Global consulting firm KPMG says Botswana has the potential to become Africa’s mining centre because of its mineral rich wealth. According to the firm, as Botswana has vast deposits of minerals such as uranium, diamonds, coal and potash available for exploitation, the opportunity for developing mines to grow is large.
KPMG explained that investors, especially mining companies are attracted to the country not only because of the low cost of labour but also the regulatory framework for the mining industry.
“This growth is because of their known mineral wealth and others, such as Botswana, South Africa, Kenya and Rwanda are showing signs of continued business development and stability. This means that mining has a future in Africa if issues [relating to] security, corruption and supply chains can be well managed and resolved,” said KPMG mining global lead Jacques Erasmus.
He also said the political stability in the country is an added advantage which can result in a good share of foreign direct investment (FDI) or intra-Africa investment. However he notes that the region lacks the necessary infrastructure, such as rail, road and ports, which creates challenges for miners.
Erasmus says in many African countries electricity supply has been under pressure, owing to underinvestment in new infrastructure and backlogs in maintenance.
“Mining operations are typically energy-intensive and located in remote areas, sometimes with limited grid connectivity. This has caused mines to resort to increased reliance on diesel generators, which are very expensive to operate at the current oil price. They are also considering investing in baseload power plants, which may be owned and operated by the mining company or third parties,” he said.
He said this has forced some companies to operate mines using generators which can impact on the effective implementation of a mine’s cost optimisation plans.
“A reduction in equipment costs can provide a competitive edge. In addition, contractors can help reduce costs and allow for significant savings by providing specialised leasing services for mining equipment,” Erasmus said.