MACIG Connect Series
“For now, KPJ Drilling is only looking to operate in Botswana and does not have any plans for expansion.”
KPJ Drilling is involved in 90% of the drill works in Botswana. What is the company’s strategy towards capturing the final 10%?
Rodney Baker (RB): KPJ Drilling does not really need a strategy to acquire the other 10% of the market. The company is based in Gaborone, as are most drillers in Botswana. The remaining 10% are located further from KPJ and are consequently serviced by other companies in the north. To acquire the final 10% would mean that KPJ Drilling needs to open another branch and compete with service providers in that area. We do not want competitors to come to Gaborone, and thus we will not compete in their territory.
Is KPJ Drilling looking to expand into neighboring countries?
RB: For now, KPJ Drilling is only looking to operate in Botswana and does not have any plans for expansion. There is a significant amount of capital involved when expanding into other countries. Plus, most places are not as easy to operate in as Botswana in terms of security and stability.
Other than security and stability, what else about Botswana makes the country business-friendly?
RB: Botswana is a free trade country, which means that one can export funds beyond its borders. There is no restriction on the flow of funds, making investment significantly easier. With the pula being stronger than the rand, it is beneficial to purchase from South Africa and widen financial margins a bit.
Commodity prices have decreased significantly over the last year. How have these decreases affected KPJ Drilling?
RB: With the prices of commodities decreasing, many contracts have either shrunken in size or shut down completely. If the mines shut down, the only potential that KPJ Drilling has in Botswana is the private farmers, mainly requiring water well borehole drilling. Currently, De Beers has a new project in Tsabong, which is keeping KPJ Drilling going. The lack of funding in the mining industry will be a huge problem for KPJ Drilling.
How will the re-commissioning of the Groundwater Association impact mining at large?
RB: The only impact it might have on the mining industry is vetting foreign drillers who are going to be engaged on the mines. The association will have greater impact on the local drillers in terms of standardizing performance, equipment, and the drilling industry as a whole. It will also have an impact on the common farmer, giving them somewhere to go when they are not happy with services.
What are your predictions on the expansion of the Botswanan mining industry?
RB: With the low commodity prices, the mining industry in Botswana will not significantly expand in the near future. The government has regulations in place, which are not problematic but need to be revised for foreign companies entering the country. There should be more legislation that governs foreign investors in Botswana and supports the local work force.
This interview was conducted as part of research by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Molly Concannon at email@example.com or +244 940 514 806.