Saturday, October 24, 2020

Gov’t may have lied on reasons for closing BCL

A leaked document has given credence to reports that the Botswana Government may not have told scores of employees at BCL Mine the truth for the sudden closure of the mine.

The document supports reports that government placed BCL under provisional liquidation to avoid a binding agreement for the sale of Russian Company Norilsk Nickel to BCL which is controlled by the Government of Botswana.

Norilsk Nickel, Vice President, Investor Relations, Vladimir Zhukov, announced last week that they are taking the Botswana Government to court for a breach of a binding sales agreement.

Currently more than 6700 employees from BCL and its subsidiary Tati Nickel Company face uncertain future.

Contrary to reports that the mine was under dire financial constraints and in need of billions of Pula for a bailout, the BCL mine management believes that all it needed to keep the mine running was a mere P2 billion.

This is in contraction to recent reports in which Minerals, Green Technology and Energy minister, Sadique Kebonang was quoted as saying that “To keep it going, the cost is P8 billion, and if you sink that into BCL, you have to shut down the entire economy, meaning no provision of free Anti-retroviral drugs or free education.”

The document compiled by BCL General Manager Dan Mahupela and his executive team when requesting for emergency funding states that  BCL has a proposed funding through the equity of P2 billion spread as P1 billion required immediately and another P1 billion at the end of first quarter of 2017.

The document which was provided to guide the Cabinet sub-committee says the US$100 million (P1 billion) to be termed out with Barclays through a sovereign loan with a two year grace period and pushed down to the BCL balance sheet in 2018/19 and a bullet payment in 2022.

On existing debt, the report says that BCL has existing Government Guaranteed short term funding of $100 million from Barclays Bank Botswana and ABSA which has been fully drawn down. The report also states that BCL has overdraft facility amounting to P105 million from three local banks. The report states that total earnings to employees for the last three years were P4.8 billion while direct payments to government entities such as BURS, WUC and BPC totalled P3.4 billion.

Forex inflows from BCL Group was P18.1 billion.

Giving a background of BCL financials, the report states that BCL has undergone wet restructuring exercise for the last three years.

The report states that in 2006 BCL paid the principal amount of Emergency Funding from the Government of Botswana (GOB) to the value of P414 Million. The balance of interest accrued (745milion) was left in the books of BCL and was dealt with in 2013 at which time the interest accrued was P2.08 billion. The report states that in 2008 another restructuring was done of which P606 million was paid to Government of Botswana, IDC of South Africa and KWF of Germany .A total of 198.8 million of the principal loan was waived together with accrued interest of P10 Billion

According to the report, the 2013 /4024 restructuring of the BCL balance sheet comprises of P2 billion (Emergency Funding Interest) P472 (deferred Royalty), P864 million (Senior Debt inclusive of Interest and capital) and 251 million (Preference shares). The report states that a total of P1 billion was paid leaving a balance of PP2.67 billion which was converted to equity. It says the sysmin  Loan d which were advanced on a concessionary basis by the European Union to Government of Botswana were cleared in 2010 through payment of P107 million to the Government of Botswana.

Interest payments were paid annually from 2004 to Government of Botswana and disbursements to BCL were based on the BCL capital plan requirements. 

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