Government now wholly owns BCL
Onalenna Kelebeile | Friday August 1, 2014 16:32
BCL board chairman Dr Akolang Tombale has revealed that the move was necessary to give government effective control of the miner particularly in view of its drive to diversify the local economy of the Selebi-Phikwe region. Tombale told a press conference this week that in pursuit of its Polaris 11 strategy the company has undertaken a number of initiatives geared towards cleaning the balance sheet. This was not only to ensure the company is debt free but is also to position it to derive the shareholder value.
“These initiatives are restructuring the company ownership and the debts settlement,” he added.
Tombale added that BCL has settled the sum of P3.3 billion to make good its indebtedness to the government through a combination of P1 billion in cash and the balance of 2.3 billion by way of issuance of shares.
“It was further agreed to reduce the tax burden from its current 40 percent to the industry norm of 22 percent. The royalty has also been reduced from 3.41 percent on gross income to 3 percent,” he said.
He explained that government has further supported the restructuring initiatives by the board and its management by agreeing to convert its preference shares valued at P251 million into ordinary shares to ensure that the company attains a debt free status.
With a clean balance sheet, the chairman said BCL is now positioned to approach capital markets for funding productive assets that will be able to independently service its obligation.
“The company is now debt free aligned to the Polaris 11 strategy and well positioned to pursue growth in Africa through mergers, acquisitions, joint ventures and can effectively leverage its technical capacity in mineral extraction built over 40 years,” he noted.
He explained that government has vast experience in owning private entities and that it is their interest to get into partnership with a suitable partner. He noted that government has plan of using BCL as an industrialisation vehicle. He cited that South Africa was built by Anglo American, which made the country what it is today.
“BCL has that chance and we have the ability and experience to play in that space,” he added.
Dismissing fears that BCL ownership by government would compromise private sector initiatives Tombale explained that the move is driven by profits. He reasoned that no private company would be attracted to partner with a loss making entity.
Tombale explained that government invested P680 million in the BCL mine in early 2000 to keep the mine afloat and that his task as the Permanent Secretary then was to help the mine become viable.
This is why a consultancy was appointed to assess the mine and made recommendations, he said. Tombale noted that historically ore production in the mine has been a challenge and said during its inception three minerals copper, nickel and cobalt were discovered but geological assessments indicated that the deposits would have been financially more profitable if it had contained more of cobalt than nickel and copper.
“However government and shareholders decided to proceed to mine these deposits up to date. BCL now has new problems that include deepening shafts, high production cost, depleting resources and safety of our workforce,” he said.
He added that other encountered challenges include the fact that ore-body at number 3 shaft is narrowing so that the large cut and fill stopes are being replaced by narrower open stopes and board and pillar mining. The other challenge is skills, experience and accountability particularly at supervisory level,” he said.
The board chairman further said BCL mine has had a long difficult journey characterised by low-grade minerals and fluctuating metal prices, declining production trends.
He was however optimistic that the current year will be a better year. It was also highlighted that BCL’s production cost has remained a challenge and that the mine experienced a P200 million loss last year.
The BCL general manager Daniel Mahupela explained that the mine management has been given a six months window period to look for a strategic partner to reduce government involvement.
“Many countries have shown interest to partner with us looking at the government’s involvement in BCL and generally Botswana is the best country to partner with.
We have been approached by companies from South Africa, Zimbabwe and Zambia,” he explained.