Thursday, June 13, 2024

Botswana insists on mining secrecy

The Botswana Government is refusing to open up to scrutiny by Natural Resource Governance Institute (NRGI) and Extractive Industries Transparency Imitative saying it is not under any obligation to do so. This emerges in a report that was filed with the Public Accounts Committee in May this year but was made available during the ongoing session of the PAC.  In her report, Permanent Secretary in the Ministry of Minerals and Energy, Ellen Richard-Madisa states that: “It is not mandatory for state to become members of the Extractive Industries Transparency Imitative and the National Resources Governance Institutions, however states make assessments on the benefits of joining such bodies.”

Richard-Madisa said: “The Government of Botswana continues to review her position and is of the view that joining these institutions was not adding expected value to the state but rather financially benefitted these bodies through subscriptions.”

She added that mineral data is shared through local reputable institutions like Statistics Botswana and Bank of Botswana who ultimately publicise the mineral data. In 2021, the Auditor General said she was unable to audit the mainstay of Botswana’s economy because Debswana diamond mining company is refusing to avail records. In her report, the Auditor General Pulane Letebele echoed concerns raised by the Natural Resources Governance Institute (NRGI) that Debswana does not disclose the transfer of funds to government and details relating to the sale of diamonds adding that such an arrangement puts Botswana’s success story at risk. Deals between the Botswana government and De Beers are highly secretive. The World Bank has also expressed concern over the secrecy between Botswana government and De Beers. Letebele expressed concern that “the mining agreement with Debswana was not availed to me as it was considered confidential. This was said to be the case for companies in partnership with the Government of Botswana.”

Regarding Debswana Royaltie, Letebele found that the Department of Mines was inconsistent in their revenue collection drive as they did not set baselines and targets for the revenue collection from Debswana like they did for other mining companies. In response, to the Auditor General’s concerns, Debswana Management stated that they prepared revenue forecasts which informed the budget at national level and that revenue collection was monitored against the budget on a monthly basis. Meanwhile Richard-Madisa said in her report that it is an obligation of the holder of mining license to furnish the Minister with a copy of his annual audited statements within six months of the end of each financial year as required under section 45(2) (d) of the Minerals Act. 

Departments of Mines reconciles the payments received from all large mines with the monthly production declared. On declaration of production, Richard-Madisa said “According to Mines, Quarries, Works and Machinery Act regulation 598, the Manager shall ensure that a mineral production return is rendered monthly to the Engineer on or before the 15th day of the month following that to which it relates.” “Therefore, all mining concession holders are obligated to submit their returns. To intensify monitoring of mining operations Department of Mines caries out scheduled operational and financial audits on all mining concession holders,” she said. Touching collection of royalties’ and dividends by the department of mines from 2014 to 2019, she said Mupane and Messina Copper were the only two companies that were deferred royalties at the time of the audit.

Richard-Madisa said deferral of royalties is granted to companies on request based on their financial performance in order to assist them to stay afloat and avert abrupt closure that may lead to job losses.  She said the figure of Mupane Gold Mine “recorded as P51, 201,404 & P8, 398,709 were erroneously recorded because the true figure of P8,398,709 is recorded in foreign currency, according to our records being US$8, 398,709 which is the total outstanding debt (deferred from May 2023 to December 2017) owed by Mupane Gold Mine.”  Richard-Madisa said: “The P51, 201, 404.64 quoted was the balance as at 14 March 2016.” She said Tati nickel which stopped operations in 2015, owes royalties amounting to P91, 425,000. “However, our records indicate that this figure is a total sum of both BCL Limited and Tati Nickel Mine combined,” she said.

The Permanent Secretary said: “The BCL Limited Group made a payment of P109, 801,441 in 2015 and it accounts for both BCL and Tati Nickel Mine; the figures on the original report indicated that royalties owed by BCL amounts to P18, 919,808.00.”


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