Brite Star rises on Phikwe�s horizon
Mbongeni Mguni | Friday September 8, 2017 16:42
Selebi Phikwe’s 50,000 or so residents are all wishing on a star. And not for the first time.
Brite Star, a global aviation group also invested in hospitality and training, plans to invest more than P1.4 billion over the next five years on a ten hectare plot of land near Selebi-Phikwe Airport, employing up to 3,000 workers.
Attracted by the tax and duty incentives package launched in March for Phikwe, the group plans to develop an aircraft assembly plant, research centre, maintenance workshop, hospitality facilities and pilot training centre. Brite Star works on a partnership model in America, Malaysia and Australia and in Botswana, will be seeking local partners.
The group says its recruitment will prioritise former BCL Mine employees and will engage with the Botswana Mine Workers Union.
Documents seen by Mmegi indicate that the project will commence at the end of October, with employment levels rising from 60 this year, to 440 next year, 760 in 2019 and finally 3,000 in 2022. Capital spend will rise from US$10.5 million this year to US$40.8 million next year, ramping up to a total of US$141.1 million by 2022.
A multi-billion pula project, employing potentially 70% of the numbers axed at BCL, upskilling and retraining workers and opening Phikwe up to the global aviation market, sounds almost too good to be true.
For many in the town, the picture Brite Star is painting in the hearts of residents, is one they have seen before.
A few years ago, a different star won the hearts of Phikwe residents. Polaris II, BCL Mine’s diversification and life-elongation strategy, promised residents an economy bolstered by a sulphuric acid plant, slag iron project and the returns of investments in several base and non-base metal mining projects.
Residents fixed their gaze on Polaris, named after the celestial body more commonly known as the North Star, confident that lifespan issues that had hovered over BCL Mine and Phikwe, were resolved.
Instead, Polaris precipitated BCL Mine’s closure as management continued pumping funding into the strategy, despite falling copper prices and revenues. This starved the core business to the extent that some BCL operations frequently ran out of fuel and spare parts, while paydays were postponed, shortly before the inevitable liquidation in October 2016.
The slag iron project, Pula Steel, closed in June 2017 and eventually entered judicial management earlier this year, while BCL Mine’s liquidator is scrambling for investors to buy other Polaris II assets, likely at a discount.
Polaris, however, was not Phikwe’s first heartbreak.
In the decades that the town has attempted to diversify away from a reliance on BCL, hope has sprung and then died from failed or smaller-than-hyped projects such as the agro-processing/tomato sauce production company, ARV and pharmaceuticals production and the infamous college of applied arts that was not.
Phikweans remember the hope sparked by the BDC factory shells and the proliferation of textile firms in the 2000s. They also remember the agony, when these firms closed shop and left when their incentive packages expired. They remember the closure of Talana Farm and the hopes once triggered by a plan to build BIUST in Phikwe. Palapye now hosts the university.
Brite Star president, Imre Katona is aware of the pressure and weight of expectancy in Selebi-Phikwe.
“As a group, we are ready and have everything in the right place, from capital to technical capacity,” he says.
“From our side, if everything happens from the government side, we are ready to start.
“This is not a fairy-tale, it’s real. Government officials from your country came to the US, saw this in operation and did a full due diligence including meeting with FAA officials.”
According to Katona, funds for the core business, the aircraft assembly plant, have already been mobilised, while additional finance is being secured from other sources. Brite Star is also negotiating joint ventures for the add-on ventures planned for Phikwe, such as the pilot school, maintenance services and hospitality initiatives with local Botswana companies.
“We are also grateful to our Malaysian partners, Nazrul and Ahmad Khairuddin and also our investor from a leading investment company in Australia operated by Cihan Eryigit for their support and confidence in Brite Star Botswana project, as well as to Richard Estenson, our US partner.”
Katona said Brite Star wished to work with other local Botswana investors in the hotel, tourism and maintenance centres and other sectors.
“We call upon those willing to invest in the various Brite Star projects to email us on investors@britestaraviation.com since we work on a partnership model in other countries where we have been established and we wish to replicate the same in Botswana.”
“We expect to commence at the end of October 20 if we secure the necessary permits and licences and sign for the land, incentives and others.
“With the pressure on us, we have said what we need and it’s time to perform to get these approvals.”
Besides Phikweans’ expectations and commitments from the MoU recently signed by Brite Star, the pressure is also about fulfilling the orders the company has on its books.
“We have a big order book from the US as well as various countries in Africa especially from the flight training schools, police, army, anti-poaching units and land border control departments,” Katona said.
“The Brite Star Botswana operation will be used a springboard for marketing activities into the SADC region and Africa as a whole.”
Phikwe will act as the production hub for Brite Star’s clients in Africa and the US, complementing other plants in the Middle East, Europe and Asia. For Katona, the town synonymous with copper and nickel mining, will be a flagship for high-tech, eco-friendly aviation components and aircraft.
“Our ‘problem’ is that we have more demand than supply.
“We have more orders than we can supply. In fact, for the next five years, we are already booked for orders, which is important for the business plan because it means the returns come on time.
“In addition, our Phikwe business’ viability will helped by the fact that we are standing on six pillars, being tourism, the hotel, pilot school and others, instead of depending on just production.
“In terms of strategy, it is not wise to have just one factory; you would rather have several territories from where you operate.”
Brite Star intends to produce in Selebi-Phikwe, the two seater and four seater models initially and from about 2021, start the six seater model production. The two seater models are mainly targetted on the pilot training sector that has shown huge potential in Africa.
The group’s plans are built using the latest composite technology making them very light and durable, safe, fuel efficient, with low operational and maintenance costs.
“We work together with worldwide companies on the hybrid models that will dramatically change the flying world,” Katona said.
“The Brite Star eco friendly models will have impact also on tourism since flying quietly for the safaris will protect the environment and not disturb the wildlife.
“Our aircraft have unique features such as additional land roll of 200-250 metres and improved fuel consumption using normal 95 motor gas. The fuel consumption is as low as seven to eight litres per 100 kilometres which competes with the fuel burnt by small cars.”
For all the buzz around Phikwe’s latest hope, a lesser known fact is that Botswana was not even in the running when Brite Star began scouting for an African presence. According to the group’s president, Brite Star was studying Kenya, Nigeria and Ethiopia earlier this year.
Botswana only came into the picture late in these considerations, courtesy of an outward investment promotion mission by the Botswana Investment and Trade Centre (BITC). That particular mission took BITC executives to Germany, Czech Republic and Hungary.
“We confirmed that what they want in Selebi Phikwe is not a pipe dream, but something that can brought to fruition,” says BITC acting CEO, Meshack Tshekedi.
“Brite Star will change the face of Phikwe.”
For Katona, the proposals the BITC laid on the table were simply too sweet to pass up. The Phikwe incentives package includes five per cent corporate tax for the first five years and 10 per cent corporate tax thereafter, as well as zero customs duty on imported raw materials.
Within hours, the Brite Star president knew he wanted to know more.
“Gods Must Be Crazy is the only thing I knew about Botswana, but the way they represented the country and their formality, showing us the advantages of investing in the country was very professional,” he recalls.
“It was very eye-catching. They had done their due diligence of our group and they knew who they were talking to and presenting to. “They knew that we were the right company to attract to Botswana.” Katona travelled to Botswana for the first time in April, shortly after the BITC mission and was further enamoured by the welcome the BITC put on, the itinerary and the layout SPEDU showed Brite Star in Phikwe.
“I saw the empty but beautiful airport and the area was perfect. We need that land to test and fly the aircraft. Also, the space was enough for the other businesses that we want to operate there.
“The nature around there is also brilliant for our tourism business.”
The project in Botswana is being lead by Advocate Efan Khan who has several years in developing various projects in Africa and Asia from media to mining.
“Khan is committed to leading the Brite Star project in Selebi Phikwe and is a transactional lawyer with Piyush Sharma Attorneys, a leading firm of attorneys in Gaborone.
“Dr Mokubung Mokubung of SPEDU travelled to Brite Star in USA with his team and they have done their due diligence.”
Botswana’s attractive investment climate, the incentives package, professionalism and persuasiveness of SPEDU and the Civil Aviation Authority of Botswana, as well as the beauty of Phikwe, certainly bowled Brite Star over. However, there was one factor that clinched the deal.
“When you do a country risk assessment, besides the business climate, politics and economy of that country, you always look at the human resources and behaviour.
“That is one of the last, but important things that I looked at.
“Everywhere I went, I met simple people in the streets, in the market who were very polite and helpful and I did not feel any kind of difference between us.”
The people of Phikwe, it appears, did their part and wooed Brite Star over. It remains to be seen whether all stakeholders in the latest dream will indeed deliver the miracle to a town fatigued by hope.