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1. Debswana Diamond Company (Pty) LtdThe Role of Debswana in Botswana’s Economic DevelopmentMr Balisi Bonyongo, DebswanaAUGUST 2014 Page 1

2. OBJECTIVES • To share the story of Debswana and it’s role in the economic development of Botswana Page 2

3. Francistown as a leading Economic Hub • This Forum is about development and investment opportunities in the Greater Francistown area. We are here to “share strategies and discuss structures aimed at creating a conducive investment climate for this region, to strive to project and position the City and the region as the lead economic hub in southern Africa by 2022.” • This is an ambitious aspiration, and it needs to be. It is also coming at the right time with Botswana attempting to reposition itself to find new engines of growth in the economy

4. The time is now as Botswana attempts to find opportunities for economic growth and employment creation • One of the 7 themes of the 2014 / 2015 National Budget is • “Growing the Economy and Employment Creation”

5. The success story of Botswana is synonymous with diamonds and Debswana has played a significant part of that story • One of the poorest countries in the world at independence in 1966 • Mining sparked a period of sustained economic growth and… • …in four decades post independence the country has emerged as a middle income developing country • Diamonds and the Debswana Diamond Mining Company has been central to this success story

6. Diamonds have been a major source of wealth for Botswana since the opening of Orapa Mine in 1971 • Diamond exports account for a significant proportion of total exports from Botswana • Revenues from diamonds form a major part of government revenues • High rate of public investment by the government; (infrastructure, health and human capital) have channeled revenue from minerals to domestic assets • Diamonds are a significant contributor to the GDP Page 6

7. The discovery of diamonds and other minerals has clearly been a catalyst for Botswana’s success… It has been the visionary leadership of the founding leadership of the country to create an environment conducive to “smart private – government partnerships” • Ownership of mineral assets remains with the state, leaving company management in the hands of private investors • Debswana Diamond Company is today a model for successful Public – Private Partnerships Page 7

8. The legislative and policy framework for mineral exploration, mining and mineral processing in Botswana has continuously been reviewed to make it more competitive • The enactment in 1999 of a new mining code that streamlines licensing and enhances security of tenure • The reduction of the fiscal burden on marginally economic mines • Variable Income tax rate which is based on project profitability and 100% capital redemption • Secure title to mining rights for exploration companies Page 8

9. This has enabled the diamond sector to grow and Botswana is today one of the largest producer of diamonds in the world 2012 GLOBAL DIAMOND PRODUCTION FOR TOP 10 COUNTRIES (REVENUE IN US$) Data Source: Kimberly Process Page 9

10. The total value of exports of rough diamonds mined in Botswana in 2013 was P28 billion, representing 45% of all exports from Botswana Page 10

11. For Debswana our long term plans indicate resources that can be mined economically up to 2050 • The lives of the Debswana major mines can be extended beyond the original life of mine estimates up to 2030 • This will strengthen Debswana and Botswana’s position as a leading producer of rough diamonds in the world • Diamonds will therefore continue to contribute significantly to the economy and to the lives of the people of Botswana

12. What opportunities exist for local governments to tap into this growth and the long term future of mining in Botswana??

13. The success of beneficiation in the diamond sector presents a model for beneficiation of other minerals in the country • The relocation of the DeBeers Global Sightholder Sales and the establishment of the Diamond Hub have created a nucleus around which an industry has started to grow to create the all important critical mass • 20 diamond cutting and polishing factories, employing over 3000 people • The establishment of the Okavango Diamond Company (ODC) which will distribute up to 15% of Debswana’s total production by 2016 • Around the growth of the diamond sector, emerge opportunities for growth in sectors that offer supporting infrastructure and services such as banking, security, ICT and insurance

14. The next frontier for growth in the minerals sector is coal, and similar to diamonds, sustainable growth can be supported by the establishment of a hub with critical mass • Botswana is sitting on Coal resources estimated at over 200 billion tonnes, 45 billion at reserves • Commercial opportunities are limited by the lack of freight and logistics infrastructure • The potential will never be realised without investment in infrastructure and centres like Francistown can position themselves as a potential hub for growth in this sector

15. Francistown is the largest commercial centre in the North, and the gateway to the rest of Africa… • Mining activity around Francistown does not offer a distinctive advantage to the City of Francistown • Are there opportunities in Francistown’s proximity, connectivity to the rest of Africa? • Can Francistown become a economic base to supply goods and services to industries (including mining) in the rest of Sub Saharan Africa? • There is a rich tradition of major mining activity in the region. Is there potential for mining tourism (linked to other major mining centres; Orapa and SelebiPhikwe)

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