Knives out for Minister Moagi over $27bn Mineral Deal

An international diamond and metal exploration company has launched a court application against the Minister of Minerals and Energy Lefoko Moagi setting aside his decision not to renew its prospecting licence or pay US$65 million in damages. At the core of the high-stakes dispute are territorial demarcations. According to the government, the area sought for renewal of the prospecting licence falls within a buffer zone of the Okavango Delta that is protected by UNESCO as a World Heritage Site. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] On the other hand, Gcwihaba’s says the area did not fall into the core zone until the government established a buffer zone around the core zone that encroaches on a portion of the area that had been licensed to the company, including the area licensed to it. Court papers before the Maun High Court indicate that Moagi, in a letter dated 26 April 2022, informed the Managing Director of Gcwihaba Resources, James Bruch, that “the coordinates submitted in the application for prospecting licence no. 020/2018 are encroaching into the buffer zone of the Okavango Delta, which is listed as a World Heritage Site.” “Prospecting activities are prohibited within the buffer zone of the delta or if permitted are to be subjected to stringent Environmental Impact Assessment measures…” “In light of the above, I am not in a position to renew the prospecting licence as long as the submitted coordinates fall within the buffer zone of a world heritage site.” In its court application, Tsodilo Resources Limited, through its subsidiary, Gcwihaba Resources, is asking Minister Moagi to show cause why his decision of 29 June 2022 rejecting the renewal of its prospecting licence for its project in the Okavango should not be declared illegal, unreasonable, irrational and arbitrary. The company also wants the minister to show cause why his decision of 29 June 2022 rejecting the renewal of its prospecting licence no. 020/2018 should not be reviewed and set aside. In his affidavit, Gwihaba’s Office Administrator, Moagi Ntukununu, says the government is refusing to renew the company’s licence for the reason that the area in question falls within the Okavango Delta and is protected by UNESCO. Ntukununu notes that the Okavango Delta was declared a World Heritage Property (WHP) by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in July 2014. He concedes that by virtue of this status, the Okavango Delta was subject to protection from activities which may compromise the property. “This area is also referred to as the core zone,” he says. However, Ntukununu says Gcwihaba’s licensed area did not fall into the core zone until the Government of Botswana established a buffer zone around the core zone that encroaches on a portion of the area that had been licensed to the company, including the area licensed to it. He says before the expiry date of 30 June 2019, Moagi had been causing delays in granting Gwihaba renewals of some of its other licences held east of the Okavango River panhandle sometime in 2017. Ntukununu says on 25 October 2017, Tsodilo Resources - which is the parent company of Gcwihaba - wrote in protest to note that the delays in the renewals of Gwihaba's licences had caused great uncertainty to the company and resulted in a disjointed exploration project. He notes that on 30 June 2021, three months before expiry of prospecting licence, Gcwihaba applied for renewal of its prospecting licence. However, he says, the company became aware in October after the filing of the 30 June 2021 renewal application that the government had as far back as 2015 issued a report to the World Heritage Committee indicating that prospecting and mining licences in the buffer zone would not be renewed. According to Ntukununu, the government further reported that they were engaging in negotiations with the Applicant for purposes of terminating existing licences in the buffer zone. In 2017, the Government of Botswana issued out another report to the World Heritage Committee indicating that the Applicant had "in principle" agreed to relinquish all its licences in the buffer zone and that there were prospecting licences in the buffer zone, he says. “In 2020, the Government of Botswana had issued out a further report to the World Heritage Committee confirming that negotiations with Gcwihaba had been concluded and that there were no existing prospecting licences in the buffer zone,” Ntukununu avers. “All of the reports referred to above, as generated by the Government of Botswana, were a lie.” He goes on to deny that there were negotiations between the parties, saying the minister continued to grant Gcwihaba prospecting licences for areas in the buffer zone except for renewal of 30 June 2021. Ntukununu says Gcwihaba informed Minister Moagi that the buffer zone (which was the basis) for refusal to renew the licence sought, was not part of the core zone and Gcwihaba’s licence has existed since 2008 before the buffer zone was demarcated. He asserts that it is the buffer zone that encroached on the company's licensed area and that the company agrees that if mining is to be carried out in a buffer zone, an EIA must be conducted and made part of the mining licence application. An Environmental Management Plan (EMP) must also be filed before exploration activities can begin. Ntukununu says Gcwihaba went on to note that the law requires an EIA in the event of a mining application and that an EMP is utilised with a prospecting licence. He avers further that the government's submissions to UNESCO since 2013 have been to the effect that both mining and prospecting licences can in fact exist within the buffer zone. On 29 June 2022, he says, the company received a checklist from the minister indicating that the coordinates in the application (for renewal of licence) still fell within the buffer zone. He asserts that on 30 June 2022, Gcwihaba re-submitted an application for renewal of the licence, further reducing to a bare minimum the area for which the buffer zone encroached on the license area. Ntukununu says Moagi has not bothered to respond to the re-submission. Significantly, the government’s non-renewal came as a shock to Gcwihaba in view of the fact that in 2014, the company had produced and shared with the minister an inferred resource report which established that the company “had discovered a tonnage of 441Mt of inferred iron resource within the prospecting area with a current in-situ value approximated to be worth $27 billion (P357 billion), of which 164 Mt worth $6.8 billion USO is located within the buffer zone.” According to Ntukununu, Gcwihaba has incurred substantial costs in furtherance of the licences issued by Moagi and that the costs were to be recovered in the course of the company’s activities stemming from the said licences. “The effect of the non-renewal of the Applicant's licence in turn means that the Applicant (Gcwihaba) will not be able to recover the above-described costs, together with any revenue which was to be generated from the Applicant's activities,” he says. “The extent of these damages therefore ought to be assessed.” [/ihc-hide-content]

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Knives out for Minister Moagi over $27bn Mineral Deal

UNESCO and its protection of World Heritage Sites are being advanced as reasons for withholding renewal of a prospecting licence for iron in the Okavango but the company involved is calling this a ruse and has gone to court to assert its position

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Knives out for Minister Moagi over $27bn Mineral Deal

UNESCO and its protection of World Heritage Sites are being advanced as reasons for withholding renewal of a prospecting licence for iron in the Okavango but the company involved is calling this a ruse and has gone to court to assert its position

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