Monday, May 27, 2024

The forgotten story of a giant that is BOTASH Mine

What is today known as the Makgadikgadi salt pans where BOTASH mine is ingrained was a lake that existed millions of years ago. Scientists have also gathered evidence suggesting that humans have lived harmoniously in the area where they made a living out of the lake. Seasonal rivers would perpetually deposit sand into the bottom of the lake and formed an aquifer ( a body of porous rock or sediment saturated with groundwater). Over the years, the unforgiving climate change caused the water in the lake to evaporate leaving vast amount of salt deposits. In fact history also suggests that local people (The San) started mining salts in the area around the 12th Century. The San however did not mine a lot of salt as they stayed in small groups. Part of what triggered the salt trade was the various Empires among others the Munhumutapa Empire in Zimbabwe and Mapungubwe in Limpopo South Africa which traded with the San people and provided a lucrative market for salt. The trading of salt continued until the colonial era when the British arrived into the country. The British grabbed over the territory in 1955 and they commissioned the Royal Selection Trust (RST) to find out the source of the African trade mainly to investigate why there was such trade for a very long time. They also explored minerals especially oil in the Sua Pan. They however discovered that the pan had abundance of aquifer of brine. The brine contained vast amount salt.

The forgotten story

The right to the resource was passed to a British company, Imperial Chemical Industries (ICI) and passed to another company British Petroleum (BP) Chemical Limited. This company then made an investigation on how this salt can be recovered from the brine. All this happened in the early 80’s. In 1984 BP built a pilot plant and it convinced them enough that Soda Ash and Salt were recoverable. A golden opportunity presented itself in South Africa when that country was under heavy sanctions due to the apartheid government of the day in 1985. With the United States of America not being able to export its Soda Ash to South Africa, it had to look elsewhere for fulfill its demand. South Africa approached Botswana government to come up with a partnership. The partnership was made by the big business giants, Anglo America and Debeers. They then needed chemical manufacturers and brought in African Explosives and Chemical Industries (AECI) a company owned by the two giants. Botswana government was then a minor shareholder at 40 percent. They came up with a company, Soda Ash Botswana.

In 1988 they finalized their partnership agreement and worked together to bring about primary infrastructure such as roads, railway line, water and electricity. They also accelerated the design of the mine. It was ultimately built and commissioned in April 1991. The American cartels (American Natural Soda Ash Corporation) that were the dominant Soda Ash exporters and had controlled the market in South Africa were green with envy and planned to frustrate the new operation in Botswana. They decided to lower their prices to suffocate the Botswana operation and that caused the expected devastating blow to the business as it collapsed. Soda Ash Botswana was finally liquidated in 1995. The American Soda Ash business magnates were however not the sole cause of the liquidation but there was also a management crisis at Soda Ash Botswana. All was not lost as the shareholders were optimistic and believed there was hope. They put their heads together and revived the operation and the new Botswana Ash(BOTASH) was born. The customers in South Africa supported the operation as they felt that they had been exploited and overcharged by the American suppliers for a long time. BOTASH which hit the ground running was established at a cost of P736 million, with an additional P100 million investment in supporting infrastructure in the form of Sowa township. Botswana government increased its shareholding to 50 percent and Chlor Alkali Holdings a South African company holds an equal 50 percent.

Like any other business operation, BOTASH has had its fair share of challenges, nonetheless it has potential to transform the economy of Botswana more so that it is one of the largest producers and exporters of Soda Ash and salt in the region. It also has the second largest reserves after the Soda Ash produced in Green River Wyoming, United States of America. BOTASH production capacity stands at 300 000 tonnes of Soda Ash per annum and 650 000 tonnes of salt per annum.

In an interview with the Sunday Standard last week the Managing Director of BOTAH Mine Kangwani Phatshwane said BOTASH exports most of its Soda Ash to South Africa among other markets in the region. He revealed that this Soda Ash has created a value chain in that country worth close to R40 billion in the form of glass production. He also said it is important to note that almost 40 percent of the Soda Ash that is mined at BOTASH goes into making container glass(glass for beverages). Glass production accounts for 50 percent of global Soda Ash demand.

“The bottles that are used every day to contain beverages and other products are a product of Soda Ash right here from Sowa Town,” he said proudly as he punctuated his statement with a long sigh.

“The second glass product that Soda Ash makes is flat glass which is used to manufacture windows and car windscreens. If you are driving a car that was manufactured after 1995 that glass is probably from BOTASH in Botswana,” he quickly added.

In a sad tone, Phatshwane said Botswana does not have glass manufacturing companies hence all this is done in other countries like South Africa and Zimbabwe. He however said manufacturing glass requires high technology and is labour intensive. On a positive note he said Botswana can also follow suit and look into glass manufacturing as a value chain from Soda Ash which could stimulate the economy by creating lots of jobs. The three major glass manufacturers in South Africa are Consol Glass, Nampak Wiegad and PFG. Zimbabwe also has Zimglass, a glass manufacturing company.

Other Soda Ash opportunities that the country can tap into include production of soaps, detergents, production of potassium chloride and bircabonate of soda amongst others.

He also said salt that is produced by the mine also presents a huge potential for business opportunities. He said almost 50 percent of salt they produce ends up as food in the kitchen. Phatshwane revealed that 250 000 tonnes per annum of salt is put on food in the region and only 4 000 tonnes is eaten locally. He also said salt can also be used to produce animal feed in countries that have advanced agricultural sectors like Zimbabwe and South Africa.

“Salt can also be used into a number of chemicals. It goes into treating water and even manufacturing of tiles,” he said.

In his opinion Phatshwane said Botswana needs to take a stern and bold decision to pursue value chain not only in Soda Ash but even other minerals and products produced in the country. He however said many African governments still have not managed to pursue value chain from their resources like Botswana. He emphasized that it is all about a country making a bold choice to do so.

“The most important thing is for a country to assess its situation and pursue a specific value tied to the resource. You then have to allocate resources like infrastructure at the same time to achieve that. The decision you take should be informed by your competitive advantage,” Phatshwane said.

Asked on the failed Fengyue Glass Project in Palapye which has since become a white elephant Phatshwane expressed his disappointment. He said its success was going to provide them with a very good market for their Soda Ash. Fengyue Glass Company, a controversial Chinese company had partnered with the government investment arm, Botswana Development Corporation (BDC) in 2007 to establish a glass manufacturing plant in Palapye.

The company was liquidated after the project was not completed. BDC lost almost half a billion Pula in the project that would have created hundreds of jobs producing approximately 450 tonnes of float glass per day.

Phatshwane emphasized that if the project was successful they would have found a market that was not far to sell their product which was going to be good for their business. He also said the project was going to provide employment opportunities especially for the youth.

“In fact we had negotiated with them to offer them preferential prices,” said a clearly disappointed Phatshwane.

On what challenges they are facing at the mine, he was quick to point that the inefficiencies between Botswana Railways (BR) and Transnet presented transport challenges for BOTASH. He said more often BR has often failed to maintain its rail tracks while Transnet Rail on the other hand was failing to manage its tracks. He said this has forced them to transport their Soda Ash to South Africa by road which is expensive. He emphasized that the trail tracks managed by Transnet in South Africa are haunted by community unrests which more often affects rail transport.

“Because we are heavy freight business we rely on railway transport. It is cheaper and efficient. Sadly the performance of BR and Transnet is not what we expected. We have however elevated these issues with the relevant authorities,” he said. While he could not share their financial information, he said they spend P390 million on transport costs. Reflecting on the old good years, he said there was a time when they used to transport 100 percent of their Soda Ash to South Africa by rail but now they only transported 20 percent. Eight percent is transported by road which is expensive. He said this has a huge impact on their business operation as more often they are forced to change their business model to serve their customers. Phatshwane said one of the challenges is lack of proper communication infrastructure.


Read this week's paper