Weak prices stymie plans for pioneering metals refinery
Mbongeni Mguni | Thursday June 30, 2016 14:48
Last year, government funded a prefeasibility study into the establishment of the refinery, which would use output from BCL, Tati Nickel, African Copper and Khoemacau mines, to produce pure metal that can be processed into final products such as copper cables and pipes.
Botswana Chamber of Mines (BCM) CEO, Charles Siwawa told BusinessWeek that while the prefeasibility study had shown that such a refinery could be viable, no further progress could be made due to the prevailing weak prices of base metals.
Weighed down by weaknesses in major global economies, base metal prices plummeted in 2015, leading to the closure of Boseto, Mowana, Thakadu and Phoenix mines as well as the near collapse of BCL mine.
“The results of the study indicated a modest return on investment and hence required more work to be done in the form of a feasibility study,” Siwawa said.
“We are still engaging the appropriate quarters in terms of the way forward.
“In the interim however there have been some changes that do not auger well for the project, namely the subdued base metals prices that has forced some of the mines to be uneconomical and hence shut down or placed under care and maintenance.
“The premise of the study is continual feed of a certain tonnage through the smelter/refinery.
“The demise of some of the mining operations has placed this study to be reviewed and await the upswing in commodity prices which of course we know will happen given time,” he said.
Development of the refinery is expected to boost the local economy through value added exports, while a downstream industry for finished nickel and copper projects, will also drive development of skilled manpower.
Siwawa said notwithstanding the troubles in the base metals sector, should funding become available, the feasibility study would be done and “just await the upswing for construction of the project”.
He said at present the cost of the refinery was yet to be finalised, but would be based on modular construction of the project and assume existing tonnage throughput.
The CEO explained that the advancement of the project would involve approaching potential investors for funding of the refinery.
“The next steps would be to develop a feasibility study that will support its predecessor within some certainty.
“It will also detail out some of the concepts to arrive at a higher level of confidence in the conclusions reached.
“Once the feasibility study has proved the concepts, then investors can be approached to start construction of the project.
“Indeed even the feasibility study itself will require funding from other sources other than the government,” he said.
The refinery’s development is expected to increase Botswana’s attractiveness to foreign investors in the base metal’s sector, allowing the country to comprehensively package its marketing for investment in the minerals sector.