Rising prices anchor local base metal bounce-back

Belly of the beast: A truck being loaded at Khoemacau Mine on the Kalahari Copperbelt PIC: KHOEMACAU.COM
Belly of the beast: A truck being loaded at Khoemacau Mine on the Kalahari Copperbelt PIC: KHOEMACAU.COM

The Botswana Chamber of Mines is redoubling plans to establish the country’s first base metal refinery, as investors return to resuscitate copper and nickel mines, six years after all operations shut down. Staff Writer, MBONGENI MGUNI reports

Copper and nickel production is set to resume in the country, six years after all the country’s mines closed. Investors are leveraging on stronger base metal prices to finalise acquisitions of suspended operations and fast-track new mines.

A commodity price rout in 2016 resulted in the closure of BCL Ltd’s mines, which up to that point, had been the country’s main base metal producer for 60 years. Mines owned by Discovery Metals Ltd and African Copper Plc also shut down, collectively retrenching thousands of workers. Together the mines accounted for about 4.5 percent of the country’s exports in the first half of 2016.

However, a resurrection of base metal production is taking place in Botswana, spurred by copper prices which rose by 23% at the London Metal Exchange last year. Prices are expected to continue firming due to the global economic recovery from COVID-19 and low inventories of the base metal.

“I don’t think it’s a coincidence that the planning by investors for these mines has happened when the prices of copper are their highest,” Botswana Chamber of Mines chief executive, Charles Siwawa told Mmegi.

“Two of the mines being developed have got it right in terms of their planning and the prices, while the others are due to take a little more time to reach production.”

One of the two is Khoemacau Copper Mining which has taken over the processing plant at Discovery Metals to handle ore from its own adjacent underground mine. In an investor update released recently, directors said mining activities were ramping up to full production by year end, at which point Khoemacau will be capable of producing up to 65,000 tonnes of copper per year.

The other is African Copper’s Mowana Mine where new investor, Max Power Limited, has pledged to clear most of the P800 million owed to various creditors and also inject new capital towards reopening. Max Power Limited’s sole director is Dutch wealth manager, Gregory Elias, who has renamed the operation Kopano Copper Mine. Liquidators who handled the takeover have said hundreds of workers have already been mobilised on site to resume operations.

BCL Limited is scheduled for reopening in the next three years, with Mineral Resources minister, Lefoko Moagi recently announcing that a local subsidiary of Canadian base metals developer, Premium Nickel Resources, had sealed a cash deal worth P837 million to take over three mines under the group.

“PNR Botswana has undertaken to expend approximately P5 billion to construct new mining infrastructure and it is envisaged that further hundreds of jobs will be created,” he told Parliament early last month.

“Upon completion of the construction and opening of the new mine for production, hundreds of additional mining jobs will be created.”

ASX-listed Sandfire Resources expects to kickstart production at its Motheo Copper Mine next year, with construction activities ongoing and a definitive feasibility study due complete by June 2022. Investor updates by the company indicate that the mine will cost $259 million (P3 billion) to build and produce 30,000 tonnes of copper annually.

The resuscitation of base metal activity has energised long-held ambitions by the country to develop its own copper refinery capabilities. Siwawa said the Chamber of Mines had produced a prefeasibility study on a refinery to be used by local base metal producers and a private company was working on a final feasibility study.

“We have never stopped having the debate around establishing a refinery in the country.

“The aim is to produce that copper for the production of pipes, power lines and others within the country,” he said.

A refinery in the country would produce 99.9% copper and spawn an industry producing final goods such as the copper pipes, cables and others domestically.

Siwawa said the resurgent interest in the country’s base metal sector underlined the continuing attractiveness of Botswana as Africa’s preferred minerals investment destination.

“If you want to go and look for a diamond address, you come here because that’s our playing field.

“However, with base metals we are not as rich as our northern neighbours in terms of grades.

“They are talking about six to seven percent copper in a deposit and for us it about one percent.

“So why are people coming here? It’s because of the transparency and excellent investment climate.

“We have to guard that because that’s what will keep our mining going forward.”

For the mines reopening and developing in the country, the lessons from the 2016 meltdown appear to have been learnt. At BCL Ltd, PNR Botswana has trimmed down the original operations in Selebi Phikwe and is studying the resource remaining in the ground. The company also plans to use more modernised and mechanised mining methods to restrain operating costs.

Kopano Copper, previously known as Mowana, has now reached a quality of ore more suited to sustainable operations. Mowana has a troubled history having closed initially in 2015, then briefly revived by a new investor before another collapse in December 2018. Much of its troubles have stemmed from weak copper prices, poor ore grades, high operating costs and an unsustainable debt burden.

“Two weeks ago, we were there (at Mowana),” Siwawa said.

“Before, they had a challenge with the type of ore available and that ore has finished. They are now going into the good ore.

“They can be sustainable for the life of the mine and we also think Mowana will be sustainable for the long term.”

Khoemacau and Motheo also have a distinct advantage over the previous mine that attempted to operate on the Kalahari Copperbelt. Discovery Metals’ Boseto Mine closed in 2015 saddled by both low copper prices and unsustainable operating costs which were largely the result of having to depend on diesel electricity generation.

The Botswana Power Corporation has since brought the national grid closer to the Kalahari Copperbelt through the North West Transmission Grid project, which has added wind to Khoemacau and Motheo’s sails.

All signs are that after years of slumber, the country’s base metals sector is set to revive, with the creation of thousands of jobs and opportunities for citizens.

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