The changes are part of a suite of proposed amendments to the Mines and Minerals Act, the legislative backbone of the country’s mining industry. The amendments were gazetted at the end of May and were first tabled in Parliament on Tuesday when the winter sitting kicked off.
The bill follows at least eight years of consultations within the ministry and beyond into the industry, with a previous suggestion that citizens should be given the chance to purchase up to 26% equity in new mining ventures where the state foregoes its statutory option for 15%.
Under the current law, government is entitled to purchase up to 15% equity in any new mining entity. The proposed amendments do not force or require new mining companies to sell equity to citizens as a condition of being awarded mining licences.
“Where government does not exercise its option of acquiring 15% working interest upon the granting of a mining licence, the holder shall use his best endeavour to dispose the 24% to citizens or citizen-owned companies,” the amendment bill reads.
BusinessWeek understands that under the proposed amendments, when new mining projects advance from exploration to mining operations, the clause encouraging the offer of 24% to citizens would form part of the mining licence negotiations.
While the amendments do not offer clues on how the local ownership structure should be achieved, prospective mining licence holders could follow the example of electricity generation players who establish a local company and offer shares to local partners.
The country rarely changes the Mines and Minerals Act and has received accolades for the stability and predictability of its minerals policies over the years.
However, in recent years, citizens have been piling pressure on government to provide them with direct equity access into the mining industry, the country’s economic mainstay which makes up about a third of budget revenues and the bulk of foreign currency receipts.
Last July, Minerals and Energy minister, Lefoko Moagi, told state television that government was in favour of empowering citizens in mining, especially in instances where it did not exercise its 15% option.
“Instead of that 15% just going away, Batswana are there and if they want it, they should have the option, whether as individuals or companies,” he said. “These days, we have the pension funds and many of them have been helping energy and mining companies. “That’s where Batswana can approach for funding to invest in these mines and diamonds.”
Other proposed amendments include requiring mining companies to beneficiate or process their minerals within the country “as far as is economically feasible” and to “the satisfaction of the minister”. Minerals licence holders will also be required to give preference to local citizens and their companies in procurement.
The proposed amendments also reduce the period for a retention licence from three years to two years, while renewals of retention licences will be for two periods of no more than two years each, as opposed to a single term of three years under the current law. Retention licences can be applied for by mining operations when a mineral cannot be mined profitably.
The proposed changes also cover the conditions under which minerals permits for citizens are issued.
