Mining focus on Botswana


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Mining focus on Botswana presentation by Chairman: De Beers Consolidated Mines, Mr. Barend Petersen at the 2013 Mining Lekgotla. 27 August 2013


  • 1. reputationsafety & health environment security governance 1 A Focus on Botswana Chairman: De Beers Consolidated Mines Mr. Barend Petersen Mining Lekgotla: 27 August 2013

2. reputationsafety & health environment security governance Points of Discussion 2 Botswana A Background A Formidable Partnership Diamonds For Good Debswana Structure Operations Leading Corporate Citizen Strategic Projects Cut 8 Enterprise Development Community Development Beneficiation Conclusion 40 years on.. 3. reputationsafety & health environment security governance 3 Botswana A Background 4. reputationsafety & health environment security governance Botswana A Background De Beers commenced prospecting in Botswana in March 1955. The first kimberlite to be discovered was in the Mochudi area in 1966. On 1 March 1967, the first Orapa discovery was made, whilst the main pipe at Orapa was discovered on 25 April 1967. Mines at Letlhakane and Jwaneng soon followed. Since independence in 1966, Botswana has transformed itself to become one of the fastest growing economies both on the African continent and in the world. Through fiscal discipline and sound management, the country has grown from one of the poorest countries in the world to a middle income country with a per capita GDP of US$ 13 100 in 2010 and an average annual growth rate of about nine percent. Returns from diamond mining have been used to develop physical and social infrastructure such as roads, water supplies, electricity, telecommunications, health facilities, schools and supports the governments HIV/AIDS programmes, including free antiretroviral therapy to citizens. 4 5. reputationsafety & health environment security governance Botswana A Background Botswana is the worlds largest diamond producer by value, producing about 21% of global output (2012: 20,216,000 carats). In 2006, Debswana recovered a record 34.3 million carats, generating an annual profit in the order of BWP 12 billion, most of which was remitted to the government in the form of dividends, royalties, and taxes. 5 6. reputationsafety & health environment security governance A Formidable Partnership 6 Debswana, a 50/50 joint venture between De Beers and the Government of Botswana, is described both confidently and routinely as a unique partnership. Its a relationship thats been tried and tested, showing that things are possible when government and private enterprise join hands to do good for the nation. Debswana Chairman Eric Molale 7. reputationsafety & health environment security governance Diamonds For Good Debswana Diamond Company, originally known as De Beers Botswana Mining Company (Proprietary) Limited, was established on 23 June 1969. The name was changed to Debswana Diamond Company (Proprietary) Limited on 25 March 1992. As the Government of the Republic of Botswana owns part of De Beers as a whole, it also receives dividend income from this 15% shareholding. Roughly 80% generated by Debswana is accrued as government revenues for the benefit of the people of Botswana. The Chairmanship of the Board is rotated between the Government of the Republic of Botswana and De Beers every two years. On 1 January 2012, the Chairmanship revolved to the Government of the Republic of Botswana for the calendar years 2012 and 2013. Diamonds are a finite resource and diamond earnings will therefore eventually plateau and decline. Debswana can make a valuable contribution through diligent closure planning, supporting other industries through procurement agreements, strategic social investments, and through support for enterprise development. 7 8. reputationsafety & health environment security governance Country Case Study: Botswana from 1966 to 2013 in less than just a lifetime The World Economic Forum rates Botswana as one of the two most economically competitive nations in Africa. Botswana has an "A" grade credit ratings by Moody's and Standard & Poor's. This ranks Botswana the best credit risk in Africa and puts it on par with or above many countries in central Europe, East Asia, and Latin America. Since independence, Botswana has had the highest average economic growth rate in the world, averaging about 9% per year from 1966 to 1999. Growth in private sector employment has averaged about 10% per annum over the first 30 years of independence. The government has consistently maintained budget surpluses and has extensive foreign exchange reserves. By one estimate, it has the fourth highest gross national income at purchasing power parity in Africa, giving it a standard of living around that of Mexico and Turkey. 9. reputationsafety & health environment security governance Debswana Operations 9 Botswana's impressive economic record was built on a foundation of diamond mining. In the unique partnership Botswana has a 50:50 share in Debswana. Owns 15% of De Beers, the Anglo American plc. Company. It has no similar partnership model in the minerals or other sectors, nor does the state manage the independently managed Debswana. 10. reputationsafety & health environment security governance 11. reputationsafety & health environment security governance 12. reputationsafety & health environment security governance Debswana Leading Corporate Citizen Debswana is the largest private sector employer in Botswana, with more than 4 000 staff members, with just more than 500 fixed-term contractors. 95% of its employees are Botswana citizens. Debswanas diamond revenue accounts for about 50% of public revenue; 33% of GDP; and 70 to 80% of foreign exchange earnings. The company's citizen spend and local procurement spend in 2012 amounted to more than BWP 3,5 billion. Debswana mines have contributed significantly to the economic growth of Botswana, as well as producing revenues responsible for lifting the country from one of Africas least developed to an international development success story. Botswana is now a middle- income country independent in means as well as name. 12 13. reputationsafety & health environment security governance Strategic Projects Cut 8 13 Jwaneng Mines Cut 8 project was approved in August 2009. Cut-8 will extend the life of mine to at least 2025 and will allow access to approximately 95 million carats, worth an estimated US$15 billion, in approximately 80 million tonnes mined. Debswana completed the Jwaneng Cut 8 infrastructure development project on schedule, including the establishment and handover of workshops for earth-moving equipment. 51% of Cut 8 contracts have been awarded to citizen-owned or Botswana-based companies, these have already received 46% of all Cut 8 project spend and 86% of the Cut 8 project workforce are Batswana. 14. reputationsafety & health environment security governance Enterprise Development Debswana invests in community enterprise development through Peo Venture Capital Proprietary Limited (Peo), which was established in 1997. Since Peos inception, the shareholders have always been committed to promoting and facilitating the development of commercially viable businesses in Botswana. Its shareholders contributed BWP 40 million capital and at least 60 companies have benefited from this funding with a total disbursement of more than BWP 36 million to date. About 1,400 new jobs have been created and sustained, generating salary payments of more than BWP 10 million per annum. 14 Veterinary and agricultural consultants financed by PEO Polymex Industries (Pty) Ltd financed by PEO 15. reputationsafety & health environment security governance Community Development Governance: The CSI Committee is a sub-committee of the Debswana Board whose role is to consider and approve funding for community projects, as well as to recommend funding for larger national-level projects to the Board. Education: The wealth generated from diamonds has enabled every child in Botswana to receive free schooling to the age of 13. The results of this investment are demonstrated in 97% of pupils progressing from primary to secondary education, an impressive figure in comparison with the African average of 67%. Health: The companys fully funded mine hospitals provide medical services to mine employees but also act as district hospitals for the communities surrounding our mines. At Orapa Mine, the mine hospital provides essential health services to more than 64,000 patients in 2012. 15 16. reputationsafety & health environment security governance Beneficiation In September 2011, the Government of the Republic of Botswana and the De Beers Group announced that agreement has been reached on a new 10 year contract for the sorting, valuing and sales of Debswanas diamond production. The Agreement includes the relocation of our London-based sales operations, a process that began in 2012 and will be completed by the end of 2013. This unprecedented geographic shift in the sale of rough diamonds will strengthen the foundations for the diamond trading, cutting and polishing, and jewellery manufacturing industries across the southern African region. befitting southern Africas position as the worlds leading diamond producing region, with a 43 percent share of global production, by value. The agreement also provides for an independent sales outlet for the Botswana Government, which will begin this year at 10 percent of Debswanas run of mine production and rise to 15 percent over a five year period, through Okavango Diamond Company. 16 17. reputationsafety & health environment security governance 40 years on.. Current Status: Botswana is the worlds largest producer of diamonds by value; Debswana is the worlds largest diamond producer by value; Jwaneng Mine is the richest diamond mine on the planet by value; Jwaneng Mine is the richest piece of real estate in the world, valued at five times an equivalent piece of land in Tokyo, Japan; It is rat