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BCL loses P33 per pound of nickel mined

BCL is experiencing serious cashflow problems
The minister of Minerals, Energy and Water Resources, Kitso Mokaila told parliament this week the current depressed international nickel prices are below the cost of mining, leading BCL to lose as much as $3 (P33) per every pound of nickel it mines.

He said the state-owned copper miner, which is struggling to ensure business continuity under the current climate, is failing to meet the operating costs of the current nickel prices.

According to Mokaila, it currently costs BCL about $7 to mine a pound of nickel while international prices are at $4 per poud.

“BCL is currently operating the lowest grade and deepest mine,” he said. “This crisis has been precipitated by the drop in the nickel prices below BCL’s current operating cost. About 70 percent of all nickel mines producers worldwide are operating at a loss.” In 2015, BCL produced 139,000 tonnes or 305 million pounds of nickel suggesting that the company could have lost over P10 billion from digging the nickel out of the ground. To mitigate the losses, Mokaila said government commissioned a review of BCL operations to optimise them and reduce the cost structure by aligning it with the current nickel prices to ensure business continuity under the current climate.

“Government is working through the Minerals Development Company Botswana

to ensure the robustness of the business plans that will allow sustainable nickel production at current prices,” he said.

Mokaila said the government was providing financial support for BCL to obtain bridging finance from financial institutions in the short term to ensure the business was streamlined to meet all its operating and capital costs in the future.

As at end of February 2016, the cash-strapped copper miner owed its 620 listed suppliers P595 million with P452 million owed to local suppliers and P143 million to foreign companies.

Mokaila was responding to a question by the Member of Parliament for Selebi-Phikwe West Dithapelo Keorapetse who asked him for an update on the cash flow problems at BCL, in particular the exact financial situation and if there was an ongoing investigation on how BCL sank into financial crisis. Keorapetse had also asked what the BCL board was doing to mitigate the crisis and what the government was doing to deal with the crisis and whether they would bail out BCL.




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