BCL dodges bullet in SA
Mbongeni Mguni | Friday March 8, 2019 12:55
At Christmas, Norilsk suddenly dropped its demands, saying it was terminating the contract and would rather focus on pursuing damages under arbitration. The Court of Appeal recently cleared the way for arbitration to begin in London.
This week, African Rainbow Minerals, which owns the other 50% in Nkomati, said the Mpumalanga mine’s struggles had continued in the six months to December 2018.
Nkomati reported a headline loss of R186 million (P140 million) in the period due to “lower nickel and chrome sales”.
“ARM has completed its review, given the mine’s operational challenges, cash support that could be required from the partners and the relatively limited [eight-year] life of the open pit mine,” BusinessDay quoted ARM executives saying. Analysts in South Africa’s mining sector, however, told BusinessDay that Nkomati’s future was uncertain given “ARM’s history of disposing unprofitable assets”.
“Given ARM’s history of disposing unprofitable assets, such as its Lubambe copper mine, which it sold at the end of 2017, the future of Nkomati in the company is not certain.”
According to ARM’s interims, Nkomati’s slide over the years has been due to a decline in grades, in ability to generate sufficient cash and an increase in production costs.
In the aftermath of BCL’s closure in October 2016, liquidator, Nigel Dixon-Warren, Selebi Phikwe West legislator, Dithapelo Keorapetse and a host of former BCL managers have said the $271 million deal to purchase Nkomati and other assets from Norilsk was grossly overvalued.
BusinessWeek previously reported that BCL was one of two bidders for Norilsk’s assets and heavily outbid its rival in the race.