Monday, October 26, 2020

Scramble on for BCL mine

At least three suitors have approached Minister  of Resources, Green Technology and Energy Security Sadique Kebonang declaring their interest in buying BCL mine, he has confirmed to Sunday Standard.

According to Kebonang, one is Canadian, another South African and the other a Mozambican. 

Sunday Standard has also come across information that a member of the Khama family, Micus Te haar has for his part expressed interest in purchasing Maibwe diamonds eposits in the Central Kalahari Game Reserve.

BCL had discovered Maibwe deposits following the company’s drive to diversify from copper and nickel. Maibwe was part of the BCL diversification process called Polaris 11.

Te haar is the nephew to President Ian Khama and Minister of Environment, Wildflife and Tourism Tshekedi Khama.

Kebonang could not confirm Te haar’s interest.

“I am currently in Spain. If he has expressed any interest then it would have happened during my absence,” said Kebonang.

At least two former executives of the former BCL management have additionally told Sunday Standard that indeed, Te haar, who is currently Deputy Chief Executive of government-owned Okavango Diamonds did indeed talk to them prior to BCL closure.

They said they had declined his gesture as they considered the diamond find a key component of efforts to diversify the BCL revenue base.

Meanwhile, the haste with which investors are already beginning to see the value of BCL, only a few weeks after it was closed has renewed questions over government’s wisdom to close it.

So far all fingers are pointing to the thinking within Minerals Development Company Botswana.

MDCB Chief Executive Officer Paul Smith is said to have prevailed over President Khama convincing him against all advise from the then Minister for Minerals, Kitso Mokaila, that BCL had no business case.

In the end Mokaila was shunted off from the ministry as the questions and resistance he posed were considered a hindrance to closing BCL.

A Cabinet reshuffle saw him deployed to the Ministry of Transport.

While Mokaila had throughout maintained that commodity prices were about to make a corner, Smith was of the view that BCL would nonetheless never be profitable.

In the build-up to BCL closure, Smith, who was enjoying excessive access to President Khama had literally cut off all ties with BCL executives, including to BCL CEO, Dan Mahupela, with whom he was not even in talking terms. 

At the same time a totally false narrative was immediately created that BCL was draining government coffers when the fact of the matter was that the mine had not received any money from government for at least 27 years.

In the recent facility with Barclays Bank Botswana, government’s role was limited to being an underwriter.

Smith’s view that BCL had no business case is also said to have further clouded all negotiations with the Russian Norilsk executives from whom government had purchased stakes for both Tati Nickel and BCL.

At a meeting in London, the Russians had offered some payment flexibility when they settled for 60 percent of the payment upfront and 40 percent only when BCL began to make profit.

An insider has said the Russians started to feel rebuffed and spurned when Smith emphatically told them that BCL would never make money.

It was then that Norilsk executives started to demand all their money as spelt out in a binding agreement that Botswana had signed.

The meeting took place in London on October 12.

This led to a collapse of negotiations resulting in government resorting to legal technicalities as a way out, which effectively cleared the path for liquidation.

Also under scrutiny as the situation at BCL got murkier has been the credentials of the BCL liquidators including whether or not they were sufficiently staffed to undertake the mammoth task of liquidating an immensely technical company the size of BCL.

Insiders from BCL say the closure of the mine will itself not come cheaply. The 460 staff retained by the liquidator will cost a minimum of P3 million a month.

And that is only a tiny fraction of the true costs. Government has been forced to renew insurance cover for the same employees.

The last cover elapsed end of October. The smelter at the mine continues to consume 112 000 litres of diesel every three days just to keep it at holding temperature.

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