Thursday, October 1, 2020

Norilsk is in Botswana to stay, say mining bosses

The special advisor to the first deputy general director of Norilsk Nickel International, Nikolay Sergeeve, shrugged off suggestions that the Russian mining giant is planning to disinvest in Africa and reaffirmed its commitment to Africa operations and investment, especially Tati Nickel Mine in Botswana.

Briefing the media after a tour of the Phoenix Mine last week, Sergeeve reaffirmed that Tati Nickel is to date Norislk Nickel’s flagship project in Africa and dispelled rumours that the mining company is looking to pull its investments out of Africa.

“Because of its unique ability to mine very low grade ore at a profit, and the fact that is a pioneer of the trendsetting dense media separation technology, Tati Nickel remains a very integral and tactical part of our Africa investments,” he said.

Nikolay Sergeev also added that while Norilsk Nickel has other investments in South Africa such as Nkomati, the tranquil and stable democracy in Botswana, low labour costs and the general consensus that Botswana remains Africa’s best mining investment destination all work in favour of Tati Nickel as Norilsk’s premier Africa investment.

“We also have to consider the fact that the presence of the BCL smelter, which is easily accessible to all our operations, is also a boost to Botswana because it makes Norilsk operations much easier to manage,” he added.

While Norilsk’s largest investments are in Russia, there is a general consensus that the mining giant is looking to spread its wings to the outside world, especially Africa, with a view to countering the large investments that China and America have made in Africa.
Nikolay Sergeeve’s comments come in the wake of recent reports that Norilsk Nickel, which owns 85% of Tati, is contemplating terminating its investments in Africa. In a previous article titled “Norilsk edges to Africa adieu,” business websites miningmx.com and Fin 24.co.za were quoted as saying that Norilsk Nickel is considering terminating its $6.8bn investment in Africa where it has nickel projects in Botswana and South Africa.

Norilsk made a big bang entrance into Africa when it beat out Xstrata in a $6.8bn purchase in July 2007 of Lion Ore, which owned 85% of Tati Nickel in Botswana and 50% of Nkomati Nickel in South Africa.

The websites also quoted the Moscow Times reporting on February 20 that Norilsk “may review” its African unit, which had production costs of $10 000/tonne and was operating at “virtually zero profitability.”

“If the price falls further, we’ll analyse the possible solutions,” Moscow Times quoted Deputy CE Oleg Pivovarchuk saying about the African operations, which produced 23 410t of nickel in 2008.

The reports also came in the wake of a move by Tati Nickel management urging employees to opt for voluntary exit packages ahead of a fully-fledged retrenchment exercise by March 31.
“We have asked interested employees to opt for voluntary separation. Like everybody else, we have been affected and are trying to manage the challenges posed by the global economic crisis,” Tati Nickel general manager, Seb Sebetlela said at the time.

One of the reasons why Norilsk invested in Africa was the Activox technology refinery project, situated at the now defunct Botswana Metal Refineries plant near Tati Mine. Some mining industry commentators have always maintained that Africa lost its allure to Norilsk after the collapse of the much-touted BMR Activox plant. Yet more contend that the only reason Norilsk invested in Africa, especially Botswana, was that they wanted to grab the Activox technology.

Nikolay Sergeev last week reiterated that the Activox plant was abandoned simply because it could not be economically operated in Botswana or anywhere else given the immediate past economic climate.

However, after the collapse of Activox, Tati Nickel seems to have redeemed itself when the DMS technology surpassed expectations and propelled the mine to greater operational and economic heights after its commissioning. At the same time, Sebetlela is also said to have instituted far reaching overhaul techniques that saw the mining company cutting down on its operational costs and streamlining operations to achieve maximum profits at limited investments.
For his part, Sebetlela said that there has not been any discussion regarding Norilsk nickel’s pulling out of Africa.

“Tati Nickel is Norilsk’s most important asset outside of Russia. The presence of such an esteemed member of the company’s leadership lends credence to our initial stance that we are an integral part of their operations. As a relatively new acquisition, Norilsk management found it fitting that they familiarise themselves with our operations, hence the presence of Nikolay Sergeeve,” he said.

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