BCL goes under the hammer
Mbongeni Mguni | Monday October 10, 2016 19:00
However the BCL’s 5,000 workers remain employed pending the finalisation of the liquidation process, the mineworkers were informed.
Cabinet on Friday took the decision to shut down the BCL mine with immediate effect, while a liquidator to be appointed this week will advise cabinet on any options they have.
Over the years BCL, which started operations in the early 1970s, has carried on past its lifespan even after being abandoned by investors, leaving government as the sole shareholder.
Minerals, Green Technology and Energy minister, Sadique Kebonang told The Monitor in a telephone interview that BCL would have required P8 billion to keep it running, an option he said would have crippled the economy.
Ministers Kitso Mokaila, Kebonang, Vincent Seretse, and Nonofho Molefhi travelled to BCL mine Friday to deliver the bad news to the mine management and Botswana Mine Workers Union. The urgent meeting started at 6pm and ended at around 8.30pm.
On the same day some mine operations were immediately suspended and employees who were supposed to report for duty that night were sent back.
Employees were summoned to an urgent meeting on Saturday morning where they were officially informed on the decision to liquidate the mine and that no worker should report to work until further notice. However , the BCL workers remain employed by the company until the liquidation process has been completed.
It is understood the decision to shut down the mine was taken at a cabinet meeting that started at 8am and adjourned at 2pm.
Immediately after the end of the cabinet meeting, a delegation that comprised cabinet ministers was dispatched to Phikwe to deliver the news to the BCL management and the mine workers’ union.
Today government will approach the High Court seeking a provisional liquidation order, paving the way for the appointment of a liquidator for the BCL.
Former Minister of Minerals, Energy and Water Resources Mokaila explained that government considered a decision to apply for a provisional order of liquidation at the High Court as a viable one considering circumstances at hand.
Mokaila explained that by taking a decision for a provisional order of liquidation government considered the interest of the country at large not BCL alone. He said if creditors were the ones to apply for BCL provisional liquidations the implications would be worse than when the company applies because it remains with the control to appoint a liquidator.
“Production is suspended until a liquidator is appointed who then will evaluate and make an informed decision on whether to look for investors to buy the mine or close it down,” he said.
He added that he was not in a position to answer a lot of questions until the liquidator makes recommendations.
For his part, Kebonang said, “To keep it going, the cost is P8 billion and if you sink that into BCL, you have to shut down the entire economy, meaning no provision of free antiretroviral drugs or free education,” he said.
Kebonang said a court process was underway to appoint the provisional liquidator by Monday. He said thus far, none of the more than 5,000 employees of the mine had lost their jobs and the liquidator would decide on the way forward.
“The liquidator will assess the situation and see whether he can reorganise it and if he cannot, then look at winding it down. Currently, no one has lost their job; we have just switched off the machine so we can assess the operations, the equipment, the safety environment and others, which cannot be done while operations are ongoing,” he said.
Kebonang said government remained the sole shareholder of BCL Mine and would await the liquidator’s recommendations on whether to sell off the mine.
“For the past 20 years, BCL Mine has not been doing well except for a short period when commodity prices were high. Government initially held 15% shareholding and the other shareholders kept abandoning it because it was not profitable,” he said.
“We have had to subsidise it and keep it going. The decision is not only about the current commodity prices, but the cost of mining because currently, we are mining at $8 per tonne and selling at US$4, and that’s a huge loss,” he said. Mokaila explained that BCL has been faced with serious financial challenges that predated his first cabinet appointment as the minister of minerals in 2012. He said that they looked at ways the mine could be assisted and employed all strategies that could prolong the lifespan of the mine like Polaris 11. He explained that BCL needs a cash injection of P1 billion to survive despite that it was granted a P1 billion loan by Barclays Bank with government as a guarantor.
He added that initially BCL was a private company in which government held a small stake but major shareholders left the company until government remained a major shareholder. Mokaila said this was necessary because government wanted to preserve existing jobs and ensure survival of the town of Selebi-Phikwe. He said that was during a time when commodity prices were favourable until they took a knock in 2008.
He also said BCL as an old underground mine now mines low grade ore in the midst of unfavourable market prices. He further explained that after thorough considerations the mine decided to acquire 50% shareholding in Nkomati mine in South Africa to help the smelter to operate to its maximum capacity.
The prices were agreed based on the commodity market prices then. “However BCL could not be able to pay the amount of money that Nkomati and other service providers had requested. We went to Nkomati to negotiate with them to reduce the price but they refused.
We needed P3 billion to acquire 50% shareholding in Nkomati and now we need another billion to keep BCL running. It is tough on the government’s side as the only shareholder to have that money,” he added.
Chairperson of the newly-established Mineral Development Company, Regina Vaka-Sikalesele said the liquidator would evaluate the condition of the mine and come up with a proper plan after being granted powers by the High Court. She said the liquidator may look at all mine operations and identify redundant areas that need to be rid of, or if nothing at all may order a closure. She also said proper plans would be made with the human resources department concerning employees.
However, despite not coming to work, employees remain employed by the company and are entitled to all their dues until a liquidator makes a decision. Those who work at the shafts are expected to report to their shafts for feedback on Monday morning.