Botswana Ash (Botash) has outlined ambitious plans to deliver diversified sodium-based products through improved logistics, plant operations, new product development and geographical expansion to double earnings before tax by 2027.
Botash Managing Director Kangangwani Phatshwane said this when addressing the media last week in Sowa Town.
Phatshwane’s ambition is motivated by the fact that Earnings before interest, taxes, and amortisation (EBITA) measure a company’s profitability before income taxes and other related costs are factored in.
He plans to double Botash EBITA, defined loosely as money left after all expenses are subtracted from the revenue.
The EBITA growth, in his view, will drive profitability.
Botash’s EBITA has been on an upward trajectory since 2017, where it settled at P191 million. The earnings grew significantly to about P470 million in 2023. Phatshwane’s plan is to reach just under P1 billion in EBITA.
“We intend to continue delivering through our reliable and predictable production. We shall also defend and grow our market share and improve the diversity of our product offering through sustainable mining operations,” Phatshwane said, adding that the idea is to increase profitability, reduce costs and manage capital expenditure (CAPEX) efficiency.
Botash Increases Retail Market Share
Botash’s Process Engineering Manager Modisagaarekwe Kgaodi said Botash wants to increase its retail market share.
Botash is owned 50 percent each by the Botswana government and Chlor Alkali Holdings (Pty) Ltd, a South African-owned company and a member of the Bud Chemicals and Minerals group of companies. Chlor Alkali Holdings is owned by Investec.
Located on the Sua Pan in North-Eastern Botswana, Botash began operating in April 1991. It is the largest producer of natural sodium and related products in the region, currently producing several variants of sodium carbonate and sodium chloride. In the past, all activities of the company were undertaken on the Sua Pan – from production through to marketing, sales and administration. Today Botash has increased its footprint with fully operating offices in South Africa, dealing primarily with sales and marketing of Botash products mainly soda ash. The South African office and depot, situated in Alrode Alberton, is operated by Botash’s sister company; Botswana Ash South Africa (Pty) Ltd.
Botswana Ash is a natural sodium minerals beneficiation company located in the Sua Pan, Botswana. Botash is the largest producer of natural sodium products in the region and currently produces variants of soda ash and salt. Botash’s nameplate production capacity for soda ash is 300 000 tonnes per annum and for salt is approximately 650 000 tonnes per annum which includes the variants chemical grade, food grade coarse salt, and food grade fine salt. However, the production of salt stands at approximately 420 000 tonnes per annum in line with market demand.
Already Kgaodi said 60 percent of soda ash is sold to the glass industry in South Africa. It is used as a fluxing agent as it lowers the melting temperature of the raw material pure silica, thus reducing energy requirements.
Further, Botash sells around 20 percent of its soda ash to the chemical industry. Both dense and light soda ash are used in chemical reactions to produce inorganic or organic compounds that are in turn used in a range of different applications.
Moreover, Kgaodi revealed that 2 percent of soda ash is sold to the detergent industry.
“Light soda ash is used in powdered, paste and soap detergents where it acts as a builder. Additionally, it acts as a water softener and has a cleaning function,” he stated, adding further that 11 percent of Botash soda ash is sold to metallurgical applications or steel & vanadium. In the vanadium sector, soda ash is used for vanadium ore beneficiation. In steel works, it is used as a flux, and to reduce limestone and coke consumption in blast furnaces. It is also used to reduce the phosphorous and sulphur content in cast iron which is used to produce high-quality steel.
Queried on whether Botash is not planning to exploit the Soda Ash value chain by venturing into the manufacturing of Soda Ash by-products, Phatshwane said Botash is rather inviting other investors to take advantage of Botash’s products and manufacture by-products.
“We will do the extraction of several products that come from the mine. We invite entrepreneurs to rather invest in our product value chain. By allowing investors to participate in the value chain, we will be playing our role in making sure that there is product diversity,” Phatshwane responded.
Other than Soda Ash, Botash produces three grades of salt, being the human consumption grade, the animal grade and the industrial grade used for chemical production.
Only Botash has soda ash deposits in the Southern African Development Community (SADC) region.
Currently, Botash produces soda ash and salt. Soda ash is then exported to other countries; mainly South Africa for further processing into container glass products while salt is primarily food-grade micronutrients. At 90 percent, South Africa is the largest consumer of Botash salt. Kgaodi and Phatshwane, however, revealed that while Botswana consumes only 1 percent of Botash’s salt production, plans are advanced to start supplying retailers like Shoprite and Sefalana, who will package and sell their brand of salt supplied by Botash. They believe this will increase their demand and market share at the same time. Choppies already has a salt packaging plant.
PRODUCT DIVERSIFICATION
Moreover, Botash is in the process of diversifying its product base by developing three more products, said Phatshwane. These are sodium bicarbonate, potassium sulphate, and sodium sulphate. Botash looks set to extract and subsequently introduce them into the market on a yet-to-be-confirmed time frame, said Phatshwane.
“The products will be launched, as soon as the market is ready,” said an ever-optimistic Phatshwane, adding that the products in question are salt-related to be used for different industrial purposes.
According to Phatshwane, sodium bicarbonate is used in the manufacturing of detergents and animal feeds while potassium sulphate and sodium sulphate are used in the industrialisation of fertiliser and glass respectively.
With Botswana’s manufacturing sector still at its infancy stage, Phatshwane sees great potential since Botswana imports washing powders, animal feeds, fertilisers, and container glass products in large quantities.
“These products are feasible. It is a matter of time before Botash starts benefitting from them commercially,” explained Phatshwane, adding that the company nestled in the middle of the pristine Makgadikgadi Pans is looking forward to this kind of developments to expand its revenue base.
“Expansion in revenue base will definitely translate in our endeavor to double Botash earnings before interest, taxes, depreciation, and amortisation,” said Phatshwane, adding that this quest is earmarked to be achieved by 2027.
Once the market is ready, Phatshwane said the products will be introduced because their commercialisation has been delayed due to a lack of skills and competencies needed around them.
Elijah Ncube, a senior business lecturer at Botswana Accountancy College’s (BCA) Francistown campus said Botash is poised to emerge as a behemoth in the supply of industrial solutions.
“Beneficiation is on the horizon at Botash. There is no way Botash can just mention these additional products without a background check,” said Ncube, adding that the recent partnerships Botash entered are bearing fruits.
In May this year, Botash signed a Memorandum of Understanding (MoU) with Botswana Development Corporation (BDC) to drive economic growth through investment, impact assessment, and the beneficiation of Botash products. Those in the know believe that BDC wants to invest in the Botash value chain.
