SELEBI PHIKWE: Normally when commodity prices are low, miners usually look at cutting costs.
The painful options they consider are to close operations and reopen them when prices are up or to retrench staff.
At BCL, which runs a huge underground mine, the option of cutting staff to save the company some money is likely although it will face resistance from the Botswana Mine Workers Union (BMWU). The mine executives were this week not ruling out retrenchment possibilities because of the fall in base metal prices (nickel and copper).
The company’s General Manager, Montwedi Mphathi, was this week diplomatic with words lest he faces the wrath of the unions when he responded to media enquiries at a press conference.
“I do not think that any business can rule out any retrenchments under the current situation,” said Mphathi. “We have to look at deficiencies although our aim is to keep people employed.”
Labour expenditure accounts for 40 percent of BCL’s total costs. Whisper in the corridors of BCL suggests that retrenchment is inevitable with some suggesting the mine might slash its workforce by 10percent.
“It is one area to explore. We are not making profit under the current environment,” Mphathi explained to the media.
Currently, the mine employs 4, 200 people, the second largest private sector employer after Debswana.
However, the company is the largest single employer in Botswana outside the state since Debswana operates 4 mines while BCL operates one mine with shafts.
The other large employers in the country are the textile industry although it comprises several outfits scattered around the country. Mines around the world are faced with difficulties facing the world as a result of the financial crisis. Purchasing power from nations that used to buy Botswana’s raw materials are getting broke as a result of the liquidity problem.
The problem facing BCL at the moment is the commodity prices that have collapsed as a result of a fall in demand leading to fall in prices of copper and nickel produced here.
“There is less demand and for commodities like ours (copper and nickel), it is a question of demand and supply,” explained Mphathi. “Some mines close and reopen when prices are high. When prices are low it is a question of who can outrun another. It depends on cash reserves,” Mphathi explained. There are concerns that should BCL go the route of retrenching staff, they will target the lower cadre who is the man underground while leaving costly white collar officers. A BCL insider says it is better to look ‘at labour costs rather than the labour number’. Some employees suggest that to cut costs, the company could look at removing duplicated functions and looking at non citizen contracts. The other possibility that has been whispered at the mine is the one of overtime reduction. Apart from unpredictable nickel prices, the mine is also facing challenges in increasing costs with the shafts getting deeper, more travel time for workers hence reduced productivity. There are also concerns that ventilation is getting costly and high fuel prices.
The BCL pays P120 million in electricity bills to Botswana Power Corporation (BPC) every year.