The imperatives of beneficiation law for Botswana’s diamond-mining industry and their implications for foreign investment protection

• DOI: 10.10520/EJC-13bd8433f4
• Author: Kuda Tshiamo,Femi Oluyeju
• Published date: 01 December 2018
• Pages: 1-29
• Date: 01 December 2018
• Record Number: sapr1_v33_n2_a5

Southern African Public Law

https://doi.org/10.25159/2522-6800/3098

https://upjournals.co.za/index.php/SAPL

ISSN 2522-6800 (Online)

Volume 33 | Number 2 | 2018 | #3098 | 29 pages

© Unisa Press 2018

Article

The Imperatives of Beneficiation Law for Botswana’s

Diamond-mining Industry and Their Implications for

Foreign Investment Protection

Femi Oluyeju

Post-doctoral Fellow, Centre for Human Rights, Faculty of Law,

University of Pretoria

femioluyeju@gmail.com

Kuda Tshiamo

LLM Candidate, Centre for Human Rights, Faculty of Law,

University of Pretoria

Abstract

This article seeks to investigate the advantages and disadvantages of a

beneficiation law for Botswana’s mining industry and its implications for

foreign investment protection. It argues that the enactment of a beneficiation

law could stimulate economic growth and development in Botswana. On a

proper analysis of the potential of a beneficiation law it seems plain that it may

facilitate the integration of, among other things, the cutting and polishing

segments through facilitating backward and forward linkages in the entire

diamond value chain. The objective would be to move Botswana’s diamond

industry a step further as a new and emerging jewellery manufacturing and retail

centre in order for it to derive maximum returns from rough diamond

production. Quite clearly, the cutting and polishing of diamonds in Botswana is

bound to promote employment, which in turn would promote a demand for

goods and services that would have a positive impact on economic growth in

the country. The authors conclude that, on balance, the opportunities to be

accrued from the enactment of this law far outweigh the disadvantages and that

beneficiation will not in any way scare investors away, as some have predicted

it would.

Keywords: beneficiation law; diamond mining; mining industry; Botswana; foreign

investment

2

Introduction

Botswana was one of the poorest countries in Africa with a per capita gross domestic

product (GDP) of approximately US$70 when it gained independence from Britain in

1966: there was hardly any infrastructure of note; the literacy rate was very low; the

industrial sector was almost non-existent, the country being heavily dependent on

subsistence farming and government employment.

In the years that followed independence, however, Botswana recorded phenomenal

economic growth supported by the discovery of diamonds, and it is now ranked as an

upper-middle-income country. It follows from this that Botswana’s diamonds are its

pride and it is no wonder that the mining sector is the pillar of the economy. The

exploration and exploitation of its mineral resources has been instrumental in the

country’s economic development for more than half a century. Botswana is best known

for its diamond mines, but to date steps have not been taken to beneficiate the precious

stones within the country.

1

It is in this context that there has been a rigorous debate

about the opportunities and challenges for the diamond industry in Botswana that could

possibly accompany the enactment of beneficiation legislation.

Sometime in February 2013, the parliament of Botswana engaged in a somewhat heated

debate on the enactment of beneficiation legislation: the question whether beneficiation

law would scare off investors lay at the heart of it. Accordingly, the motion that was

tabled in parliament making a case for the enactment of such legislation was met with

mixed feelings in the House.

2

Some members of parliament believed that it was crucial

to have such legislation in place, as it could help to transform the country’s abundant

minerals and other resources to gain a competitive advantage, whereas others argued

that it would be disastrous to enact beneficiation legislation because such legislation

would scare away investors. They contended that it would be tantamount to

expropriation, or at least likely to lead to some kind of interference in investors’ rights.

Consequently, the voting results were 19 for the motion and 23 against.

In some respects this article seeks to continue this debate by answering the question

whether beneficiation legislation is the best guarantee for local community benefits

under Botswana’s regulatory regime for diamond mining or whether it is yet another

flawed concept that will undoubtedly scare investors away. It therefore investigates the

attendant benefits of the enactment of beneficiation legislation and argues that such

enactment could stimulate economic growth and development in Botswana. It argues

1

Ministry of Minerals, Energy and Water Resources (MMEWR), Botswana Mineral Investment

Promotion Report (MMEWR 2008) 3.

2

Ministry of Trade and Industry (Botswana), Beneficiation Law May Scare Away Investors (18 February

2013) <www.gov.bw> accessed 20 August 2016.