The P40bn miracle hidden in the hills above Kanye

Giyani Metals officials are sensitive to the need to manage expectations. And with good reason. It’s not every day that geological studies confirm the existence of billions of Pula in revenue, or verify millions of tonnes of a mineral desperately required by the new age economy, the era of renewable energy and electric vehicles.

The fact that the area has been the subject of previous mining, been abandoned and suffered a failed resurrection attempt, also makes the management of expectations a critical issue. For the residents of Kanye, whose economy lies in the shadow of Gaborone and Jwaneng, excitement is building about the potential at Kgwakgwe Hill, particularly as the sightings of trucks bearing ore increase in frequency.

Already, youth in the village regularly take the southern trek along the few kilometres to the Hill to enquire about employment opportunities. For the youths, the legend of an immortal giant snake living in the mountain is folklore for older people to worry about; the Hill is coming alive and the youths want in on the opportunities.

Foreign Affairs minister, Lemogang Kwape, who is also Kanye South legislator, is keenly aware of the rising excitement in the area around the developments at Kgwakgwe Hill.

“If you look at the history of the area, you will find that there was a mine there at one point that sustained the livelihoods of the people and when this new exploration confirmed a high quality resource, as a community we were very excited,” he says, speaking from London at the Commonwealth ministers’ meeting.

“It will create employment, between 300 and 400 people which is big, but we have also suggested how to go about things in terms of raw materials and processing on site, which will help with jobs and produce more, instead of raw exports.

“This is a very techno-savvy operation which will require skilled manpower and they have started training Batswana, some of whom have done Masters and PhDs, so that they are ready for when mining starts.”

Community engagement, empowerment and involvement are as important as managing expectations, in the revival of manganese production in Kanye.

According to available records, Kgwakgwe Hill was first mined between 1957 and 1971, a period that precedes diamond production. Mining at the time took the form of rudimentary methods, essentially using picks and shovels to make horizontal shafts into Kgwakgwe. Today, one of these shafts extends horizontally 100 metres into the Hill, a testament to the determination and nerve of the yester-year miners.

While village folklore states that the giant snake chased away miners at Kgwakgwe leading to its abandonment, academic records suggest the risks in the shafts grew too intense even for the most foolhardy of miners. At country level, Kgwakgwe joined other sites in the hilly ranges of Otse and Lobatse which were abandoned by around 1973, due to rising production costs and low prices for the metal.

In 1973, the country’s manganese production reached 43,000 tonnes, but a shinier, pricier mineral had captured explorers, government and Batswana – diamonds.

The first attempts at resurrection occurred in 1981, with plans to combine production from Kgwakgwe, Otse and the Lobatse project sites to a single processing plant. The licence for this attempt elapsed without any work completed and until Giyani arrived on the scene, the manganese ore remained a fond, but increasingly dim memory for many villagers.

Part of the renewed interest in manganese is due to its use in the steel and speciality alloys sectors, as well as the global shift towards electric vehicles. High Purity Manganese, also known as battery grade manganese, is purchased by cathode and battery manufacturers for use in electric vehicles, in either a metal or sulphate form.

While the share of electric vehicles to fossil-fuelled powered vehicles in the global market is presently as little as three percent, it is expected that this figure could increase up to 70% in the next 20 years as part of the global clean energy transition.

Giyani Metals and its partners have spent millions of Pula updating geological and technical estimates at Kgwakgwe and other sites, as well as advancing studies around the mining and processing methods required to achieve best value from the resources.

Recently, the Toronto Stock Exchange Venture-listed company revealed its feasibility study for Kgwakgwe Hill (K-Hill) providing the first authoritative and industry-accepted estimate into the resources, their potential value, the costs of extracting them and impact on the country.

The numbers contained in the feasibility are stunning, under-cutting the attempt to manage expectations.

According to the study, K-Hill has an after-tax net present value of $481 million. It will require about $300 million to set up and will have paid this back in just over three and a half years. The project’s lifespan is about 11 years, but geologists expect that the available resources can potentially double or even triple this.

Revenues over the 11-year initial life of mine are projected at $3 billion, an amount that by Thursday was equal to about P40 billion, Giyani Metals chair, Jonathan Henry says.

“Right now we are working on our permits and we will be filing our Environmental Impact Assessment with the Department of Environmental Affairs soon,” he says, speaking from England, via a virtual link-up.

“That will go through a review process and a public consultation, which could then allow us to apply for a mining licence.

“We have a target of starting construction next year, which will take two years including the ramp up to full production.”

He adds: “We are going to need $300 million for this project and that’s going to have to come from lenders, investors and people such as the Minerals Development Company Botswana, a local partner.

“We have a number of partners in our data room putting everything together to raise that.”

K-Hill is a miracle for Kanye, but the project’s impact will be felt globally. A world which currently gets 95% of its battery grade manganese from China is desperate for non-Chinese sources of the key material, particularly those being produced in an environmentally sound manner, with sustainable impact.

Botswana, with its established track record of governance, democracy and stability, as well as global leadership in ethical exploitation of other natural resources, is a dream come true for cathode and battery manufacturers as well as vehicle manufacturers, who make up the offtakers for the High Purity Manganese to be produced at K-Hill.

Henry says Giyani is acutely aware of the need to ensure that the K-Hill project impacts the community, the region and the country in a sustainable manner. Efforts are underway to move the Kgwakgwe project to solar power and also green other planned activities at the site, as part of contributing to the country’s decarbonisation efforts.

“There has to be a sustainable legacy present after the mine has gone and we are building a lot of these stepping stones into the plan that’s going to the Department of Environmental Affairs.

“During construction and later operation, there will be direct employment opportunities, as well as plenty of spin-offs in the multiplier effect.

“We expect that the life of mine may perhaps double, which would take revenues to $6 billion.

“Some of that goes to overheads, but quite a bit goes to wages, taxes and royalties, which represents revenue spread to the community.

“We will be working with local establishments around production of the re-agents we need such as limestone, rather than importing that, which would be expensive and onerous.

“It’s preferable to work with local producers whether that involves helping them set up a business to supply us with that.”

The mining operation in Kanye will be a compact affair, with more emphasis on technology on the processing, where specialised skills are required. For the Toronto-listed company, K-Hill represents one or the only project of its kind run by a Western entity.

Over the next 18 months, recruitment will be scaled up for K-Hill, which will also involve matching “the right people and the right qualifications,” Henry says. A project office will be set up in Kanye to receive applications and also to act as the focal point for community relations.

One key question is around government’s push for greater value addition in the country’s minerals’ sector. The production of battery grade manganese has triggered dreams of electric vehicle manufacturing one day being established on local soils.

This too, is another area where the management of expectations is critical.

“There are vehicle manufacturers such as Ford whom we plan to supply with our material and in doing that, we would have them visit the country,” Henry explains.

“It’s possible that they may see other opportunities as part of that process and when they see the country, how qualified people are, how developed and organised it is, we will see how that plays out.

“For us, we are taking the raw material as far downstream as we believe we can. We are taking raw manganese ore, extracting manganese metal, putting it in a solution and producing a salt.

“In the world of diamonds, it would be equivalent to producing a fully cut diamond that’s ready to go into a necklace, rather than a rough diamond from the ore.

“We are not a battery manufacturer, but we are producing a highly value added product and we do have discussions with those who have ambitions to go further than that.

“Some of them are looking at doing these things in Botswana and if we are able to be part of helping them do that, we will be happy.”

Giyani’s ambitions in extracting best value for manganese align with the village’s desire to see more sustainable development. Kwape explains that the area is hoping to utilise the project and others like it to enhance development and access to opportunities for Batswana.

“Countries that have rivers and big channels plan along these, while Botswana is a dry country with few rivers.

“For us in Kanye, because we don’t have that, our ‘river’ is the Trans-Kalahari Highway and in terms of planning, we must plan along our ‘river’ because that’s where everything flows.

“Mines have an expiry date as the resource depletes so it’s a good time to have the manganese mine but we must invest it in a way that supports diversification along our ‘river’.

“We need to start building more infrastructure which will attract that investment.”

Residents of Kanye and surrounding areas will soon have an opportunity to directly interface with the manganese project, when Giyani conducts the public consultative meetings required ahead of an application for a mining licence.

The meetings will likely host issues ranging from those concerned about Kgwakgwe Hill’s spiritual or cultural history, to those only focussed on how to get a share of the revenues hidden in the hills.

For the area MP, the environmental impact assessment is key to gaining the community’s buy-in of Kgwakgwe Hill’s resurrection as a mining project.

“Sometimes if we don’t bring the community on board, these things fail.

“As a Motswana, I don’t want to dismiss these beliefs and we do say ‘go a ila’.

“The most important thing is to bring everyone on board, talk about safety, the environment and others.

“God will take us to where he wants us to be as a community.”