Government says it will continue to look at ways of helping the mining sector during trying times especially in the present moment when unreliable energy and weak commodity prices are major issues facing the industry.
Addressing a two-day Botswana Resource Sector conference in Gaborone this week, the Minister of Minerals, Energy and Water Resources Kitso Mokaila said they are awake to challenges facing the resources industry.
“Government is fully aware of the challenges faced by the mineral industry, the weak demand in diamonds due to the mismatch in rough and polished prices resulting in factories scaling down and in some cases, closing down around the world due to squeezed margins in the diamond downstream sector,” Mokaila told the annual gathering of mining giants.
He said base metals mines are also not spared from the poor commodity prices, which compelled government to defer royalty payments for all but one base metal operations in the country to assist the companies in the short term to overcome their financial pressures.
“My Ministry will continue to assist the industry on a case by case basis and is open to suggestions from the industry which are mutually beneficial,” he added.
Mining remains the mainstay of the country’s economy and safeguarding jobs has become an issue that has become a topic of discussion. Last month Mokaila said they decided to defer royalties’ payments to aid the struggling miners in a bid to protect jobs and keep operations running.
The minister said at the time that when deciding to defer the companies’ royalty payments, government took into consideration the massive job losses that would result if the two companies were to totally close shop.
Government has also made an undertaking to build solar power plants to help copper miners in the north parts of the country that are not covered by Botswana Power Corporation (BPC) in a bid to scale down on their energy costs.
Mokaila also said that an expression of interest tender will be issued in the near future for the less than 100 MW plant that would serve the Discovery Metals’ Boseto mine and Khoemacau Copper mining.
Energy costs were some of the major issues facing Boseto mine before it was closed by creditors earlier this year, with estimates showing it represented over 30 percent of total costs. Labour was the second significant cost to the company after diesel as the company generated its own energy at the flagship project.
Mokaila added that government was channelling all its energies and resources into resolving the prevailing power and water challenges because of the recognition of the role power plays in minerals investments.
The annual resources conference organised by Capital Resources comes at a time when the “minerals industry” is experiencing daunting challenges of weakened commodity prices and increasing environmental pressures.
“In Botswana the industry’s challenges are exacerbated by the prevailing power and water problems,” Mokaila said.