SELEBI PIKWE: When Botswana government decided to build a second university in the Palapye area, little did the decision makers know that the move would haunt them later.
Selebi Phikwe was one of the favourite towns where the Botswana International University of Science and Technology (BIUST) was to be located.
Although BCL started asking for ‘bail out’ from government far back before the decision to build the second university was made, the analogy fits well with the current triangular relationship amongst government, BCL and Selebi Phikwe town.
When ever the mine’s top brass come begging for assistance from government, the reminder of the town becoming a ghost town triggers treasury to sign a cheque. BCL General Manager, Montwedi Mphathi, said this week that government has done well out of BCL.
“I think someone needs to thank government for helping BCL during hard times,” Mphathi said. Originally, the government started providing money for the mine in the form of emergency funding followed by debt financing. By 1999, government was said to have spent P7 billion on BCL to save the mine from collapsing under huge debts and also to avoid job loses and its impact on this small town.
“Government helped this region (Selebi Phikwe) with employment. They (people in government) did expect to get this money, but they got part of this money back,” he added.
In 2002, BCL approached government with a request for funding to the tune of P700 million and the company only managed to get P440 million from treasury. The interest on this money has ballooned to P990 million according to the manager.
At a time when BCL borrowed money from the treasury, it made news with a lot of people saying that government was wasting taxpayers’ money on a loss making entity. Botswana Mine Workers Union (BMWU) was one of the critics, especially at a time after Mphathi’s salary package was made public. Only in September, BCL wrote a $65 million cheque to government although it did make headlines compared to when they borrow money. It also settled its debts to the Industrial Development Corporation (IDC) and KFW of Germany.
Rather than closing the mine when copper/nickel prices were down; government started getting dividends from its investment. In 2007, because of high commodity prices and the growing demand of copper and nickel in Asia, BCL made money which helped it clear most of its debts as part of its restructuring process and made cash reserves.
Mphathi said that the company has been able to get rid of debt worth P11 billion although it still has debt in the region of P2 billion, which it cannot pay at the moment. At a time when most of investors were selling their shares in the company, the government stood side by BCL in a bid to save it from collapsing under huge debts. At the height of high commodity prices, including base metals, BCL managed to keep some cash to the tune of P3 billion although P600-700 million was set aside for rehabilitation.
Currently, the company is undergoing restructuring that has left government owning a controlling stake with some employees now joking that they ‘are government employees’. The original shareholders who started the mine wanted to close the mine and leave and this left the government owning 93.6 percent of BCL while the remaining 6.4 percent is held by Norilsk Nickel.
Initially, the government held 35 percent, Norislk 25 percent while Botswana RST Ltd held 40 percent. Although BCL accounts for only 1 percent of the world nickel production, it runs a big underground mining comprising four shafts. It treats three million tonnes of ore per annum from its three underground mines, namely Phikwe Central, South East Extension, Selebi and Selebi North.
Mphathi says that they have made interesting discoveries that could prolong the mine life beyond the projected 2013 under the current reserves. A couple of years ago, the company started airborne prospecting that has yielded results. With this aerial reconnaissance, there were discoveries of electromagnetic areas that were followed by drilling of 1 000 metres down.
“This is very interesting with ore bodies found. Going deeper possibilities exist,” said Mphathi. “We are busy looking to extensions to ore bodies that we are mining, but it is a question of whether they are economic.”
Apart from smelting its own concentrate, BCL also does work for Tati Nickel as it toll-smelt concentrate and ore for the Francistown-based mine. Mphathi says they have also helped other mines like Silkirk and Phoenix as they were managing them.