BCL exceeds budget by P48 million

MBONGENI MGUNI
Staff Writer | Wednesday November 10, 2010 00:00

Excessive spending in staff costs, vehicles and fuel drove up the massive overrun, BCL management reveals in a quarterly briefing made in Selebi-Phikwe last week.

The General Manager of the copper and nickel mine, Montwedi Mphathi, said the overspending was mainly in citizen overtime payments amounting to P14 million, citizen overheads of P12 million, vehicles and loco spares of P10 million and in fuels and lubricants of P6 million.

Generally, expenditure on labour accounts for 40 percent of BCL costs, hence it is among the mine's chief targets for cost-saving.

'Departmental costs for the (third) quarter were P341 million against a budget of P306 million, resulting in an unfavourable variance of P35 million,' Mphathi said. 'The year-to-date is overspent by P48 million.'

The latest financials fly in the face of the copper-nickel mine's efforts to contain costs in 2010 after a precarious year of a slump in base metal prices brought on by the global recession.

Without suspending production, BCL Mine trudged through the recession by retrenching 60 employees and tapping into funds raised in previous base metal boom periods.  After paying off debts with funds from boom periods, BCL was able to focus the lower revenues last year on production and sustainability.

Through various initiatives last year, the mine was able to realise cost savings of P75 million, and an additional P60 million secured through mine-wide improvement initiatives.

This year, mine management had signalled the need to continue cost containment and improvement of operational efficiency. The copper-nickel mine is shedding 93 jobs through multi-tasking, re-deployments and retrenchments to reduce costs and improve usage of resources.

BCL Mine also plans to use currently available funds to increase production and derive maximum efficiency. Said Mack William, BCL Acting Divisional Manager, recently:

'The initiatives that have been implemented include reducing costs and increasing production with resources we currently have in order to make the business sustain itself for now while more reserves are still being delineated.'When you increase volumes with the current resources, the cost reduces as well because there will be more volume produced at the same cost.'

BCL Mine plans to produce 2.8 million tonnes of copper, nickel and related products this year, tapping into the higher base metal prices seen in global markets since the New Year.