Saturday, September 26, 2020

Phikwe rises from the ashes

The mining town of Selebi Phikwe, which not so long ago lay feebly on its deathbed, is being nursed back to health with a heavy-dose cocktail of pula and euro medication being administered by the government of Botswana and the European Union.

Shots of the Chinese yuan have also helped stabilise its condition and while the dreaded spectre of a ‘ghost town’ has not completely disappeared, for now, Selebi Phikwe has a new lease on life.
On October 17, the Minister of Finance and Development Planning, Baledzi Gaolathe, officially launches the Selebi Phikwe Diversification Unit (SPEDU) whose main aim is to breathe life back into a town which, in an economic sense, is the lifeblood of outlying villages that are arterially and fatefully attached to it.

As Ambassador Paul Malin, Head of Delegation of the European Commission to Botswana and SADC explains, promoting economic diversification of the Selebi Phikwe region is to be done through the re-investment of funds from loan re-imbursement by BCL copper/nickel mine and Tati to the government into a “Re-Employment Account” (REA) to fund diversification activities. EU support also includes a number of feasibility studies offering potential for economic diversification.

According to Serwalo Tumelo, the permanent secretary in the Ministry of Finance and Development Planning, direct funding for the project will be provided by the government while the EU will take care of long-term technical assistance. The latter is being provided through the services of an expert with experience of the reconstruction of areas affected by declining heavy industry.
“The indicative amount intended to be made available over the next three or four years is approximately P500 million,” Tumelo says.

The money was provided under the EU’s SYSMIN Scheme, a financing facility under the European Development Funds for Africa, Caribbean and Pacific countries whose economies are heavily dependent on minerals. Malin says that Botswana has, on three occasions, benefited from SYSMIN to a total of more than Ôé¼85 million – about P850 million.

“Botswana first benefitted from SYSMIN in 1992 under EDF 6 and again in 1997 under EDF 7. And further, following confirmation of its eligibility for SYSMIN in 1998, Botswana successfully applied for the project; Economic Diversification of the Mining Sector (EDMS), which was signed in February 2003 to support the operations of BCL and Tati copper/nickel mine.

“These funds, which are granted through government under the EDMS, which then on-lends them to both BCL and Tati at a concessionary interest rate (8 percent), came at a time when the decline in world base metal prices was posing a serious threat to the viability of BCL mine and its ability to continue production in the longer term.

“Through exploration and drilling for ore reserves, the establishment of new mining sections and the improvement of efficiencies at BCL, the mine’s lifespan was increased and jobs safeguarded,” Malin says.

He adds that the currently buoyant world market for copper and nickel have enabled BCL to repay loans provided to it and that the EU and the Government of Botswana have agreed to use these funds for the diversification of the Selebi Phikwe regional economy.

SPEDU’s history harks back to December 2006 when CSA Consultants embarked on an EU-funded study on how to save the town and surrounding areas. A year later, the government adopted the consultants’ report which called for the setting up of an economic diversification unit.
Tumelo says that the need for diversification was necessary because of the finite life of the BCL mine.
The EU agreed to provide further support by way of long- term technical assistance and the cost of carrying out a number of sector studies.

While the ministry of finance will play the most prominent role in SPEDU, Tumelo says that several other stakeholders will also be actively involved.
“SPEDU will have an Executive Committee to whom the Head of the SPEDU will report and there will be a high level Advisory Committee on which will sit senior representatives of Ministries, Parastatals, BOCCIM and a wide range of other stakeholders. This body is expected to provide policy guidance, consider operating strategy and approve and monitor overall performance,” he says.

The PS stresses that his ministry recognises need to create a regionally-based organisation with a strong degree of local ownership of its strategy. The ministry’s current intention is to establish a Selebi Phikwe Economic Diversification Forum to give voice to a broad range of local stakeholders. Tumelo says that already, local reference groups are being established to guide consultancy studies in areas that have already been identified as having potential for regeneration of the economy of Selebi Phikwe and its surrounding region.

“This concept of consultation and participation will be consciously developed over coming months. The SPEDU project is also working closely with the Economic Diversification of the Mining Sector (EDMS) project centered on BCL to ensure that studies and actions targeted at environmental, exploration and restructuring issues at the company will be taken into account in the diversification work,” he says.

SPEDU’s operations have already begun. An Acting Co-ordinator for SPEDU was appointed by MFDP in April this year for a six-month assignment and is being assisted by a Long Term Technical Advisor appointed by the EU.

Says Tumelo: “Initial focus has been on the practical issues of finding offices, furniture and equipment, staff and establishing a suitable governance structure. The SPEDU is currently in temporary offices at Syringa Lodge in Selebi Phikwe but due to move to a permanent location on the industrial zone of Selebi Phikwe by early October. A governance structure has been agreed in principle and an Interim Executive Committee is being appointed currently. One of its tasks will be to make recommendations for a transparent procedure for the appointment of a long-term Executive Committee.”

In addition to what the government and the EU are doing, Selebi Phikwe has also benefitted immensely from the Chinese economic miracle. Currently, China is the world’s top consumer of copper. Preliminary data from the International Copper Study Group indicates that world usage of copper will increase by 5 percent next year. However, under present circumstances, Selebi Phikwe is living on borrowed time because, copper and nickel, just like diamonds, are not forever. The government and EU hope that SPEDU will stimulate a variety of economic activities with promise of much longer lifespans.

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