Govt suspends royalties for copper miners
Brian Benza | Friday May 22, 2015 18:04
“A decision has been taken to defer the payment of royalties for the copper mining companies. The decision will be reviewed after a year then we will decide whether the market has recovered enough for copper mining to become viable again, then they will pay the royalties. It is deferment not a write off.
It is part of measures being put in place to save jobs in the industry,” he said.
Base metals mining in Botswana attract a three percent royalty payable on gross market value of mined production.
Local copper miners have been hard hit by the weak international copper prices as well as low ore recovery rates due to unviable stripping ratios. Over 800 jobs were lost early this year at Discovery’s Boseto Mine when the company was under provisional liquidation after failing to meet its financial obligations amounting to over $149 million (P1.46 billion) to various creditors.
African Copper last week also announced plans to close its Thakadu Mine due to viability concerns affecting over 400 workers.
Mokaila added that government would soon float Expression Of Interest (EOI) tenders for companies to build solar power plant in the northwest in a bid to cut the cost of power for mines operating in the region. Electricity costs contributed significantly to Boseto mine’s economic demise as it was estimated that 40 percent of its overhead costs were from running diesel generators.
The Botswana Power Corporation (BPC) is also constructing of a multi-million Pula power transmission lines from Mawana to Toteng, and from Toteng to Shakawe that is expected to address electricity woes faced by the base metals miners in the northern part of the country.
The minister also said that its not all doom and gloom in the industry as three companies have expressed interest to acquire the closed Boseto Mine.
Provisional liquidator of DML, Deloitte Botswana last week announced that Barclays Capital-backed Cupric Canyon has tabled a $31 million (P300 million) offer to buy Boseto Mine.
If the bid were accepted, it would mean creditors would receive as little as 20 cents for every dollar they are owed by Discovery.
Director of tax services at Deloitte, Terry Brick said creditors will hold a meeting on 12 June 2015 to vote whether they accept the offer or not.
“If the offer is accepted, then the creditors will be paid their share and Cupric will own the mine, plant and machinery. Cupric is offering US$31 million excluding the mobile fleet being the dump trucks and large mobile machines,” he said.
The $149 million total liabilities are made up as to $115 million owing to banks and $34 million owing to the other creditors. The creditors syndicate comprised of Standard Chartered Bank, Credit Swiss and Caterpillar Finance, including Cupric Canyon, which is eyeing the takeover.