Businesses wilt in the slipstream of BCL�s closure
Onalenna Kelebeile | Friday October 28, 2016 16:07
The town has been robbed of the P60 million BCL mine workers were paid every month and spent on the various businesses. The mine itself single-handedly supported the north-eastern town with supply contracts and purchases, over the years.
Workers at the mothballed mine are slowly adjusting to the fact that their jobs are in the wind. Together with them in misery is a large contingent of employees of contractors, who also reported to work as usual on the fateful day only to find the mine out of bounds.
While BCL workers and their union use available channels to squeeze out their benefits, those who were engaged by contractors face an even more uncertain future. Many, as the union has cautioned before, work on loose contracts where they can be dismissed at the drop of a hat, without benefits.
Many contractors are not yet sure how they will get paid for the jobs they already did. Everything is in the hands of the liquidator.
One such company is South African-based, Bulk Mining Explosives that supplied the mine with explosives. It had around 10 employees who had to go back home.
AT&T Monnakgotla also had a five-year contract with BCL that started in 2013 to provide transport services for employees. The company had 10 buses contracted to the mine but they are no longer visible on Selebi-Phikwe roads.
The bus titan’s founder, Abel Monnakgotla says they have not received any communication from the mine about the liquidation.
“We are governed by a non-disclosure contract with BCL therefore I cannot disclose some information regarding our contract with the mine.
“I am however hopeful that the mine will duly communicate and relieve us,” he said.
Another contractor, ITA, had 25 employees who were attached at BCL. The company’s director Ignatius Fourie has equally not received any communication from the liquidator.
“We are affected as a contractor on site and we are waiting to hear what BCL will say. We will take action accordingly, ” he said.
According to Fourie, ITA had concluded its previous contract with BCL in December 2015, but started working again in the mine in June this year in a contract that was supposed to run for three years.
“It is unfortunate that employees worked for a short time. Some had just quit the mine to join the company. We are fully committed to supporting our employees, the community and BCL so that it recovers again,” he says.
ITA employed 23 Batswana and two non-citizen managers.
Other companies contracted to BCL include PIMP, Atlas Copco which had about 71 employees attached at the mine, Ihawu Holdings, Vivo Energy, Hansa Flex, Logistics Transporters, Sandvic, Leco, local restaurants and others.
The BCL mine was also a major shareholder in Pula Steel, holding 61% equity.
Executives at the steel company insist that the liquidation will not have any impact on operations. Pula Steel corporate services director, Brian Mosenene says BCL was not Pula Steel’s main customer hence the liquidation will have no effect on the steel business.
He also says BCL is not Pula Steel’s sole scrap supplier and the steel company is currently buying from other sources. According to Mosenene, BCL has the option to divest from Pula Steel as per the shareholder agreement.
“The only effect is for BCL to make a decision about their shares. But if they continue to maintain their shares in Pula Steel it is up to them because we cannot dictate to them. There has never been a call for BCL to inject any capital in Pula Steel but if there is a share capital call, all shareholders are liable,” he explained.
BCL was also a major customer of Water Utilities Corporation, consuming 16 million litres a month and paying P2 million a month.
According to WUC’s communications manager, Matida Mmipi, BCL has been an important customer for many years and their business has been important.
“However, WUC’s Selebi-Phikwe operation services cover a very large geographical area therefore if BCL is not in the picture it does not necessarily mean that WUC will need to reduce staff.”
Even ahead of the liquidation, the slowdown of activity at BCL and Selebi-Phikwe had been noted by Business Botswana, the main business lobby group in Botswana.
Companies were feeling the pinch in Phikwe, with some winding up, retrenching or even relocating. Business Botswana has experienced a serious decline of its membership in Selebi-Phikwe as most companies have relocated to other areas as a result of the unfavourable business environment.
Business Botswana, formerly Botswana Confederation of Commerce Industry and Manpower (BOCCIM), had close to 40 members in Selebi-Phikwe at its peak but these numbers have dropped to a shocking five this year, including BCL mine.
The survival of the town is dependent on the resilience of the remaining local business people who have decided to stand firm despite losing their main customer, BCL. However even this is not cast in stone, as hard decisions may have to be made when BCL workers begin returning to their homes this month. The workers received their last salaries recently.
Business Botswana vice president, Palalani Moitlhobogi explained that BCL injected a lot of money into the local economy and its health was directly related to the health of the town.
“This indicates reliance on the BCL mine at a more practical level. The current problems at BCL have brought to the fore the bigger problems that exist locally as many businesses rely mainly on BCL despite calls to diversify away from reliance on the mine.”
Moitlhobogi noted that almost all local businesses deal directly or indirectly with BCL and if the mine fails to pay its contractors, then they enter into serious problems. “My view is that efforts must be made to ensure that the financial problems at BCL do not recur in the next five years otherwise the town is dead. The town cannot afford a second blow,” he says.
According to Moitlhobogi, once a company winds up, it is difficult for it to open again. He hopes that government, with its expertise and resources, will ensure that this does not happen again.
He is concerned that there is no meaningful dialogue between SPEDU and local businesses on what can be done. SPEDU is the government funded agency tasked with leading the Phikwe region’s diversification to reduce its reliance on the BCL mine.
“Investment is gone. We used to have vibrant business here. We used to have the Selebi-Phikwe Diversification Committee that led a consultancy that eventually came up with SPEDU. The only opportunity and funding lies with money allocated to SPEDU,” he added.
Moitlhobogi said Business Botswana’s role is to advocate for an enabling business environment. The organisation can only intervene when companies collapse due to regulatory issues.
“We do not have the financial capability to assist our affected members but we can only discuss with our members in the financial sector to assist affected companies, that is if they approach us.”
Dinesh Textiles, the only surviving textile business in Phikwe, has incurred an 85% revenue loss in the last eight months because BCL sub-contractors, who were their main customers, stopped placing orders as a result of cash flow problems. The company’s business manager Jacqueline Vanessa Rogers revealed that not a single order has been received since January, forcing the company to lay off 35 workers. “If we do not receive any order by the end of this month we will be forced to retrench another 30 workers. If the current situation persists then we are going to be seriously affected. “Management once considered relocating from Selebi-Phikwe but thought of workers who would lose their jobs and decided to observe the situation for a year,” she says..
Dinesh Textiles used to be the town’s second highest employer after BCL Mine with 1,200 workers between the year 2005 and 2006. It has been cutting staff since then. Last year the company only had 186 workers and this year it is about to downsize further to 133.
For many businesses, the future is as unclear as the smoke that used to bellow from the smelter, during the mine’s heydays.