Botswana slips down mining attractiveness rankings
Brian Benza | Friday April 29, 2016 13:01
According to the authoritative 2015 Fraser Institute mining survey, Morocco, Ghana and Burkina Faso have joined Namibia as African countries that are seen as being more attractive than Botswana as measured by the Investment Attractiveness Index (IAI).
Last year, Namibia was the only country ahead of Botswana.
The IAI is a composite index that combines both the Policy Perception Index (PPI) and the Best Practices Mineral Potential Index to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.
The report, which is based on a survey of 3,800 mining individuals circulated electronically between September 15th to November 27th, 2015, showed that Botswana was ranked at position 39 out of 109 mining jurisdictions from position 27 out of 122 countries in the previous survey.
Botswana IAI score also dropped from 75.1 points in 2014 to 68.32 points last year.
While Botswana is still ranked highly in terms of government policy with its PPI still the highest in Africa at 88.29, perceptions of a fall in the geologic potential of the country pulled down Botswana’s best practices Mineral Potential Index (MPI) to 0.55 in 2015 from 0.65 in 2014 while the current mineral potential index also fell from 0.68 in 2014 to 0.53 in 2015.
The ‘Best Practice Mineral Potential’ index ranks the jurisdictions based on which region’s geology “encourages exploration investment” or is “not a deterrent to investment.”
The Current Practices Mineral Potential index on the other hand is based on respondents’ answers to a question on whether or not a jurisdiction’s mineral potential under the current policy environment encourages or discourages exploration.
“Botswana’s overall rankings and score has declined but it is again the highest ranked jurisdiction in Africa on policy factors, ranking 14th of 109 in 2015, the same as it did in 2014, even though the jurisdiction’s PPI declined slightly this year. Botswana’s slightly lower score on the PPI reflects increased concerns over trade barriers, the geological database and the availability of labour and skills. Botswana also experienced a number of improvements which helped mitigate some of the areas it performed poorly,” reads the report.
The PPI is a composite index that measures the overall policy attractiveness of the jurisdictions in the survey.
Botswana was also lauded for improving the fiscal regime in a period of depressed commodity prices rather than increasing taxes/royalties in order to try and maintain government revenues as positive.
The companies that participated in the survey reported exploration spending of US$2.2 billion in 2015 and US$2.5 billion in 2014. This represents a notable decline from the 2014 Survey of Mining Companies where exploration spending of US$2.7 billion in 2014 and US$3.2 billion in 2013 was reported.
In Africa, Morocco overtook Namibia to become Africa’s most attractive jurisdiction, ranking as the 24th most attractive jurisdiction in the survey.
Three African jurisdictions—Guinea (Conakry), Niger and Zambia - each saw declines in their PPI scores of over 10 points. Niger’s decline pushed the country into the bottom 10 this year.
Two African countries, Zimbabwe (106th) and Niger (103rd), ranked in the bottom 10 of the survey rankings this year based on policy. Zimbabwe was also amongst the bottom 10 in the previous five years. Kenya and Guinea (Conakry) were the only two African jurisdictions in the global bottom 10 based on their overall investment attractiveness.