The Botswana Ministry of Minerals and Energy on Friday confirmed the enforcement of a significant new regulation requiring mining companies to sell a 24% equity stake in any new concession to local investors, specifically citizens or citizen-owned companies, if the government chooses not to exercise its own right to acquire the stake.
The new rule, which took effect earlier this month is part of recent amendments to the Mines and Minerals Act (2024) and marks a bold step toward resource nationalism and increased citizen economic empowerment in the southern African nation.
Under the previous Mines and Minerals Act, the government had the option to acquire up to a 15% shareholding in any new mining concession. The amended law provides an alternative pathway for local participation: if the government does not exercise its option to acquire its working interest, the mining company is now obligated to use its “best endeavour” to dispose of a 24% stake to Batswana (citizens of Botswana) or citizen-owned companies.
The primary objective of the legislation is to ensure that local citizens benefit more directly from Botswana’s vast mineral wealth. Botswana is the world’s leading diamond producer by value and a growing hub for copper mining.
The move is a response to increasing public pressure for direct citizen access to the profits of the lucrative mining sector, which remains the mainstay of the country’s economy.
Minister of Minerals and Energy, Bogolo Kenewendo, has previously emphasized that the reforms are designed to “break down historical barriers” that have excluded Batswana from high-value mineral deals, promoting inclusive growth.
The acquisition of these significant stakes by local investors is a key question. Suggestions raised during parliamentary debate, particularly by the former Minister of Mineral Resources, Green Technology and Energy Security, Lefoko Moagi, indicated that domestic pension funds could potentially be used to finance the acquisition of these stakes by citizens.
The Government of Botswana owns 50% of Debswana, the company responsible for operating Botswana’s major diamond mines; it holds equity stakes in Morupule Coal Mine (100%); De Beers (15%).
While the government seeks to balance foreign investment with domestic empowerment, the mandatory nature of the local ownership stake may raise concerns among international mining investors, particularly regarding capital deployment and potential dilution of foreign equity.
Botswana, however, is generally recognized for its political stability and historically predictable policy environment in the mining sector, which may mitigate some of the investment risk associated with similar resource nationalism measures in other regions.
