BCL moves to acquire Pula Steel

Onalenna Kelebeile | Friday January 17, 2014 16:49

 

It is estimated that the acquisition will create 2,500 jobs. Currently, Pula Steel's plant situated in the copper mining town is dormant. The proposed deal has been taken before Competition Authority.

According to the merger notice from the Competition Authority, the proposed transaction will see BCL acquiring 50.5% issued share capital in Pula Steel. An economic analyst from the Competition Authority has told Mmegi Business that the acquisition is part of BCL's diversification strategy known as Polaris 11. The vertical merger will also enable BCL mine to acquire raw material from its new subsidiary.

'BCL mine presented their strategy to us last week. They also want to save Pula Steel that is currently facing some financial challenges,' the analyst said. However, he could not disclose the amount that the mine is going to pay for the acquisition saying the information is confidential. BCL's market share in copper nickel and smelting is estimated at 100%. The company has the only copper and nickel smelter in Botswana.

Pula Steel on the other hand was established in 2009 as a steel manufacturing company in Selebi-Phikwe.According to the merger notice, Pula Steel has been operational in the manufacturing of finished steel products in Botswana but currently its plant is dormant.

If its business is fully operational, Pula Steel's market share in the manufacturing of finished steel products in Botswana is anticipated to be 100%. The company has been the only major producer of finished steel products in Botswana.

Recently, Selebi-Phikwe region diversification agency, SPEDU, informed the business community during a stakeholders meeting organised by Botswana Investment and Trade Centre that talks are at an advanced stage for setting up a steel plant in the town.

The plant was mentioned as one of the major economic projects earmarked for Selebi-Phikwe. A feasibility study for the construction of a P5 million airport has been conducted and the project is expected to commence this year.

A university with an enrolment of 2,500 students is also earmarked for Selebi-Phikwe. The region is scheduled to get a medical school and a private hospital that is estimated to cost over P80 million.