Botswana

Botswana represents an attractive opportunity for mining investors, with a stable investment environment and substantial and largely untapped quality coal resources.

Asenjo Energy is well positioned in this context with a clearly defined development programme, a highly prospective asset portfolio and access to capital. The Asenjo Energy team is additionally experienced in both operations as well as project development and has access to in-house exploration and mining expertise.

Botswana’s rating according to the Moody's’ Credit Rating Agency was amended from an A grade to an A- in 2010, but Moody’s’ also positively revised Botswana’s outlook from "negative" to "stable". Botswana therefore remains one of the most lucrative credit risks in Africa and is on par with many countries in central Europe, East Asia, and Latin America.


Botswana enjoys a stable, multi-party democracy (the oldest in Africa), very well developed legal and regulatory systems, an established economy with excellent growth and low inflation in addition to being investment friendly. Botswana is currently experiencing 7.9%pa GDP growth and an A2 credit rating according to Moody’s. It has well-developed infrastructure, low corporate tax rates, no exchange controls and a well skilled and educated workforce.

COAL IN BOTSWANA

Coal in Botswana is an extension of the South African Waterberg coalfield and represents the future of the Southern African coal mining industry. Botswana has vast coal resources and there are currently large developments being undertaken by Exxaro and Eskom. There is an estimated 212bn tons of coal (66% of African resources) available and the quality of Botswana’s steam coal compares favourably to that of South African exporters.

Historically, Botswana has not been exploited due to the large distances from export ports, limited local market demand and the political instability of the region, as well as the concentration of mining in South Africa.

Botswana now represents a strategic opportunity for investors. With the increasing regional energy deficit, ever-increasing global demand for resources and energy, as well as the infrastructure developments, we predict the “opening up” of African resources in the next 10 years. The “rush” to secure coal resources in Botswana has already evidenced this.

The abundance and quality of resources, global and regional demands allow flexibility in application, such as power, fuel and international and regional exports.

BOTSWANA REVISES GDP GROWTH FORECAST UP TO 7,9%

Botswana, the world's largest diamond producer, has raised its economic growth forecast for 2010 due to a recovery in the mining industry and investments in power and water, a budget strategy paper showed on Monday.

The government also cut its budget deficit forecast for 2010/11 to 9,03% of gross domestic product from an earlier 12,16%.
Botswana now expects economic growth of 7,9% for 2010, up from earlier forecasts of 5%, the paper showed.

"The economic outlook looks favourable, with the recovery of the mining sector. Investment in the power and water sector is also expected to boost growth," the paper said.

In the paper, which the government will use as a guide in preparing the 2011/12 budget, it also revised its revenue and expenditure forecasts for the next three years, mapping out how it plans to reach a balanced budget by 2012/13.

Botswana has posted budget surpluses in the past but the last three years have been characterised by high deficits due to a global economic crisis, which has slashed demand for diamonds. Diamond output accounts for 33% of GDP and 70% of foreign currency earnings.

In August the International Monetary Fund said that Botswana's economy should expand by 8,4% this year due to higher diamond demand but that the country would need to trim its public workforce and promote private industry to maintain high growth rates.


 

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