Warren-Dixon to sell BCL for P5 billion
Onalenna Kelebeile | Friday October 19, 2018 15:19
Nixon-Warren said they were currently seeking proposals from the business community to acquire rights to run the properties on a commercial scale.
Speaking during the SPEDU consultative forum, Dixon-Warren said he was also working with Pula Steel liquidator for potential investors to purchase the assets of the plant with the aim to reopen it. He added that BCL as the biggest creditor at Pula Steel was interested in seeing a successful disposal of the plant.
“There is 450,000 tonnes of scrap sufficient to sustain the plant for 10 years without buying from elsewhere,” he said. Warren-Dixon conceded to the forum that concerns over the length of time and costs of the liquidation exercise, were genuine, but promised that he would complete the exercise in the shortest possible time, with preferred outcomes.
“I need to be cognisant of the costs. I do not have sufficient funding to continue to work at the pace I started with, but I have to keep things going until I secure a buyer,” he said.
He said he has already started planning for a closure process in the event no buyer was secured because BCL, as an old and complex operation, has to be dealt with accordingly.
He noted that currently he was engaging with two potential investors though the process was still at an early stage. He said he has to establish their background, knowledge, financial capacity and experience to take over the mine.
He however regretted that the quality of information that the mine had prepared before closure was not sufficient to determine the mine’s commercial opportunities to potential investors.
The liquidator elucidated that investors were expected to assess the mine properties at their own costs for the next 12 to 18 months.
“Once the assessments are complete, then we make the final offers for creditors to decide,” he said.
He revealed that 180 interested parties have so far approached him, but he rejected them as they did not meet the standard requirements.
“I want to make sure that I deal with experienced people to run this mine not spend time on interested parties without the capacity,” he added.
He encouraged investors to engage in joint ventures, especially with the involvement of Batswana as shareholders in the business, which he said would need P5billion to become operational again.
He added that the plan to sell the mine remained unchanged and that potential buyers should not stress in regard to proper maintenance of the plant. This, he said,was because of the potentially lucrative commercial deals coming the way of BCL Mine because of the demand for copper and nickel as the world is moving towards the use of electric vehicles. “Because of no new resources, BCL would be viable at some point. When global resources decline, then BCL would be the only best option.
“Currently, metal prices have improved and projections are that they will increase further hence heightened interest on BCL and Tati Nickel,” he said. He added that reopening the mine would require a lot of money and that the reopening would not happen overnight otherwise.
“Without a buyer the mine would eventually close down and the site would have to be cleaned up then we would see how the infrastructure can contribute towards the economic development of the town. The liquidator said his overall strategy as enshrined by law was to dispose of all the mine’s assets for the benefit of the creditors.
He added that in a long standing complex operation like BCL, he may reduce obligations with regard to the value to the creditors and said he has to minimise the obligations because creditors have to be paid from the money the estate has.
“For me to sell the mine, it has to be attractive hence the need to prepare for a proper rehabilitation exercise. For the estate to be attractive, I need to retain its value hence I have kept the underground open to maintain the infrastructure and water,” he said.
He further noted that creditors are not going to be paid in a long time unless the assets can be sold for a significant amount of money or ultimately get nothing at all if nothing is sold.
He explained that the BCL lost P5 billion in its operations in the last five years prior to liquidation and now between P20 million and P25 million was being spent monthly.
“I have suggested to government to place the mine on long term care and maintenance because of future opportunities as it would then be cheaper to reopen than the expensive closure exercise,” he said.
Dixon-Warren said in fact, the mine should have been restructured many years ago because it was operating at massive losses with serious safety issues.
He said their assessment proved that proper maintenance was not carried out and there was no mining plan and no money to develop the mining plan.
He said the housing aspect of the mine has been a problematic area, especially their legal status in that 2,000 residential properties are under 27 title deeds hence they cannot be sold until this is regularised. He, however, said about 60 are ready to be leased into the market.
For his part MP Dithapelo Keorapetse said closing BCL was not the right course of action and wondered if government could inherit the environmental rehabilitation liability or at least share it with the prospective buyer.
He said Pula Steel was designed by people who wanted to plunder BCL.
He said it was unclear from the onset where the company was to sell its low quality steel billets when there were stockpiles and cheap imports in the market.