New Report Available: Botswana Mining Report Q3 2013

From: Fast Market Research, Inc.
Published: Mon Jun 17 2013

We are positive on the outlook for Botswana's mining sector over our forecast period, to 2017. Diamond output will remain the mainstay of Botswanan mining production, boosted by new projects being planned by both Gem Diamonds and Lucara Diamond Corp.; however, key mining projects, such as Discovery Metals' Boseto project, are also being developed in the copper, uranium and coal sub-sectors. Botswana's mining sector is on course for stable growth over the next few years and we forecast the sector to average 3.1% growth from 2012 to 2017, reaching a value of US$5.96bn by 2017.

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Diversification The Priority

Botswana has been stepping up efforts to diversify its mining sector, with the government aiming to develop production of non-core minerals, including, coal, copper and precious metals. Our expectation for a continued slow recovery in the US and Europe, two of the main export markets for Botswanan diamond production, will hinder growth in the country.

One key measure, introduced in recent months, has been the amendments made to the country's tax framework with the level of company tax having been reduced from a minimum of 25% to 22%. Botswana's Minister for Minerals, Ponatshego Kedikilwe, said the measures are aimed at encouraging foreign investment in areas of non-core mining including production of coal, copper and other minerals. Coal mining has enjoyed one of the largest boosts in recent months and the government is in the process of drawing up a national Coal Development Unit (CDU), which will oversee development of mining projects and transport infrastructure and will act as a go-between between the government and private investors.

Botswana Leads The Rest Botswana remains high up in our mining risk/reward ratings, and we see little prospect of the country being usurped in the near future. Botswana's impressive country risk scores are due to a strong legal framework and investor-friendly environment. It has some of the lowest tax rates in the region and there is little government interference in the mining sector. Furthermore, Botswana has some of the lowest rates of corruption in Africa. The country's mining potential is enormous, with huge diamond deposits and numerous successful exploration projects. There is strong potential for growth due to the government's focus on diversifying away from diamond production. Discovery Metals has begun drilling at the Boseto copper mine and African Copper has started operations at the Thakadu silver and gold mine. It is in coal production, however, that we expect to see the fastest growth rates, as the sector grows rapidly from its low base. Furthermore, while much of Southern Africa is undergoing greater resource nationalism, we do not expect this trend to reach Botswana, as it has pledged to maintain its business-friendly outlook.

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