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Botswana’s P17bn harvest from Anglo American

Publishing Date : 09 July, 2019


It has emerged that Botswana got P17 billion from Anglo American as total tax and economic contribution for its precious stones in the company’s last financial year.

This was revealed through Anglo American’s recently latest Tax and Economic Contribution 2018 report which was released concurrently with the mining company’s Integrated Annual Report for the year ended 31 December 2018. Anglo American’s P17 billion contribution is an improvement from last year which was a billion Pula less at P16 billion. Anglo American is a major stakeholder of De Beers Group- a company it jointly owns with Botswana government. Botswana government owns 15 percent of De Beers while Anglo American holds 85 percent.  

De Beers also has a 50 year 50:50 partnership with Government of Botswana on Debswana, a mining company which is the biggest contributor of rough diamonds to De Beers and generates more than 80 percent of profits for Botswana. Debswana owns the Jwaneng mine, one of the world’s richest diamond mines by value, a contributor to 70 percent of Debswana’s total revenue. Debswana’s Orapa mine is one of the largest resources by volume. Debswana, in turn contribute approximately 50 per cent of public revenue, 33 per cent of GDP, and over 80 per cent of foreign earnings to Botswana.

According to the Tax and Economic Contribution 2018 report, Anglo American spent almost P1 billion ($98.6 million) on Capital Investment. Capital investment is defined as cash expenditure on property, plant and equipment, including related derivatives, proceeds from disposal of property, plant and equipment and direct funding for capital expenditure from non-controlling interests, according to Anglo American, and these includes capitalized operating cash outflows.

For the year ended 31 December 2018, according to Anglo American, the mining company employed 1,524 people in Botswana. This came at a cost of P915 million($86.0) for Wages and related payments which Anglo American explains as, “payroll costs in respect of employees, excluding contractors and certain associates’ and joint ventures’ employees, and including a proportionate share of employees within joint operations.”

In the latest report released by Anglo American, the company’s Global Head of Tax says, “this report (Tax and Economic Contribution 2018) demonstrates the enduring nature of our economic contribution to society and our commitment to the countries in which we operate.”
Furthermore in Total Taxes Borne and Collected Botswana made almost P9.31 billion ($874.8m). This broken down is P4.5 billion ($448.8) of corporate income tax which is calculated based on profits and includes withholding taxes.

There is also P3.26 billion ($326.6 million) as Royalties and Mining Taxes which are revenue, production and profit based royalties. Botswana got P570 million ($5.7 million) as other payments borne which are simply other payment directly incurred by Anglo American. Botswana pocketed P937 million ($93.7 million) as taxes collected for the year ended 31 December 2018 and this reflects  taxes paid by Anglo American on behalf of other parties as a result of the Group’s economic activity.

Apart from paying wages and taxes Anglo American show it has spent P6.73 billion ($672 .8million on “total procurement” which refers to addressable expenditure only (excludes public sector spend) and includes all supply chain related spend from third party suppliers. According to Anglo American, this includes opex- and capex-related transactions and inter-business unit procurement.

For local procurement which is procurement of goods or services from within the same immediate area as the operation, as defined by each operation Anglo American spent P5.52 billion or $551.8 million. According to the mining company, a localized supplier is a supplier that meets the business unit criteria for localized procurement, allowing goods or services to be procured from within the same immediate area as the operation. This is defined using the same parameters and definitions as set out in SEAT Tool 2A – Profiling the Local Area.

In Corporate Social Investment (CSI) Anglo American contributed P20. 5 million or $2.5 million. Anglo American’s CSI contribution refers to all social investment spend that is not related to impact management, either from allocated budgets or established foundations.
According to Anglo American’s Integrated Annual Report for 2018, the company has made an operating profit of P60 billion ($6.1 billion) as compared to the P55 billion in 2017 or $5.5 billion. The 2018 revenue was around P280 billion or $27.6 billion when compared to 2017’s P262 billion ($26.2 billion). As for diamonds, Botswana’s economic mainstay, De Beers comes forth with P1.2 billion underlying EBITDA.



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