Dormancy programme starts at BCL
Onalenna Kelebeile | Friday May 4, 2018 13:57
The programme is necessary after investigations into the status of the Mine revealed that spending much money on care and maintenance was not viable. This is because the mine’s assets are no longer in good condition to continue being kept under care and maintenance as no potential buyer would be able to start operating the mine as it is. The dormancy programme is expected to reduce the care and maintenance cost that has been reaching P30 million to a lower amount.
“This simply means we are putting BCL on life support or a controlled comma and we must be prepared for BCL to be in dormancy for a longer period because as global resources for copper are dwindling, we on the other hand should not lose any resource because our nickel has a key component for electric vehicles, hence its demand would be high in the near future.
People would soon invest in technologies to process our low grade ore,” the mine liquidator Nigel Dixon-Warren said.
Dixon-Warren said they have already identified some resources underground that would be viable in future. Other areas such as the South East Extension (SEE) shaft are no longer viable. The shaft has run out of good quality ore. It is deep and very far from the processing facility.
Dixon-Warren said even if the commodity prices would double, the SEE shaft would still operate at a loss. Dismissing reports of a shutdown starting soon, Dixon-Warren explained that it was only one underground portion, being SEE, and said the shaft consumed 40% of the mine’s power supply on ventilation and emphasised the need to cut those costs. “We are working with regulators to ensure that the dormancy programme is done properly and safely. The shaft is no longer economically viable to be kept under care and maintenance, and I want people to be convinced that the mine can reopen in the near future,” he said.
He said the smelter remained on shutdown and would remain so for some time. He explained the BCL smelter has no viability without full production from BCL and Tati Nickel mines. He said the BCL smelter could not be utilised by other mines because it is a specialised facility designed to process concentrate from Tati and BCL.
“It is not a copper smelter, so it would need modifications to process concentrate from other mines and cited that P1 billion worth of modifications would be needed for it to process Nkomati concentrate. It is a very technical facility,” he said.
He also added that in efforts to make BCL attractive to investors, they were kick-starting cleanup projects that would also create employment opportunities and keep the Mine in a better condition for the new owner. The liquidator, however, said that he is not actively trying to sell the Mine assets in terms of the mining resources because it would not make them attractive to increase the value of the Mine.
Efforts are also underway to fast-track getting houses so that they can be rented out to the market particularly unoccupied ones to augment funding from government. An amount in the region of P7 million to P10 million could be raised from renting out BCL houses. The selling of assets that would never be needed in future such as scrap and shafts that have long stopped mining is also in the process. “I have submitted a request to government for additional funding to continue the liquidation process. We have already received a certain budget to work with for the current financial year,” he said.
He noted that he is engaging the government and hopes to be successful in requesting for funds, otherwise he would have to explore other available options that would of course come with their own challenges.
One of the projects the Mine is engaged in is exploring opportunities around the tailings dam to re-mine and extract ore. Drilling is expected to commence in June and the project would involve testing samples to understand the value to be reprocessed.
“We would then put out a tender for interested parties to respond and make an offer,” he added.
The assessment of scrap from BCL is ongoing and the liquidator would then negotiate with Pula Steel to consider getting the supply of scrap from the Mine and that would in turn generate income for BCL. The increase of income sources is expected to reduce requests for funding from government and the liquidator is working around the clock to get those projects up and running.
“We are currently preparing for the second creditors’ meeting scheduled for June 28, 2018 where an update of the BCL report will be made and on how I am going to conclude the liquidation. Selling of assets that would not be needed in future and the shaft that has not been in use would commence midyear. Up to last year it was not clear whether the Mine would be sold or kept open and sell the resources in due course. We must keep it open because resources do not disappear and it would be viable to Mine those resources in future,” he said.
Dixon-Warren further noted that it has been a challenge for interested parties to buy BCL because of insufficient information on its resources and that the cost of mining the resource was too high in the current environment. He said though mineral prices have been improving, the minimum time for somebody to reopen the Mine would be 18 to 24 months because so much work needs to be done to refurbish the dilapidated plant and prove that the resource is commercially viable.
He also said obligations under mining rights were some of the reasons why no major global mining companies has come forth to express interest to buy BCL.
“Those who buy the Mine would have to assume those environmental rehabilitation obligations. People already know the grades and quality of resource at BCL, hence why no major player in the mining industry have shown interest,” he said.