Sunday, May 29, 2022

BCL cost cutting measures dribble recession

BCL, the copper/nickel miner, said it continued with operations by adopting measures that saved the company cash, including cutting out unnecessary expenditure and slashing of its workforce.

The miner’s General Manager, Montwedi Mphathi, said the outfit that operates four shafts was ‘not immune’ from the global economic downturn, but acted swiftly to save it from disaster.

“When the recession came, BCL could not be immune. Because of low demand of copper and nickel from our export countries, the prices plummeted,” Mphathi said on Friday.

“We had to respond swiftly,” he added. One such measure that the company took to conserve cash was to stop non productive projects.

The move affected the refurbishment of houses, which in mining terms is crucial for staff retention in an industry that is notoriously known for poaching between mining houses.

BCL’s annual projects’ portfolio is P400 million.

The other route that the miner took to cut costs was the unpopular retrenchment mode. In the short term, the move affected the company’s coffers in terms of packages, but would later benefit the company in the long term.

However, Mphathi did not give the number of workers affected by the cost cutting measures. But the number of retrenched workforce is said to be less than 200 workers with most of the employees having had opted for packages. Initially, BCL wanted to cut more than 300 people employed at the mine, but the figure was revised.

BCL, which is the only underground mining operation in Botswana, employs about 4, 000 people at its four shafts scattered around the Selebi-Phikwe area.

“Nevertheless, we continued with exploration and we did save some money during boom before the crash”, he said.

BCL, unlike other mining houses, is currently sitting on a pretty cash position and has set aside P700 million for rehabilitation after the mine life. This money cannot even be accessed by the management.

At the height of high commodity prices, BCL managed to keep P3 billion and reduced its debt from P11 billion to P2 billion.

The company, which over the years depended heavily on government for livelihood, also managed to negotiate with lenders, which helped in debt restructuring and position cash position.

After restructuring and clearing of debt, BCL is currently owned 94 percent by government of Botswana and the rest (6 percent) held by Norilsk.

“We were able to save that cash and we did not close the mine and continued with the operations. We were able to keep the money we had and continued with projects like exploration”, added Mphathi.

Miners around the world including Debswana were affected by the recession that slowed demand from key markets in the U.S, Europe and Asia.

When it is over, Mphathi revealed that his company would have learnt lessons from economic downturn.

“We must always expect such shocks and plan for them. Nickel and copper prices go up and down and therefore we need to be prepared and keep some money for these difficult periods,” said the mining expert.

“We can not control metal prices, but we should manage risks associated with the shocks,” he added.

China at the moment is keeping the demand high, but ‘the prices will remain fairly buoyant in the future’.

“If the (global) economy picks, there could be shortages in nickel therefore we need to prepare and take advantage.”

BCL at the moment targets to mine 2.7 million tonnes of ore per annum although at times the company is off target as it was with the previous target of 2.8 million tonnes of ore.

“We have increased production at some of our mines to take advantage of metal prices.”

Despite the continuous breakdown of the concentrator, Mphathi believes his company has done a lot to attain its planned productions. BCL also does smelting for other mining companies.

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