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Home  »  SA Mining   »   Botswana Law: A Fine Balancing Act October 2014

Botswana Law: A Fine Balancing Act

By Brindaveni Naidoo

Botswana’s success as a country, with regard to mining, is largely the result of recognising the delicate balance between encouraging free enterprise and foreign investment, while ensuring that its people benefit from the country’s mineral wealth, believes Terence Dambe (right), managing partner at Minchin & Kelly (Botswana), a member of DLA Piper Africa.
The diamond sector plays a key role in Botswana’s economy. Pic: Elvira van Niekerk, Business Day The diamond sector plays a key role in Botswana’s economy. Pic: Elvira van Niekerk, Business Day
October 2014
Issue / Number
October 2014

This, he explains, is while ensuring that the country also achieves its socio-economic development objectives.“The country remains focused on ensuring that it exploits its mineral wealth for the benefit of the country as a whole and its people.”

On the flip side, Dambe says that Botswana’s adherence to the rule of law and protection of property rights is enshrined in the constitution. “This gives investors the confidence that their investment will be protected in accordance with the provisions of the law.” The fact that there are no foreign exchange restrictions on the remission of profits outside of the country is a further positive factor for investor confidence.

The country’s progressive mining laws provide a good foundation for carrying out mining operations, he adds, with no restrictions on foreign ownership of mines. However, the government of Botswana has an option to acquire up to 15% of the shares in a mining company and appoint two directors. Botswana is home to many mining companies, including Jindal Africa, Firestone Africa, Gem Diamonds, African Copper Mining, Tati Nickel, Anglo Coal Botswana, Debswana Diamond Company and De Beers.

Law in focus

Caption

There have been many countries across Africa that are seeking to amend, or are currently under way with amendments to, their mining law. In South Africa, amendments to the MPRDA Amendment Bill, which was passed by Parliament earlier this year, have the ability to open up a number of opportunities for the country, but a dominant factor of discussion has been the policy uncertainty.

Kenya’s proposed new Mining Bill, which has yet to be passed, will replace the Mining Act of 1940 and is also receiving mixed reactions. Investors are also expected to feel the impact of Mozambique’s Mining Law 20/2014 of 18 August 2014, which came into force on August 22.

But for Botswana, Dambe says that there has been no discernible feeling that there is a need to amend the laws in any major way. “It is generally recognised that progressive mining laws have played a major role in the rapid growth and success of mining in the country.”

The last major overhaul of the mining legislation in Botswana resulted in the Mines and Minerals Act of 1999. However, Dambe says that, by and large, the government has engaged in periodic reviews of the mining laws in Botswana, which has resulted in proposed changes to the laws and policies being considered on an ongoing basis.

Recent examples include an amendment for the granting of mineral rights through competitive processes, to reduce speculation, in November 2012; as well as a proposal that has been recently submitted to amend the Mines and Minerals Act to cover options of financial instruments available to mining companies for rehabilitation and closure of mines.

However, he points out that some of the laws that are associated with the financing of mines and mining transactions have not been amended for many years, and are outdated – some of the major ones being the Deeds Registry Act and the Deed of Hypothecation Act.

“Legislation such as the Deeds Registry Act needs to be amended to be in line with the provisions of the Mines and Minerals Act of 1999. As an example, the Act needs to provide certainty regarding the status of mining licences and registration thereof as documents of title and security. The government is currently undertaking a review of the Deeds Registry Act.”

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