BCL Forced To Take Drastic Measures To Avert Closure

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BCL Managing Director, Mr. Dan Mahupela

BCL Managing Director, Mr. Dan Mahupela

BCL, the Botswana government owned copper/nickel miner said survival hinges on the success of its business reorganisation project. The Selebi-Phikwe based company, together with other peers globally, faces bleak future on the back of collapse in commodity prices.

The company’s Managing Director, Dan Mahupela told journalists recently in Gaborone that they have been affected by the drop in commodity prices with nickel coming down from a 10 year average of 9.2 USD/Ib to 4.0 USD/Ib currently, which represents a “significant” 57% loss in value.

“For BCL to survive the current down turn, the company has to change and operate at USD4/Ib which will be achieved through the business reorganisation project,” stated Mahupela.

BCL is a major player in the economy of the mining town of Selebi-Phikwe and should the mine lay off a large chunk of its 4, 300 workforce, the impact will be huge.

“Manpower rationalisation is being undertaken in line with business reorganisation project. For the underground mines, the aim is to achieve significant efficiencies through mechanisation from the current 40 tonnes per man to 110 tonnes per man,” said Mahupela.

The company is looking at ways to cash on its assets including the sale of its private jet and BCL houses.

BCL has also prioritised exploration projects with the view to fund priority 1 and strategic projects. Mahupela noted that key priority Polaris II projects identified for continued funding in 2016 include Maibela Nickel Prospect, Maibwe Diamonds, Selkirk Nickel Project and the sulphuric acid and fertilizer projects.

“Priority 2 projects, such as Moeng Manganese Project, Molopo Iron Ore Project, have been orderly disposed of through joint venture partners,” said Mahupela. “Other priority 2 projects are looking for homes with stable JV partners to them to bankable feasibility”.

BCL is experiencing its worst period in history and it is facing difficulties in all fronts in addition to depressed global commodity prices. Last year, the company’s underground operations could not achieve production targets only managing 80% due to difficult underground conditions.

The infamous smelter shutdown also hit the miner’s balance sheet as the refurbishment exceeded the budgeted amount. According to BCL, the smelter shutdown which was planned for 62 days was completed in 112 days leading to a 50 days loss of production in 2015.

The delay was blamed on a number of factors including the contractor work permits and lifting and installation of the mantle sections of the uptake shaft due to inclement weather conditions.

There were also contractor payment delays due to cash flow problems constraints and extra work associated with small bore piping assembly for the smelter furnace cooling systems. The delays led to a loss in revenue of P230 million of BCL metal and P40 million of Nkomati Toll Revenue making a total of P270 million. At the end of this, the smelter refurbishment cost P754 million.  

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