Interview with Lefoko Moagi, Minister of Minerals and Energy, Botswana

Interview with Lefoko Moagi, Minister of Minerals and Energy, Botswana


ASAP: What key factors have kept Botswana’s economic growth on a solid journey, and what role has its substantial mineral sector played in balancing its GDP?

MOAGI: Since the early days of our independence, Botswana has enacted legislation that declares all mineral resources found in the country as the property of the state. This means that these resources are utilized for national development rather than being allocated to specific regions or areas where they are discovered. Additionally, we have emphasized the importance of adhering to the rule of law in all aspects of governance. This commitment to legal compliance has been fundamental in guiding our decision-making processes.

In the past, Botswana was primarily reliant on agriculture as a source of income, but the discovery of minerals, particularly diamonds, has played a crucial role in transforming our economy. If you fly into Gaborone, you can witness the significant changes that have occurred, primarily due to the wealth generated from mineral resources. We have worked diligently to establish favorable policies that attract and retain investors. For example, we impose royalties on minerals, with rates of 3% for most minerals, 5% for precious metals, and 10% for precious stones, specifically diamonds. This revenue, along with various taxes, contributes to our overall income.

Historically, we focused mainly on the upstream side of the mining business, involving mining, processing, and exporting rough materials. However, President Masisi’s vision is to ensure that beneficiation becomes an integral part of our economic development. This means adding value at every stage of the mining process. Consequently, we have expanded our operations to include midstream activities such as cutting and polishing diamonds, as well as downstream processes involving jewelry manufacturing and retail. This strategic shift is driven by the realization that the rough diamond business is worth around $15 billion, while the downstream segment, comprising high-end jewelry and retail, reaches close to $100 billion. Thus, we aim to participate in this lucrative market.

To achieve our goals, we seek partners who share our vision of establishing diamond cutting, polishing, jewelry making, and retail industries in Botswana. We also rely on financial institutions to provide the necessary capital for these ventures. Botswana boasts a highly skilled workforce, and we have made significant progress in acquiring the required expertise for downstream processes, allowing us to establish these businesses locally. To incentivize local processing, we have addressed the import duties imposed on our rough diamonds when exported to certain countries. By processing the diamonds in Botswana, these duties can be avoided, providing a shared win situation for all parties involved.

Our mineral development plans extend beyond diamonds to encompass coal, copper, manganese, and battery minerals. We aim to process battery minerals locally to facilitate the production of electric vehicle batteries, thereby creating industries that address high unemployment rates while supporting our vision for economic growth.


BF: What are your predictions for the diamond industry in 2023 and beyond? What steps is the government taking to secure foreign investments and to increase regional competitiveness from its diamond operations?

MOAGI: We are pursuing transformative ideas to enhance our diamond trade by expanding beyond Botswana’s borders. We recognize the potential of partnering with other countries to explore different jurisdictions for various minerals, including diamonds. By collaborating with governments or companies in these countries, we can leverage our expertise and experience to overcome challenges related to deep mining, which Botswana faces. While these countries may have diamonds, they lack the mining experience we possess. Through joint ventures, we can continue generating revenue by applying our diamond mining expertise in these regions.

Our aim is to become a regional player, capitalizing on our mining experience and venturing into the midstream and downstream segments of the diamond industry. Rather than passively accepting declining diamond reserves, we are proactively using our knowledge and skills to sustain our livelihoods in other locations. The focus on midstream and downstream activities is crucial because these skills are transferable and applicable globally. For example, Dubai has become a hub for such activities. By exporting our key skills, we can contribute to the development of these centers in other countries. This is already happening.

Considering the competition, we are determined to derive greater value from our diamond allocations. We are exploring various sales methods, including auctions, spot trades, and contract sales, to determine which approach maximizes value. We aim to attract potential partners by presenting them with the most favorable value proposition. While we have a longstanding partnership with De Beers, we are engaged in negotiations to ensure both parties benefit from the collaboration. Over the course of our 50-year relationship, we have gained valuable knowledge from each other, enabling us to negotiate more effectively. Hence, we are currently at the negotiation table to advance our mutual interests.


BF: What policies and incentives are needed for the country to unlock the renewable energy industry, and what kind of projects are being suggested for partnerships today?

MOAGI: We should begin by discussing our policy and legislative framework. Our national vision for 2036 sets a target of achieving a 50% penetration of renewables by that year and becoming a net exporter of electricity to the region. To support this vision, the National Energy Policy has been approved by Parliament. Its overarching goal is to ensure energy security and improve access to reliable and sufficient energy supply, fostering low-carbon and sustainable economic development in Botswana.

In line with our objectives, we have recently revised the integrated resource plan for electricity generation. The plan sets a goal of reaching 30% renewables by 2030 and 50% by 2036. Currently, our baseload generation in Botswana relies on coal, as renewable sources still have intermittent availability that cannot provide continuous power supply throughout the day. However, we are committed to driving the development of 900 megawatts of new generation capacity by 2027.

This includes the addition of 200 megawatts of concentrated solar power (CSP), as well as various photovoltaic projects scheduled to come online between 2022 and 2025. While we prioritize baseload generation, we recognize the need to address the emissions associated with our older coal plants. Therefore, we have recently refurbished these power stations and incorporated newer technologies to reduce emissions. These advancements will form part of our new generation coal capacity, alongside our ongoing efforts to improve emission controls.

Additionally, we are exploring battery storage options, aiming to implement 140 megawatts of battery storage capacity. By combining a hybrid approach of fossil fuels and renewables, we believe we can facilitate a just transition without significant disruptions to our economy or the well-being of our people. It is essential for countries like Botswana to carefully manage the integration of renewables, considering the unique challenges we face. We remain committed to improving emissions and advancing our energy infrastructure while maintaining a balanced energy mix.


BF: Given the ongoing energy crisis, how do you see greater collaboration between the USA and Botswana lead to further endeavours in coal mining?

MOAGI: Recently, we have conducted roadshows in the United States, London, China Hong Kong, and the Middle East. The purpose of these roadshows is to explore the potential benefits of coal utilization. As part of our commitment to maximizing the value of our natural resources, we are considering various avenues for extracting value from coal. For instance, we are exploring the production of petroleum products from coal, which can offer significant advantages considering the current tensions affecting the supply of fertilizers due to the situation between Russia and Ukraine.

In addition to petroleum, coal can also serve as a source for fertilizer production and other smaller-volume chains of products. Our aim is to tap into these opportunities and attract investor partners who can contribute their expertise and resources to unlock the full potential of coal. We are open to partnerships with entities from the United States, with a focus on the petroleum aspect, as well as collaboration with China in the fertilizer sector. Alternatively, we are open to exploring partnerships that involve a combination of expertise and resources from different countries.

By pursuing these avenues, we are demonstrating our commitment to maximizing the value of our coal resources and diversifying the range of products derived from it.


BF: How significant has US investment been in building up the country’s mining and energy sectors? And what are the opportunities for the future that exists in terms of PPPs and joint ventures with the US?

MOAGI: We have developed an online system that centralizes information on prospecting activities throughout the country. This system allows potential investors from around the world, not just the US or any specific location, to access our website and view the areas where various minerals of interest have been prospected and discovered. Preliminary information will be available on the website, providing potential investors with a starting point. They can then delve deeper into the permitting platform to explore specific areas of interest and determine if they would like to invest there. The platform also provides information on awarded licenses and availability of unallocated areas.

Our goal is to attract potential investors by providing them with valuable information and ensuring they are not left in the dark. We believe that this initiative, primarily led by the Botswana Geoscience Institute, will facilitate investment and partnerships with Botswana. We recognize the growing demand for critical minerals, such as lithium used in batteries, and believe that our mineral resources can meet this demand. Unlike countries with stringent legislation and environmental activism that hinder mineral exploitation, Botswana remains open for investment. While we have strict laws and a rigorous impact assessment process that considers both the environment and minerals, we strive to find the right balance. If the environment takes precedence, mining operations will not proceed in that area.

This approach creates opportunities for investors, not only in mining but also in the energy sector. Botswana has abundant solar radiation, making it favorable for renewable energy development. We are exploring solar and wind energy options to create a hybrid energy generation system. The availability of reliable power in specific mining areas is crucial as it reduces costs and supports mining investments. To illustrate, we supported a copper mining project in the northwest that initially faced high costs due to diesel-powered mining. As a government, we expedited the grid connection to the mine, resolving their power issues and improving cost-effectiveness. We are also pleased to promote employment opportunities and the utilization of raw materials in value-added activities associated with mining.

Overall, this approach benefits all stakeholders, creating a win-win situation for investors, the government, and the local economy.

BF: What are your top three priorities for the mining and energy sectors? What vision do you have for Botswana in brief?

MOAGI: First and foremost, our priority is to ensure energy self-sufficiency in the country and even become a net exporter of energy to the region. Energy is the lifeblood of our economy, enabling the functioning of industries, mines, and businesses. Without sufficient energy, everything comes to a halt, as we have witnessed in neighboring countries. To achieve this, we are accelerating the implementation of various energy projects. We have invited independent power producers to participate, allowing them to quickly establish power generation facilities. We have already awarded several solar and coal projects, recognizing their significance in powering our economy.

Simultaneously, we are focusing on the mining and mineral sector. Botswana has significant mineral prospects, and our goal is to bring these minerals to production. Through the enactment of favorable legislation and incentives, we have positioned Botswana as an attractive mining destination for investors. We have successfully opened several copper and diamond mines, including transitioning to underground diamond mining from open-pit operations. Additionally, we have reopened previously closed mines such as the Selibe and Selibe North mines, through the PNR Company. We also encourage small-scale mining operations, particularly by our citizens. We believe that Botswana has acquired the necessary skills and expertise to run these mines. While we value foreign investors, we strive to maximize the involvement of Botswana citizens to drive economic empowerment. In one instance, by transitioning to local operations, we saved over 3.5 billion Pula, which facilitated further citizen empowerment initiatives. This approach fosters skills development and strengthens the economy.

Fuel is another critical aspect we focus on. As a land-linked country, we heavily rely on external refineries for fuel supply. To enhance fuel security, we are advancing the coal-to-liquids project to produce fuel domestically. Moreover, we establish alliances with other countries to ensure efficient fuel delivery through pipelines and alternative routes. This approach not only impacts the economy but also supports other sectors such as agriculture. We recognize that farmers heavily rely on diesel, and by ensuring fuel sufficiency, we contribute to food security within the country. During the Covid-19 pandemic, we witnessed the importance of self-sufficiency when borders were closed. In addition to these key initiatives, we pursue various other projects, such as biodiesel and biogas, which reduce costs, promote sustainability, and provide energy solutions for institutions, farms, and remote areas. Our ministry is dedicated to advancing these initiatives to ensure Botswana’s widespread access to energy, off-grid solutions, and associated benefits, ultimately improving the lives of our citizens.


BF: Do you have a message that you would like to share with the readers of USA Today?

MOAGI: These days, terms like “just transition” and “justice” are often used, emphasizing the importance of fairness. From my perspective, any resources or endowments, whether they are minerals or any other assets, should primarily benefit the people of the country where they are found. If there is a lack of knowledge or expertise in deriving value from these resources, external assistance can be sought. However, the ultimate goal should always be to improve the well-being of the local population. Furthermore, this focus on benefiting the people should extend across generations because we are currently custodians of these resources for future generations, ensuring they have something to rely on.

When discussing renewables, it is essential to consider the entire value chain and not just the end product. Even renewables require energy and resources to be produced. For instance, the mining of minerals is necessary for manufacturing solar panels and storage devices, which involves energy consumption. Therefore, it is crucial to recognize that every energy source has dependencies and impacts throughout its lifecycle. It is not as simple as saying, “Here is a solar panel, use it.” We must understand the processes and resources involved in reaching that point.

The focus on critical minerals today highlights the significance of these resources. However, it is essential to anticipate that in the future, concerns may arise regarding the environmental impact caused by their extraction. Therefore, we must approach mining responsibly, considering environmental factors, social considerations, and adherence to governance protocols. This principle should guide us in all sectors, whether it is agriculture, mining, energy, or any other field. We must prioritize the love and care for our environment, ensuring its preservation for generations to come.