholders like the Chamber of Mines must also be brought on board to sell the project.

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