Wednesday, October 21, 2020

Copper mines closure pushes Barclays impairments up

Barclays Bank Botswana says the closure of two mines in the financial year 2015 negatively impacted the bank and resulted in impairments of P41 million.  

Newly appointed Finance Director at Barclays, Mumba Kalifungwa said Thursday that the closure of two copper mines in the northern part of the country during 2015 have resulted in a rise in credit impairments. The rise has been attributed to personal loans acquired by employees who lost their jobs at the closed mines. 

“Our 62.5% higher credit impairment was driven largely by personal loans. During the year we also absorbed the impact of two mines that went into liquidation with an impairment of P41 million in total,” Kalifungwa said Thursday. 

Barclays financial statement for the full year of 2015 shows that its loans and advances to customers increased by 20 percent year-on year to P9.7 billion. The mining sector in Botswana is expected to shed thousands of jobs in a massive hemorrhage that runs across the sector, from copper to diamonds. The hardest hit so far could be Selebi Phikwe based, BCL, which is expected to cut as many as 2,000. The 2,000 forms part of the  6,000 strong workforce of the government owned entity as it streamlines operations in the face of weak copper prices, currently at six-year lows. Reports indicate that Barclays Bank Botswana has since agreed to bail BCL out through a loan that has been guaranteed by the government. 

At the same time, Moolman Mining Botswana, a company that was contracted by Tati Nickel Mining Company (TNMC) to do its excavation work closed down its operations in mid February 2016. Over 500 employees lost their jobs as a result of the indefinite closure.

The level of commodity prices has impacted most metal producers in the country who are currently under provisional liquidation. African Copper which has two operations at Mowana near Dukwi and Thakadu near Matsitama is amongst those under provisional liquidation and was employing 543. Another Copper miner, Discovery Metals Limited was liquidated in February 2015 and was employing 538 people before closure. Meanwhile the minister responsible for minerals, Kitso Mokaila recently said that government will direct its efforts toward avoiding or minimising job losses in the mining sector, which has already reported thousands job losses. 

“Beyond the job losses, the current situation has also constrained mineral exploration expenditure and activities on the ground, thus compromising the ability to make any new mineral findings,” Mokaila said.

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