Tuesday, August 9, 2022

BCL master plan to resolve Selibe Phikwe’s existential challenges is a source of hope

Saving Selibe Phikwe and ensuring that the town remained alive even after the closure of BCL mine has been a big national priority for the last few years. Those who know anything about Selibe Phikwe would be aware that by any measure, the BCL Mine is the town’s lifeblood. As currently constituted, Selibe Phikwe cannot survive for more than a month without BCL Mine. It was thus distressing when the mine announced a few years ago that its life span would be coming to an end. Initially the mine had been expected to close by 2013, which did not happen. Then there was talk of it closing around 2022. As we report elsewhere, this too will not happen as a result of some restructuring. The documents shown to this newspaper indicate BCL tax structure has been changed. More crucially the documents indicate a change in ownership that has made Botswana Government the sole owner of the company . Also to happen has been the cleaning of the company’s balance sheet.

The balance sheet cleaning could not have come at a more opportune time. The defective balance sheet has for rather too long weighed down on the company – closing down its prospects and limiting its options and opportunities for maneuver. Such a balance sheet has long acted as an impediment to BCL Mine’s ability to attract funding that is necessary for growth. It also made it difficult for the company to leverage its size to make new investments. With a clean balance sheet, it is now our hope that BCL Mine management can freshly assess their options from a totally new and creative outlook. This means negotiating with financiers from a position of strength for funding including from the international market. With such salient changes taking place at BCL, it is altogether not surprising that company has approached Botswana Government as a shareholder with a new plan. While the BCL Plan is multi-faceted, two items stand out; turning around the company but also for turning around the whole of Selibe Phikwe as a town. By any account, the BCL plan to government is an ambitious one. Should the plan be successful, it goes without saying that it will bring with it enormous fortunes for BCL Mine – a potentially lucrative mining house that has for over a generation tragically found its capacity undermined by a number of factors that have consistently conspired to make it operate well below its full optimal. While the unleashing of BCL potential is at the centre of the plan, for the country that is only half the story.

More crucial is the fact that BCL success will see Selibe Phikwe gravitate towards a more sustainable future that is predicated on economic certainty, economic confidence and long term stability that are all necessary for a turnaround but currently lacking. We acknowledge that lack of certainty over the long term existence of Selibe Phikwe has been infinitely corrosive. And it will take long and hard work to turn the situation around. That lack of stability has resulted in capital flight and pervasive reluctance by investors and businesses to commit resources in the town for the long haul. Not only has it taken away confidence from the town, it also has in a big away eroded the gains made over the last forty years that turned the town into one of the country’s biggest economic centers. Reversing the tide will not be easy. In fact it might prove costlier than the initial round of building the town from scratch.

If the plan is to be believed, BCL plans to open new mines not just around Selibe Phikwe, but all over the country, using its underground mining and smelting expertise to establish synergies as far afield as Zambia, Namibia, South Africa and Mozambique. Traditionally a copper-nickel mining company, BCL is now planning to go into coal mining, power generation, iron mining, diamond mining. In short the company plans to become a world-class base metal one stop mining company with interests sprawling the sub-continent, while retaining Selibe Phikwe as its capital and nerve centre. If all these come to bear, BCL as a commercial entity will become a total new animal in its size but also in the scope of its contribution to the overall economy of Botswana. Not only will BCL take away the long lingering fear of Selibe Phikwe morphing into a ghost town, if implemented successfully we are likely to see Selibe Phikwe once again gravitating into an economic hub where investors arrive not to close down but rather to assess new options and opportunities.

It is our view that good as it is, the BCL Plan will not by itself become a panacea for the ills bedeviling Selibe Phikwe. For the Plan to be successful other players, chiefly the Government of Botswana have to come to the party. SPEDU, which was created to save Selibe Phikwe has been too slow to prove its worth. We all on Government to revamp SPEDU and also put a strict raft of targets backed by a regime of performance measurements on those mandated to run SPEDU. SPEDU has to fast-track the process of releasing tourism sites in areas around Selibe Phikwe including at such areas like Mmadinare, especially at the recently constructed damns. There is a lot of tourism potential in and around Selibe Phikwe that alone could help diversify the town’s economic base and help reduce the town’s overbearing reliance on just BCL.

SPEDU also has to work closely with BCL to help identify new investment opportunities that will come as a result of the BCL plan. A new process of targeted investment promotions for the town coming out of such interactions between the two is most likely to help bring back the much needed investor confidence into the town.

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