Hype Over BCL Mine Reopening Heightens
Onalenna Kelebeile | Monday August 27, 2018 14:06
SELEBI-PHIKWE: Residents’ greetings are punctuated with confirmations that they too heard the news bulletin and their conversations have anecdotes from mineral resources, green technology and energy security minister, Eric Molale’s utterances that clearly stated the reopening would be made ‘very soon’.
How soon to them is not an issue but the news has instilled a previously lost hope that the town would eventually bounce back to life.
There are reports that those in authority have held several meetings both in Gaborone and Selebi-Phikwe while arrangements are at an advanced stage to reopen the mine. It was further reported that Molale had scheduled to go to the mine for a site visit last week. From the way it appears on the ground government and liquidator are parallel on the reopening of the BCL Mine. Despite the latest reports the mine liquidator, Nigel Dixon-Warren maintains that given the complexity of the mine operations it cannot reopen as soon as it is assumed.
“Again the only way government can reopen the mine is for it to come and make an offer to buy BCL from me as the liquidator. It does not matter how much is needed to reopen the mine, but there is just no hope yet,” states the liquidator. He reveals that so far no offer has been made to him and that they have discussed it, but the government wants the liquidation process concluded as soon as possible.
He, however, says he cannot rush the process otherwise they would not come up with a sustainable solution. “If I am forced then I would have to auction the mine but enough would be salvaged. Closing the operation down would not be a viable decision either because fundamentally the mine value would go up as it is driven by the metal prices,” he says.
The liquidator points out that until they know what it would cost to reopen the mine, the commercial value of the mineral deposits and costs to be invested on infrastructure then its worth would be known.
“We have done some work through our consultants on the cost of reopening of the mine that included optimisation and prepared an assessment and we came up to a value of P2 billion. The mine is at a negative value as we speak.”
He notes that to rebuild BCL; the smelter alone would require P15 million to P20 million, P5 billion for the concentrator and P1 billion for each shaft. Dixon-Warren says a lot has already been spent on BCL, but the problem with the mine is the worth of the underground.
“Not much was done to convert resources into reserves. BCL has no reserves, but it was still mining which was bad because you cannot continue to mine when you are not sure if it is economically viable to do so. The cost of mining was much higher than its sales,” he reveals.
Dixon-Warren says it is his wish for a solution to be eventually found for the mine, but it would take some time as he is still negotiating with potential investors. Even if a deal is signed today it would take a year for the investor to actually commit to reopening, as buyers make investment decisions based on necessary information, he argues. Equally, the liquidator indicates that even if a buyer is not secured it would take about 10 years to close down the mine.
“My position is that a decision to close down the mine should never be taken but government should instead buy the assets and place the mine in a low cost state as its value would be increasing with time so government must look at the long term benefits.”
The liquidator has applied for additional funding from government that is yet to be effected. However, he could not disclose how long the available funds would sustain the care and maintenance exercise.
“There are legal remedies that could be applied if government does not come forward. I would also have to issue notice to creditors if we run out of funds. The only concern is lack of understanding why more money is needed. I will, however, continue to engage with government so that we reach a common understanding,” he says.
According to Dixon-Warren, P3 billion to P5 billion would be needed to reopen the mine and an additional P1.5 billion to comply with the environmental rehabilitation and then the mine should be operated commercially. Care and maintenance on the other hand requires P250 million annually from government. He says there are plans to reduce the cost and points out that power cost have been compressed from the initial P11 million to P4 million a month while water dropped from a P1 million to P300, 000 a month. “We also have a seven to 10-year supply of scrap that we can sell to Pula Steel as we seek to maximise revenue until we find a buyer. We have also signed a contract with the council to rent them out 60 of our housing units,” he says.