Barclays assures markets on BCL P1bn loan
Brian Benza | Wednesday October 12, 2016 18:00
In a statement, the bank said all the corporate exposures to the BCL Group are fully secured.
“Barclays remains sufficiently liquid, well capitalised and we continue to execute our strategy in the market through the delivery of innovative financial products and services,” read the statement. In April, Parliament authorised the issuance of a government guarantee for a $100 million loan for the struggling state-owned copper and nickel miner.
The loan was sourced from Barclays Bank Botswana and parent company, Absa Bank, attracting an interest rate of 4.5%, aimed at cushioning the miner from the severe cashflow problems it faced due to declining commodity prices.
BCL chairman, Khaulani Fichani told Mmegi Business yesterday that the loan would not be referred to the liquidators like other creditors.
“Because it was a guaranteed loan, government will pay the bank directly. This is why we have been saying government has already pumped a billion pula into BCL,” he said.
BCL was placed under provisional liquidation over the weekend due to insolvency.
The mine has been operational since 1972, but has faced viability challenges in the past 20 years as the quality of its copper and nickel resource deteriorated. Due to the decline in copper and nickel prices coupled with high cost of operating the old mine shafts, some of which run as a deep as 2km underground, BCL has been saddled by unsustainably high operational costs. Fichani said it cost BCL $8 to mine a pound of copper or nickel which can only fetch a price of $4 on the market.
Government says the mine, which has been running for over four decades, will need a total overhaul estimated to cost about P7.6 billion, an amount they also cannot afford hence the application for liquidation.
Copper mines in Botswana have been struggling in the past two years with two others; African Copper’s Mowana Mine and Discovery Metals’ Boseto Mine liquidated in 2015. Government suspended royalty’s payments for base metal miners last year as a relief measure.