Policemen, SSG personnel and G4S security guards man the gates of the Botswana Metal Refineries Activox plant just a few kilometers before Matsiloje Village. There is no sign of the protests that are said to have erupted at the plant on Wednesday, and only a few labourers loiter around outside the locked gates of the BMR plant.
There is no activity going on and all the machinery that once churned away, day and night, to bring one of Botswana’s trump card projects of mineral beneficiation have grounded to a halt, ready to ship out. A few employees listlessly loiter outside the locked gates of the BMR in apparent disbelief.
There is very little resemblance of the once jovial mood that characterized the ground breaking festivities at the very spot where the gigantic monolith of a plant now stands.
Early last year Lion Ore International wined and dined none other than former President Festus Mogae, cabinet ministers and mining industry heavyweights in a lavish ceremony marking the ground breaking ceremony of the P4 billion BMR Activox Refinery Project. It was touted as the project that would make Botswana the leading nickel province in Africa and a giant step in Botswana’s path to beneficiation and economic diversification.
Better still, it was the first ever metals refinery technology of its kind in the world, diverting from the traditional, costly and environmentally degrading smelting process to the state of the art hydrometallurgy technology. The Activox technology would also enhance Botswana’s mining skill base with its inherent hydrometallurgy technology and substantially extend the life span of Tati Nickel to beyond 2030, in addition to the potential at Selkirk.
The investment, according to Lion Ore CEO, Colin Steyn, would represent a 3% contribution to Botswana’s GDP and a 2.5% increase in export earnings. “This clearly symbolizes the strength of the partnership between Lion Ore and government which is a partnership combined to maximize the value of our joint resources in the region,” said Colin Steyn, amid the clink of champagne glasses as he toasted with president Festus Mogae and Minister Charles Tibone.
In his remarks, President Mogae stated that the billions spent on the project are a clear vote of confidence on our investor-friendly mineral policy and fiscal regime.
“It had been the thrust of our policy for mineral development, and indeed other sectors of the economy, to create an environment where our country will realize maximum benefit. This will also allow investors a fair and decent return on their investment,” Mogae said.
The President said the project is one of the examples of how new mineral sector investment is having a positive effect on Botswana’s economy and added that it should increase the life of the mine by not less than ten years. In the process, he said, the mine’s output of refined nickel could increase substantially thus making Botswana a benefactor of finished high grade metal.
“National Development Plan (NDP) 9 aptly themed ‘Towards Realization of Vision 2016: Sustainable and Diversified Development through Competitiveness in Global Markets’ is a huge challenge to development stakeholders in the country,” said Charles Tibone at the time. “It is our ardent hope and belief that this project will significantly contribute to all these issues of national importance.”
But all the pomp has now dissipated and what remains is uncertainty, doom and gloom as employees walk around listlessly, apparently still stunned by the bad news and wondering where their next meal would come from.
Things took a turn for the worse when Norilsk Nickel won a protracted bid for Lion Ore against Xstrata; it culminated in Norilsk finally assuming control of Lion Ore operations after acquiring the Australian company for 6.8 billion Canadian dollars in June last year. The trailblazing Activox technology was at the centre of the protracted bid for Lion Ore, which was also attractive because if its rich nickel resources at Tati Nickel mine ÔÇösome 45 kilometers south-east of Francistown and its reserves in South Africa and Australia.
Hardly 12 months after acquiring the Activox technology, Norilsk dropped a bombshell on Wednesday when they announced that they have suspended the project indefinitely because of substantial project cost escalations fuelled by an increase in construction, equipment and project management costs. Another reason given for the sudden about turn is the short term energy constraints in the region, which have been assessed as a risk that would have adversely affected the commissioning, time to production and overall economics of the Activox project.
Botswana Mine Workers Union Chairman, Kabelo Maano, and a number of economic consultants, who preferred not to be named, see this as just another ploy by the mining giants to move the Activox refinery away from Botswana. “We have a strong suspicion that the Russian giants only wanted to acquire the Activox technology and then move it back to their homeland or to other countries apart from Botswana,” they said.
They also commented that the sudden change of heart by the Norilsk management and the apparent manner in which the government of Botswana, which at 15% was a negligible minority shareholder, was caught with their pants down conjures memories of yester year when Botswana lost out the lucrative Hyundai plant to neighboring South Africa.
“It would be foolhardy to rule out the possibility of Norilsk nickel moving the Activox technology to South Africa, especially since they have a 50:50 joint venture with African Rainbow Minerals at the Nkomati mine in South Africa.” Others have also taken exception to the announcement by Norilsk that the demo plant at Tati Nickel will continue as a testing centre at which a bulk sample from Norilsk’s Kola operations in Russia will be tested. They allege that Norilsk is trying to establish if the ore from their Russian plant will be successfully refined using the Activox technology after which they will hasten to move the refinery project to their homeland.
They also shot down Norilsk’s announcement that the decision was partly taken because of the energy shortages currently being experienced in Southern Africa. Maano said that Botswana has embarked on a number of power generation initiatives that will be able to meet the demands of the refinery plant when it reaches completion. Among these he names the upgrading of the Morupule power plant which will be able to supply the whole of Botswana and the upcoming Mmamabula power station.
“In any case mining houses are rarely affected by power cuts in Francistown,” he said.
Questions have also been asked about what would happen to the degraded land on which the indefinitely suspended project now stands. At this juncture, said Maano we are not even sure if Norilsk will come back to revive the project. “Economics dictate that it would cost the sponsors more money if they were to shelve the project with a view to resuscitating it in future” he said. He also expressed wonder why the government of Botswana does not put in more money into the project to see it to completion and then claim a larger stake than their 15% in the company.
A local estate agent also said that the shelving of the Activox project will bring the city of Francistown to its knees.
“For once, this city was showing some economic vibrancy and prospects of development. But all that has now gone down the drain,” he said. He added that a lot of Francistown businesses that were once flourishing will close down because the population boom that the city was experiencing is going to be reversed. He also expressed pity for businessmen who had set up estates and other services with a view to servicing the mining population, saying that a lot of them now face ruin.