BCL buys Tati Nickel, SA mine
Onalenna Kelebeile | Tuesday October 21, 2014 17:14
The transaction agreement included its 50 percent participation interest in the Nkomati Nickel and Chrome Mine in Mpumalanga province, as well as its 85 percent stake in Tati Nickel to BCL. This acquisition of Norilsk Nickel’s interest in Nkomati marks the first significant investment by BCL into South Africa under Polaris 11 strategy.
BCL Public Relations and Marketing Manager, James Molosankwe, said the total expected consideration for the assets payable by BCL to Norilsk Nickel amounts to US$337 million (P3.1 billion). Efforts to get separate Tati Mine consideration in the multi-billion deal proved futile. BCL officials said further details would be unveiled in due course. The acquisition of Tati Mine will see government taking full control of the nickel mine. The state already held a 15 percent stake. In addition to the cash transaction, BCL would assume attributable outstanding debt and environmental and rehabilitation liabilities associated with each asset. The agreed deal structure envisages the assignment of the Nkomati concentrate off-take agreement from Norilsk Nickel to BCL.
Norilsk Nickel is expected to enter a matte off-take agreement with BCL. The matte would be supplied for processing to Norilsk Nickel’s Harjavalta refinery in Finland.
BCL chairman Akolang Tombale said this transaction was a significant anchor to the Polaris 11 strategy. “BCL has now evolved to a regional player with high quality mining assets supported by a strong metallurgical complex,” he said.
With copper resources at BCL nearing exhaustion, the mining company has considered diversifying its operations under the Polaris strategy. In addition to venturing into steel manufacturing and mining of other base metals, BCL has considered fully utilising its refinery capacity and energy production. “This marks Norilsk Nickel’s full exit from its African business. Adding to earlier disposals of the Company’s Australian assets also marks the complete exit from all former operating international assets, but Finland.
The simultaneous assignment of the Nkomati concentrate agreement and entering into the matte agreement with BCL are in line with a new Norilsk Nickel’s downstream production re-configuration strategy,” Norilsk Nickel Deputy CEO, Pavel Fedorov said.
Molosankwe indicated that for BCL, the transaction had strong strategic rationale and allowed for the treatment of both Tati Nickel and Nkomati concentrates at BCL’s smelter. He noted that this had significantly optimised operations and delivered increased economic and social benefits to the region. Completion of the sale is subject to regulatory approvals and customary closing conditions. The closing transaction was not subject to any financing conditions.
Nkomati Nickel and Chrome mine is the only primary nickel producer in South Africa. In 2013 Nkomati produced 23.8 thousand tonnes of nickel contained in nickel concentrate. Tati Nickel includes Phoenix open pit nickel mine located east of Francistown and the Selkirk underground nickel mine, which have been put on care and maintenance since 2002. Government wholly owns BCL. It has approximately 5400 employees and boasts annual revenue of over $180 million as well as total assets of $ 700 million.