Lobatse Clay Works, one of the border town's economic mainstays, has suspended operations, with workers unpaid for April, as an expected P60 million equity injection continues entangled in disputes at the highest judicial levels.
Lobatse Clay Works, which has a workforce estimated at 500, was due for a P60 million cash injection by the Botswana Opportunities Partnership Fund (BOP) which would have taken up 80% equity in the 26-year-old company. The iconic firm, which is wholly-owned by the Botswana Development Corporation (BDC), has been in financial stress for several years and the BOP was seen as a timely investment.
The Fund, established by Capital Management Botswana (CMB) and funded by the Botswana Public Officers Pension Fund (BPOPF), is the subject of a hostile battle between the two former partners which now awaits a Court of Appeal decision in June.
Last September, CMB had asked BPOPF for P77 million to invest in Lobatse Clay Works and Yarona Media Holdings, as part of the P477 million BOP investment package agreed to in 2014.
The pension fund shot down the request citing numerous alleged violations of the partnership, leading to the lengthy legal battle still raging.
This week, Botswana Mine Workers Union general secretary, Mbiganyi Ramokate said employees at Lobatse Clay Works were stuck in limbo as the company was neither willing to officially release them and pay retrenchment packages, nor reopen the plant for work.
“The management told workers that they would suspend operations while negotiations continued for the new management and new shareholders,” he said.
“They then said there was a court matter awaiting judgement and everything would depend on that. “We have met numerous times with management and we have said, if management says there is no business, you have to pay
“Workers report that management has been paying salaries in dribs and drabs since last year, but April’s salaries were not paid. Management had also committed to paying the workers’ bank loans and insurance, but that has not happened either and workers are receiving threats.” He added: “We are not even sure what’s going on anymore and we have asked for a meeting with the management this week”.
On Wednesday, Lobatse Clay Works’ managing director, Ronald Solomon referred BusinessWeek enquiries to the BDC, where corporate affairs and strategy head, Boitshwarelo Lebang said the Lobatse firm was undergoing transformation. “The business is currently undergoing transformation following a series of challenges it has faced, including market conditions.
“BDC’s focus has been on finding a long term sustainable plan to turn the business around by bringing on a strategic partner with the requisite industry experience and capital to drive the business whilst we reduce our position to a minority one.
“We are currently in talks with a potential strategic partner around the restructuring and are therefore not at a stage where we can share any further information with the media or the public and will readily do so at the earliest opportune time,” she said. In its hey day, Lobatse Clay Works produced more than 30 million clay stock bricks and face bricks per year, many of which built up most of the country’s government buildings, institutional offices, private homes, universities and others over the years.