Molale, Dixon-Warren meet as BCL liquidation sours
Mbongeni Mguni | Friday July 27, 2018 18:00
Parliamentarians recently reacted with anger after Molale revealed that BCL’s liquidation has thus far cost P1.1 billion, with the liquidator and his team paid an average of P2.2 million per month. Further stoking the legislators’ ire were Molale’s revelations that takeover partners were yet to be identified and that the liquidator had projected that the whole process could take up to seven years.
The minister appeared to attack the liquidator several times in the heated Parliamentary debate saying he would use Monday’s meeting to demand answers on the time taken to wrap up the BCL matter. Molale also accused Dixon-Warren of foiling a deal to pay Norilsk Nickel more than P500 million as a settlement for a US$2.7 billion lawsuit brought by the Russian giant over a botched equity deal.
“I am saying as the minister responsible for mining, I have a very serious problem because we cannot just elongate this ka gore it is a cost to this nation,” Molale said under pressure from legislators on the time taken to finalise BCL mine’s liquidation. “Next week ke kopana le liquidator. I want him to know my thoughts about what he is doing and nobody should say that I am interfering in the judicial process because this matter is a serious problem that has to be dealt with as a matter of urgency.”
BusinessWeek has established that Monday’s meeting comes as the budget for care and maintenance activities at BCL Mine runs dry, with creditors already having been asked to contribute. BCL Mine presently employs some 400 workers keeping essential components and areas in good condition, either for an anticipated mine sale or in line with the development of the mine’s closure plan.
In line with the Companies Act, creditors who have successfully proven claims against BCL can be asked to contribute to the administration costs of the liquidation. While those contributions are refundable at the end of the liquidation, there is no guarantee creditors will get full or partial refunds. Dixon-Warren told BusinessWeek that going into the meeting with the minister, the goal would be to clear misunderstandings on both sides.“I understand that people are saying we are using a lot of money.
“What I would say is that that money should be seen as an investment in the future.
“It’s keeping 400 people employed, it’s keeping some economic activity going on in Phikwe and if we can keep that going and start to implement these other projects, we will see employment increase as a result of the BCL legacy itself.
“Those funds also keep alive the opportunity to actually sell the mines to be operated again in future,” he told BusinessWeek.
The liquidator plans to shed excess assets not core to the plans for BCL, which include scrap metal and, soon, housing properties.
Dixon-Warren said while the liquidation costs appeared high, they paled in comparison to what was required to have kept BCL Mine going.
“BCL needed P2 billion immediately, compared to what we’ve used which is P1.1 billion. It then needed another P2 to P3 billion to fix the infrastructure and plant.
“It would have cost a lot of money if it had continued to trade, but we are past that because the decision was made to liquidate.
“We need to say ‘what’s the best outcome to achieve even if it’s not today or tomorrow or it takes a few years?’
“The reality is that we can only work with the information and plans we have.
“My job is to convince government that the plans we have are logical, make sense and are required by law.”
He added: “What I do understand from some quarters in government is that some don’t understand why we need to keep spending money on BCL.
“I need to convince government that it’s a question of how much, not if you need to keep spending.
“If we can manage the costs, we can reduce what we need to spend and hopefully getting something back. If we don’t manage the costs, we may end up with a bigger bill.
“If we have to walk away from everything, there’s going to be a management disaster and other matters that will require much more spending”. BCL Mine has a P3.2 billion environmental liability for the rehabilitation of its environs, one of the key factors keeping potential investors away.