By Mpho Tebele
GABORONE–A MINING sector crisis gripping the SADC region has claimed its first casualty in Botswana after the copper and nickel mine BCL Limited and its subsidiaries were placed under provisional liquidation due to non-profitability.
Kgomotso Abi, the Permanent Secretary in the Ministry of Minerals and Water Resources, said operations at BCL, which is the country’s oldest mine, have ground to a halt.
Abi also revealed that BCL subsidiaries such as Tati Nickel & BCL Limited are also part of the liquidation and operations at those companies have also been halted.
The 4,300 miners at the BCL and 700 others at Tati Nickel mine, which are government owned, will continue to be paid their salaries for the next 12 months, Abi said.
Both the board and management of BCL have been formally dissolved as the liquidator has taken over. Abi said the liquidator will hand in his report on BCL to the government on February 9, 2017.
“BCL is technically insolvent and Cabinet was worried that should any creditor apply for its liquidation government would lose control of the mine,” said Abi.
Like a majority of countries in the region, Botswana’s projected economic growth for the year depends on good mining output and better commodity prices.
Kitso Mokaila, the former Minister of Minerals Water Resources and Energy who was recently redeployed to the Ministry of Transport and Communications, said the BCL Mine was operating at a loss, thus taking a lot of money from government coffers, something that also impacted negatively on the economy.
Mokaila is member of a Cabinet sub-committee that President Ian Khama assigned to look into the affairs of the BCL Mine challenges and consequently submit their findings to Cabinet.
He said the government previously made efforts to resuscitate the mine, but costs went up close to P5 billion, therefore it was no longer feasible to run the mine.
The sub-committee recommended to President Khama that the P8 billion needed to keep BCL afloat was unaffordable. Earlier in January, the government rejected a request by BCL management for a P1.5 billion equity injection.
The BCL management was advised to go to the market and float a bond.
BCL’s troubles were also partly a result of the ongoing collapse of commodity prices. BCL extracts some of the lowest grade ores in the world in very deep shafts, and at depths in excess of 1,000 metres underground – making the mines dangerous and very costly to operate.
The situation was not helped by the failed April 2015 expansion strategy marked by the signature acquisition of all Norilsk Nickel Africa assets, which included the troubled Tati Nickel Mining Company (TNMC).
BCL, established in 1956, operates Botswana’s oldest mine and consumes about 20 percent of the country’s electricity.
Copper mines in the world’s biggest diamond producer have been struggling in the past two years with two others, African Copper’s Mowana Mine and Discovery Metals, liquidated in 2015.
BCL mine incurred a 1.2 billion pula loss in operating costs in 2015 due to a slump in commodity prices.
BCL has also been engulfed in a string of fatal accidents and unable to make profits. Four miners died at BCL mine on May 29, 2016, while on duty at the mine. The accident involved 10 employees with the remaining six said to have sustained serious injuries.
Due to low commodity prices it is feared that Botswana mining sector is expected to shed thousands of jobs in a massive haemorrhage that runs across the sector, from copper to diamonds.
Regina Sikalesele-Vaka, the chairperson of the Mineral Development Company, which is a government company that oversees the mining industry, said liquidation of the BCL mine was necessary since it was costing government financially.
According to Sikalesele-Vaka the provisional liquidation process would give information on the way forward.
“The process will also determine employees’ exit packages and also inform government on what assets the mine had as well as what could be done with assets and other operations at the mine. Therefore I request employees to cooperate with the government and liquidator,” she said.
The liquidation of BCL is on the back of a February statement issued by the Mining Industry Association of Southern Africa (MIASA) which is an association of Chambers of Mines in SADC. It warned of more job losses in southern Africa’s mining sector, saying the Southern African Development Community (SADC) lost approximately 70,000 jobs across all commodities.
“Considering a multiplier effect of seven, this translates to total jobs lost amounting to 490,000. This means up to five million people have been deprived of their daily subsistence considering that each employee supports between seven to 10 dependants. To make matters worse, a further 50,000 employees face the risk of losing their jobs if something drastic is not done urgently.”
MIASA had highlighted the need for policy consistency by governments to help the mining industry in the SADC region survive. MIASA represents chambers of mines from Botswana, Democratic Republic of Congo, Madagascar, Namibia, South Africa, Tanzania, Zambia and Zimbabwe.