GABORONE, July 23 (Reuters) - Botswana is proposing a

law that will ask mining companies, once granted a licence, to

sell a 24% stake in mines to locals if the government does not

exercise its option to acquire the shareholding, a draft bill

seen by Reuters on Tuesday shows.

The current Mines and Minerals Act allows the government of

Botswana, the world's top diamond producer by value and an

emerging copper mining hotspot, to buy a 15% shareholding in any

mining project upon being licensed. The existing law gives the

government an option to negotiate higher stakes in diamond

mines.

The government has, however, foregone that option in all

recent mining transactions, including Lucara's

acquisition of Karowe Diamond Mine, the purchase of Khoemacau

copper mine by China's MMG and the recently opened Motheo Copper

mine owned by Australia's Sandfire.

"Where government does not exercise its option of acquiring

a 15% working interest upon granting of a mining licence, the

holder shall use his best endeavour to dispose the 24% stake to

citizens or citizen-owned companies," reads the Mines and

Minerals Amendment Bill due to be tabled in parliament by mines

minister Lefoko Moagi.

Moagi has previously said the government was proposing that

funding for Batswana to acquire the stakes could be sourced from

the country's pension funds.

The pension funds have recently been asked, through a change

in law, to reduce the amount of funds invested offshore from 65%

to 50% over the next three years.

The government, through the state-owned Minerals Development

Company Botswana, has equity stakes in Debswana Diamond Company

(50%), De Beers (15%), Morupule Coal Mine (100%), and indirectly

in coal miner Minergy Ltd through convertible debt

advanced to the mine.

(Reporting by Brian Benza, editing by Nelson Banya and Emelia

Sithole-Matarise)