After a bubbly start to 2011, a cruel twist of fate in which BCL Mine's 60-day shutdown mid last year coincided with a fall in base metal prices, has knocked the copper and nickel mine's revenues.
Before the mid-June shutdown of the smelter, international copper prices were on a seven-month gallop during which they hit a historic high of US$4.64 per pound in February 2011, while nickel prices largely tracked the same movements.
However, beginning in July, base metal prices plummeted on global growth concerns, with copper eventually shedding 23 percent of its value in 2011 while nickel lost about 25 percent.
The net effect was that the shutdown stopped BCL Mine's operations for 60 days while the price crash lowered the revenues the mine received from the production it began pumping out after processes resumed. Bank of Botswana figures released recently suggest the extent of the twin blows on BCL Mine.
Botswana's copper and nickel exports averaged P1.11 billion in the first and second quarter, before dropping to P454.4 million in the third quarter of 2011. The exports were pegged at P274.1 million and P178.6 million in October and November respectively, suggesting a depressed fourth quarter performance.
Although the Bank of Botswana includes figures from both BCL Mine and African Copper's Mowana Mine, the latter's output comprises more than 90 percent of national production. A copper
"The mine would have pumped millions into the shutdown, expecting to recoup these funds from operations in the latter part of the year," said the analyst who declined to be named.
"Coming out of the shutdown and into a price slump would wreak all forms of havoc on carefully laid financial plans. We can only hope the mine had built up sufficient cash reserves from the previous years of base metal highs, from which it can buttress itself against the price shock."
BCL Mine produced 25 127 tonnes of copper and nickel in 2010 - a three-year high - which combined with high base metal prices during that year to allow it to build up its cash reserves.
With the stronger finances, the mine had said it expected to finance its June 2011 shutdown without resorting to external credit as it had done in previous years.
The mine also budgeted P200 million to expand its ore production and awarded its workers a wage review ranging from six-and-half to eight percent.