Government is snowed under an avalanche of lawsuits in the fall out of the sudden closure of the BCL copper and Nickel mine which is now having a domino effect.
Cash strapped EPIROC Botswana has added a P60 million law suit to the piling mountain of government liabilities arising from the closure of the BCL mine. EPIROC which supplied mining equipment provided a credit line to BCL on the strength of a commitment from government that it would ensure the copper mining operation does not close down. EPIROC is reported to be battling with financial difficulties because it trusted the government.
Court papers reveal that from December 2015 BCL failed to honour its payments to creditors resulting in a crippling cash flow problem to EPIROC.
EPIROC is accusing government and the ministry of Minerals Resources, Green Technology and Energy Security for trading in insolvent circumstances where it could not pay its debts as and when they are due.
EPIROC points out that it went out on a limb to provide services to BCL because the then Minister of Minerals Resources, Green Technology and Energy made a commitment that government would ensure the BCL debt is serviced.
The then Minister Kitso Mokaila wrote on the 30th December 2015 that “government of Botswana is the owner of the 100% share holder of BCL and that the outstanding debts will be fully repaid from the proceeds of the current BCL concentrate stocks or the proceeds of BCL’s refinancing options being contemplated, whichever is realized earlier” Mokaila wrote.
The minister assured the service provider that Government would ensure that BCL is competently managed and supported so as to be able to at all times to meet its financial obligations.
Mokaila assured the service provider that government will not permit BCL to enter into liquidation (whether voluntarily or compulsory) or enter into any compromise with any of its creditors.
EPIROC is represented by Dutch Leburu of Monthe Marumo law firm. Despite the commitment from government, a few months later Cabined decided to put BCL under liquidation. The EPIROC law suit which comes at a time when government is fighting a legal challenge from Norilsk is the latest in the the string of law suits slapped on government following the closure of the BCL mine.