Recent developments in Botswana’s idled copper sector show promising signs of a recovery, helping to diversify the country’s mining sector beyond diamond, which represents 70% of exports, according to Fitch Solutions.
With copper prices now at record highs as demand prospects are starting to bulge, “there is an incentive for countries with large copper resources to develop new projects and for miners to consider untapped copper reserves.”
Prior to 2013, the country used to produce copper until output peaked at 51, 300 tonnes in 2013 before the collapse in copper prices. This, alongside high operating costs, led to a number of copper mines ceasing operations over recent years. This played out in 2016 for formerly government owned BCL Copper Mine and in 2015 for the Mowana Mine which was previously owned by Cradle Arc.
However, new projects are coming online, indicating that investment interests in Botswana’s copper sector are picking up. Sector players such as Sandfire Resources and US miner Khoemacau Copper are developing mines in Botswana’s copper rich Kalahari Copperbelt in the north east of the country.
Khoemacau Copper, for example, began production on its new project in July 2021. The company expects to reach its full production capacity of 60,000-65,000 tonnes of copper and 2 million ounces of silver by 2022. The mine has an estimated life span of 22 years. The company is progressing with the drilling of and studies on its expansion project, to increase production to over 125,000 tonnes of copper and 4.5 million ounces of silver.
Botswana’s Gov’t willing to reviving its Copper Sector
Looking at this development, the government is also willing to revive its operations in the copper sector. In September 2021, the formerly government-owned BCL copper was mine sold to Canada’s Premium Nickel Resources.
The company seeks to commence operations within three years, by 2024. This development could boost BCL Mine’s copper production in the short to medium term as private ownership could mean better operational efficiency at the mine. At its peak, BCL Mine produced on average 40,000 tonnes of copper and nickel annually.
Meanwhile, in November 2021, Max Power Limited (MPL) was granted permission by the Competition and Consumer Authority (CCA) to acquire 100% shares in Cradle Arc’s Mowana Mine, another idled mine. The mine had initially shut down operations in 2015 due to collapsing copper prices before reopening again.
Shortly following its first closure, the mine dealt with significant debt issues which resulted in its second closure in 2018. Max Power Limited is clearing out Mowana Mine’s US$70 million debt. Currently, the company is reportedly investing into new plants and equipment.
As of 2018, Mowana Mine’s production capacity stood at 12,000 tonnes per annum. Per Fitch’s analysis, the influx of capex and the revamping of the mine’s operations could see it reach and even surpass previous production guidance in the coming years.
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