BCL incurs P1.2 billion loss
Brian Benza | Friday April 22, 2016 11:06
The BCL group comprises the Selibe-Phikwe based copper mine as well as the Tati Nickel Mine near Francistown.
Speaking to BusinessWeek on the sidelines of a media briefing held in Gaborone this week, Acting divisional manager (finance and Administration) Tobokani Mosetlha said the cost of mining and running the business amounted to P2.5 billion last year while proceeds from copper and nickel sales only brought in revenues of P1.3 billion leaving a shortfall of P1.2 billion.
BCL Managing Director, Daniel Mahupela told the briefing that other internal challenges which dragged the company into the red included below capacity production from underground operations, the P754 million self-funding of the smelter refurbishment and P270 million lost due to the extension of the smelter shutdown by 50 days.
According to Mahupela, various costs cutting measures are being put in place in 2016, which will result in the company saving about P103 million.
“It currently costs us about $8 to mine a pound of nickel and yet the product is fetching about $4 per pound on the international market. This leaves us with $4 hole for every pound that we mine.
To stay afloat we have to cut costs otherwise the mine would have to be shut down,” he said.
BCL has also kick started a manpower rationalisation which will result in some of the mine’s 4,300 direct employees being made redundant.
Among some of the actions planned under BCL’s business reorganisation include mine plan optimisation, which will see the less efficient and high costs shafts being closed down while some of the shafts will be modernised to reduce operational expenses.
In a bid to unlock capital and free up some working capital cash, BCL is also looking to raise upto P536 million by disposing of assets, which include houses in Selibe-Phikwe and at Tati as well as an aircraft.
With copper reserves fast running out at BCL, Mahupela believes the future of the group largely hinges on their Polaris 11 project, whose spinoffs the company is already enjoying.
“By 2020 copper reserves would have almost run out and the future of the group would be anchored on the Polaris projects. “If it was up to me I would jump straight into the exciting new projects, but we can’t just abandon our current core business,” he said.
Among some of the benefits Mahupela says they are deriving from the projects under Polaris include the Nkomati toll concentrate valued at P250 million per annum as well as the P216 million worth of concentrate from Tati Nickel Mine.
BCL is also developing the Molopo Iron ore project with a value of P970 million as well as the Moeng Manganese joint venture. Medium to long term projects for BCL include the P1.9 billion Maibwe diamond project, Selkirk Nickel mine with a value of P1.4 billion over a 6-10 years lifespan and the Maibele Nickel prospect with an in situ value of P1.9 billion.