Mowana Mine faces liquidation over P47m debt
Staff Writer | Tuesday November 17, 2015 11:21
In an application to be heard by the Francistown High Court on Thursday, DP Botswana is seeking an urgent provisional order for winding-up of Messina Copper, which trades as African Copper.
A statement released by Diesel Power’s JSE-listed parent company, Buildmax says a provision against the debt is likely to affect the company’s 2016 financial results by up to R90 million. “DP Botswana’s current aggregated exposure to Messina Copper is approximately P47 million. As at the date of this announcement, the board of directors of Buildmax cannot reliably estimate the extent of any potential proceeds arising as a result of the liquidation proceedings.
“Assuming the liquidation of Messina Copper, a full provision against the debtor and the non-cash impairment of related plant assets, it is anticipated that the impact on Buildmax in the 2016 financial year, will be a reduction in net asset value of between R70 million and R90 million,” said Buildmax.
African Copper engaged Diesel Power last year in a $113 million (P1.2 billion) hard-rock opencast mining contract spanning over 52 months.
The troubled mine has been battling declining copper prices since 2008 and African Copper’s latest financial results show the company recorded a loss of $8.8 million (P89 million) for the six-month period ended September 30, 2014 compared with a loss of $29.1 million for the corresponding period in 2013.
Diesel suspended operations at Mowana last month over the non-payment of the debt. In an interview last week, the Botswana Mine Workers Union (BMWU) president Jack Tlhagale said African Copper suspended operations at its Mowana Mine outside Francistown, putting close to 400 workers on paid leave until November 19, when the High Court is due to hear the liquidation plea.
Tlhagale said the latest development was indicative of the battles the union has been fighting against contract mining, which it says represents the ‘fragmentation and casualisation’ of labour.
“There’s no job security and these are the issues that arise from this. In addition, companies are not transparent. You cannot inform workers when the company is already in court.
“You knew a month ago that you had problems with Diesel Power, then you only tell workers now. “All the time, workers are put on the receiving end of hardships that come with the cost of production.” Tlhagale said the union was also unhappy that the break Mowana Mine workers have been placed on would be taken from their personal leave. African Copper is 73 percent owned by ZCI, a company listed on the London and Johannesburg bourses.
Mowana Mine’s closure comes after a similar development at Boseto Mine, which ended operations in February, costing about 800 jobs.Boseto Mine was then liquidated with creditors, who were owed $149 million, receiving only $35 million from Cupric Canyon through an offer of compromise.