Banks blamed for Pula Steel cashflow crisis
Isaac Pinielo | Friday April 8, 2016 15:30
He told Parliament this week that there was a working capital shortfall at the cash-strapped steel manufacturing company that could not be financed by commercial banks due to lack of appetite. “This affected the company’s ability to pay off its salaries and wages on time for the months of January and February 2016,” said Seretse.
However, he said no employee is owed any allowance to date, adding that there was overtime allowance for the months of November and December 2015, which were paid this January. Earlier this year, over 70 employees of Pula Steel downed tools over late payments of their January salaries as well as overtime allowances from last year.
The company’s spokesperson, Brian Mosenene was quoted as saying that it was unfortunate that the workers decided to stop working despite the management having explained to them that there was a delay in the processing of their payment from their Southern African customers, due to the long process of clearing foreign exchange.
Meanwhile, the minister stated that Pula Steel forecasts are “still healthy but marginal”. He said the majority of the inputs are based on the same steel market prices so the volatility does not just affect prices, but also the cost of inputs.
He advised that the company should ensure that the costs are kept within the threshold of 60 percent to 70 percent of sales, and that there should be sufficient supply of quality scrap.
Seretse further noted that since Pula Steel commenced operations in October last year, 3,716 tonnes have been produced.
“2,868 tonnes have so far been sold to Pula Steel customers who are in the SADC region,” he said. He added the initial shareholding of BCL Mine in Pula Steel was 50.5 percent with the initial injection of P101.1 million and P53.6 million. Currently, he said, the shareholding of BCL Mine in Pula Steel is 72.4 percent, adding that total investment on the project stands at P63.7 million.
The minister was responding to a question from Selebi-Phikwe legislator, Dithapelo Keorapetse. The MP wanted the minister to update Parliament on Pula Steel cashflow problems, BCL shareholding in Pula Steel and the ongoing concern of the business.