Govt buys De Beers out of Morupule Coal Mine
Brian Benza | Friday June 10, 2016 14:18
Debswana currently owns MCM with government holding 50% while the remainder belongs to De Beers.
Responding to BusinessWeek enquiries, MDCB CEO Paul Smith said the proposed three-stage transaction involves the unbundling of Debswana’s shareholding in MCM.
The first part of the deal will see government’s current indirect beneficial shareholding in the coal mine being converted into a direct equity interest.
Additionally, government will acquire De Beers’ indirect shareholding in Morupule to take its ownership in the mine to 100%. Post-implementation, the assets of Morupule will be transferred to MDCB.
“MCM is currently funded by shareholder loans from government, Debswana and De Beers. As part of the unbundling, MCM will be repaying its loan back to Debswana and De Beers. Effectively, Debswana and De Beers will be receiving the repayment of loans in exchange for the mine’s shares,” said Smith.
MDCB officially started operation this year with its new CEO, Smith, taking office in February and his immediate task being to work hand in glove with BCL management to oversee a process of streamlining the mine’s operations.
MCM and BCL are the first batch of government mining assets to be transferred to the MDCB.
Minerals, Energy and Water Resources minister, Kitso Mokaila previously said his ministry has engaged consultants to provide transactional advisory services for the transfer of these assets, which he added was expected to be completed in 2016. Mokaila noted that the transfer of the remaining assets namely; Diamond Trading Company Botswana (DTCB), Debswana Diamond Company and Botswana Ash would follow immediately after the transfer of the first batch of assets. According to Smith, Anglo American and De Beers are undergoing a rationalisation process on a worldwide basis, and MCM does not form part of their global strategy.
Anglo, which posted a loss of $5.6 billion in 2015 compared with a loss of $2.5 billion the year before, recently announced that it was streamlining its asset portfolio to De Beers, platinum and copper, holding just 16 assets down from 55. This resulted in Anglo Coal shutting operations in Botswana ceasing works at its 700 million tonnes Mmamabula coalfields.