Light at end of tunnel, but not yet 'Uhuru'
Dithapelo Keorapetse | Monday December 13, 2021 06:00
Those who took the decision to close are now shouting the loudest in desperate attempts to accrue adulations for purportedly reopening the mine. We need to put things in proper perspective so as disabuse them from their dishonest mischief. The outlandish and reprehensible decision to throw thousands of people into the streets by closing BCL is one of the greatest frauds in 21st century Botswana. The decision was selfish, discourteous and devilish. It subversively sabotaged the economy of the town and was akin to committing crimes against humanity - condemning people to death through poverty, stress, despair and even suicide.
I wish to point out quick facts for the benefit of those who genuinely might not know or have forgotten the events surrounding the closure of BCL. Government was, is and it appears will never admit that it made a terrible mistake or alternatively that it was ill-advised by especially the executives of Mineral Development Company Botswana (MDCB) then to liquidate BCL. MDCB was set up to acquire and manage government investments in the mining industry. The first to be acquired by the mining investment arm, it would appear, was BCL.
When the Minister of Minerals in South Africa approved the sale of a 50% stake of Nkomati by Norilsk, MDCB bosses sought to renegotiate the value of the assets to below P3 billion on account of low commodity prices. Norilsk wouldn’t agree and insisted on the P3 billion or so and MDCB, which held the power to negotiate on behalf of BCL insisted on a discount and lied that there was no business case for BCL. The BCL business case could be found in their $4 per pound recovery plan and the smelting of Nkomati concentrates at the smelter plant in Selebi-Phikwe. In fact, before the MDCB screwed up, an easy and achievable payment plan was such that BCL would pay Norilsk over a period of time with proceeds from Nkomati concentrates. When they realised they messed up the deal previously negotiated by BCL, they ran to Cabinet to cause liquidation, reasoning that it was better to self-liquidate than to allow creditors/Norilsk to liquidate the group. The reasons for this behaviour remain a mystery.
My comrades, people of Selebi-Phikwe and indeed BCL workers and management wondered why the company wasn’t placed under judicial management or business rescue mechanism instead of liquidation. Subsequently, the same government, which told workers assembled at grounds of BCL that it owed P3 billion, sought to oppose the Norilsk claim of P3 billion debt, that it doesn't owe Norilsk as BCL sole shareholder. They claimed that they had shown interest in Nkomati mine 50% share owned by Norilsk and that they don't owe a cent since the deal wasn't final. So there was no P3 billion debt, according to government, in papers filed in the South African courts and other discussions elsewhere. We were told that government has been pumping money into BCL for many years and it was unsustainable.
The last time the government pumped any money into BCL was in 2002, 14 years before the mine was closed. It was a lie that government was pumping money. In fact, government took over P1 billion from BCL in 2014 at the time when the company was preparing to refurbish its smelter and was struggling because of depressed metal prices. This was a reckless move that collapsed BCL. BCL was closed notwithstanding the $4 per pound recovery plan presented to Cabinet on or about October 2016. The plan was clear and feasible, it had been verified by Mineral Corporation, a South African based company. According to the plan, BCL needed P2 billion recapitalisation, half of it in 2016 and the other half in 2017. The estimated figure was based on nickel prices at $4 per pound, and at the time Cabinet considered it, prices were at about $4-$6 per pound. The $4 was a very conservative figure, considering that prices later recovered at over $5 per pound nickel end of 2016. In 2017 prices as predicted were back and good, and now they are even high up. This is why companies were interested in buying BCL and resuming operations from day one of its closure and there is nothing extraordinary that President Mokgweetsi Masisi or the Botswana Democratic Party administration has done to lure anyone into buying BCL. Companies have made business calculations that nickel and credits from the mine can be exploited at massive profits. Part of the recovery plan for BCL then, before closure, entailed restructuring which would result in retrenchments as a result of the stoppage of non-core functions and or expensive or unprofitable operations closing some shafts and mechanising others. BCL, therefore, needed money for packages of workers who would be retrenched. Most ministers and BDP MPs were asked about the BCL resources and clearly had little or no idea about this. Other related questions were why government was consistently making reference to the depth of the mine and its low-grade ore as reasons for closure and no business case argument. According to the BCL resource statement before closure, the mine’s total resources stood at 25 million tonnes at grades of 0.66%Ni and 0.77%Cu, from these resource figures, around 2,7 million tonnes of measured resources at 0.86Ni and 0.98Cu have been declared.
This is high-grade ore, which we argued could be mined at a profit. The due diligence then showed that there were ample reserves to run the mine up to 2022 and with more evaluation the life could be extended to 2034. The deepest shaft at BCL was at 1,540-metre level whilst the shallowest production level was at 650-metre level with the potential to go up to 450-metre level.
Depth is and has never been an issue for BCL. Other mines elsewhere mine in excess of three-kilometre level. BCL had about 10 exploration joint ventures, including the Maibjwe Diamond Project. There were allegations about the diamond joint ventures being separated from BCL, effectively stolen and given to some well-placed people for free. The government has been asked to shed more light on these exploration ventures and the Maibjwe project in particular, but withheld the information.
No one predicted the 60% collapse of nickel price end of 2015 in which BCL lost 60% of its revenue against the average cost of P1.7 billion to P2.1 billion per annum. Worse this happened after BCL spent P2 billion in 2014-2015 including in the refurbishment of the smelter by P750 million. However, it was not the first time that nickel and copper prices plummeted, the only difference was that in October 2016 the mine was abruptly closed while in the past plans were put in place to weather the storm.
I have explained that the government was misguided by a certain Paul Smith, former CEO of MDCB, who had no clue about BCL. Prices for the key metals in BCL’s revenue basket have recovered impressively from the levels experienced in the lead-up to the closure of the group because of the advent of electric and hybrid cars, construction boom in China and other demands elsewhere, not because President Masisi or this government have done something extraordinary.
When BCL was closed, the government as a sole shareholder and the decision-maker made a litany of promises, in summary, the government promised a soft landing to former mine workers, e.g. the following were promised: Payment of salaries for 12 to 18 months; Staying in BCL houses; Provision of health services at the mine hospital; Payment of better packages to enable former employees to start a new life if mine doesn't open or doesn't open soon; Promise to take care of the sick who were injured, and Promise to pay school fees for private schools. According to the Botswana Mine Workers Union and the information we have, ex-employees were not paid any better packages but instead were paid a one-month salary, and leave days. This was extremely inadequate and many are still indebted to creditors, especially banks, micro-lenders, furniture stores etc and several have been civilly imprisoned while others have been foreclosed. School fees were paid for children attending private schools but those in public schools weren’t assisted in any way. Newly enrolled children at private schools weren’t paid for as the arrangement only covered continuous registration and was short-lived. The BCL hospital was never open for former workers, it was never open after BCL closure for the people who worked for BCL or their families. Those who were injured were by and large left in the lurch. Government refuses to pay for water and electricity for former employees staying in BCL houses and many lived in deplorable conditions as a result because they couldn’t afford the huge tariffs. People were and are still going hungry in the mine houses and the same government refuses to give them food hampers and other assistance through the S&CD. Whilst there is light at the end of the tunnel, it’s not yet 'Uhuru' for us in Phikwe, many lives were unnecessarily destroyed in unemployment, instant destitution or abject poverty and indebtedness leading to blacklisting and civil imprisonments. We can only celebrate once impactful economic activities related to the mine are in place and our people are employed and empowered through meaningful participation. It would appear PNR is going to start mining operations around 2026 according to their plan. Initially, they had been given three to four months for regulatory issues and finalisation of the transaction.
After that, they said they are going into a pre-feasibility study that will take another 12 months. Then a feasibility study for another 12 months. From there a bankable study for six months. Our prayer is that within this period they don’t get financially fatigued. Our hope was for the smelter to be restarted to process the concentrate into matte as this would create more jobs. If the worry is the environment, then sulphur dioxide could be collected to manufacture byproducts such as acid and fertiliser. No one is saying anything about a potentially lucrative shaft that has been deliberately written off through flooding during liquidation.
This was a criminal act in which the previous liquidator acted against the instructions of the Director of Mines. We will ask more questions and hope to get answers. There is a need to expedite decisions on the dumps and tailing as there are many companies that want to utilise them and can create many jobs. Selebi-Phikwe used to have a booming textile industry. We had firms like Sports Line, Garments, Orbot, Back Packer, Tex and others. Most of these firms closed because there was no plan to protect the industry which employed thousands, a majority of which were women and youth. Currently, we have Denish, Other Options, Nitaz Collection and a few others.
In Paragraph 6 in my response to the State of the Nation Address, I advised, “We need the Minister of Trade to swiftly without delay, enact a subsidiary legislation by way of a statutory instrument to prevent importation of school uniforms such as the common grey pants, white and blue shirts commonly sold at Woolworths, Pep, Cash Bazaar, Ackermans, etcetera. We need to stop importing PPEs including superior protective workwear. Corporate uniforms can be manufactured by firms in Phikwe and elsewhere in Botswana.” When responding to the 2021 Budget Speech I reiterated at Paragraph 16, that “The Minister of Investment, Trade and Industry should protect and revamp our textile industry. She should ban the importation of uniforms, PPEs etc and have these manufactured in Phikwe.” We have noted the introduction of Statutory Instrument No 76 of 2021 Published in September 24th 2021 banning importation of school uniforms without a permit, which came almost 10 months after I first made the suggestion during the 12th Parliament. However, the Instrument by the Ministry of Investment, Trade and Industry is inadequate in that it hasn’t included a ban on corporate uniforms used by corporations, banks, chain stores, parastatals, and etcetera.
It doesn’t cover PPEs in mines, construction and health. The minister must get the message that we have the capacity to produce all these in Phikwe. All we need to do is to work with the Botswana Bureau of Standards, Citizen Entrepreneurial Development Agency, Local Enterprise Authority, Business Botswana and others to capacitate the firms in Phikwe to produce according to the required standards.
The decision to ban the importation of school uniforms, albeit inadequate, is a welcome development but must, however, benefit Batswana ba Sekei, who are not big players in the industry currently. Big chain stores like Pep, Woolworths, CB Stores, Ackermans and others shouldn’t be allowed to dictate price through provision of cloth/fabrics and basically outsourcing textile manufacturing or basically using Batswana factories as cheap labour. We cannot allow that and if it happens we will fight them! We encourage the government through its city/towns/district councils, parastatals, big buyers such as police, prisons and the army to fulfil the 30% quota and buy from Phikwe-based firms.
For any meaningful economic activity to take off in Phikwe, we need improvement of our old infrastructure such as internal roads, streetlights, massive land servicing, which was promised in the last State of the Nation Address but with no update so far. We still need the Botswana International University of Science And Technology - Phikwe compass - focusing on mining-related programmes. We need expansion of the technical college. We need expansion of the Eastern Military Garrison whenever there is decongestion of Sir Seretse Khama Barracks or any garrison. We are still calling for a parastatal or government department like that of mining to relocate to Phikwe to breathe more life into our economy.
*Keorapetse is Selebi Phikwe West Member of Parliament. This is an excerpt of his response to the State of the Nation, as delivered to Parliament on Wednesday.