Monday, October 25, 2021

Captain Mahupela’s BCL ship going down

BCL Chief Executive Officer (CEO) Dan Mahupela, his management and board members, face the axe following government’s decision to place the mine under the management of a provisional liquidator tomorrow (Monday).

BCL miners clocked out of the final shift under the Mahupela management on Friday night and operations at the mine were stopped with immediate effect. Government has instructed Attorney Jeffrey Bookbinder of Bookbinder Business Law to file an application tomorrow for the provisional liquidation of BCL.

A delegation comprising Mineral Resources, Green Technology and Energy Security Minister Sadique Kebonang, area MP and Minister of Infrastructure and Housing Development Nonofo Molefhi, Transport and Communications Minister Kitso Mokaila and Chairperson of Mineral Development Company Botswana Regina Sikalesele-Vaka addressed the BCL management and union leaders on Friday night on plans to place the mine under provisional liquidation.

BCL is technically insolvent and Cabinet was worried that should any creditor apply for its liquidation government would lose control of the mine. Cabinet then decided that government should apply for the mine’s provisional liquidation until 2020.

Kebonang confirmed Saturday morning that the mine had been placed under provisional liquidation until 2020 but said the more than 4 000 staff would keep their jobs except for managers and board members. It emerged during the interview with Kebonang that BCL needs at least a P7-billion government bailout to keep it afloat. Kebonang told Sunday Standard that BCL needed P4 billion for its operations and an additional P3 billion for its South African subsidiary, Nkomati mine.

Botswana which is already buckling under a projected P6.8 billion budget deficit could not raise the money to save the copper and nickel mine and instead decided to place it under provisional liquidation until 2020. Kebonang told Sunday Standard that government would have had to suspend other programmes such the provision of free ARV drugs and divert the money to the haemorrhaging BCL.

Sources close to the provisional liquidation told Sunday Standard that government settled for a costly political decision to keep BCL on a life support system until after the next general elections in 2019. For now, BCL operations have been stopped with immediate effect but staff members will keep their jobs which leaves government with a P60-million monthly wage bill and no income from the mine.

Indications are that government may finally decide to close down the mine after the elections. BCL operates some of the lowest grade ores in the world in very deep shafts, and at depths in excess of 1 000 metres underground – making the mines dangerous and very costly to operate. This is making it difficult for BCL to absorb the shock of the collapse in commodity prices. The situation was not helped by the failed April 2015 expansion strategy marked by the signature acquisition of all Norilsk Nickel Africa assets, which included the troubled Tati Nickel Mining Company (TNMC).

Vice President Mokgweetsi Masisi told reporters during the recent African Union summit in Rwanda, Kigali, that Botswana would maintain P1.4 billion of annual spending on BCL to save jobs. “Only for the reason of wanting to save jobs, and the hope and promise that prices might go up, the government kept on putting in more money…There will come a point where a decision is made. We have got about 15 more years to go. It’s hot, deep, poor-quality ore – it’s like flagging an old woman and asking her to run in the Olympic,” Masisi said.

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