A Copper and Nickel mine in Diamond rich country, Botswana, Bamangwato Concession Limited (BCL) is staggering under heavy debt of approximately P1 billion (US$100 million), sending shivers that if the entity closes down the small town of Selebe Phikwe will close down and unemployment statistics shoot up, it has come to light this week when Botswana President visited the mine.
“Mining expenses had significantly escalated. Miners now have to go deeper underground to extract the mineral ore,” the Mine Manager Modise Gaoetswe explain to the President, Lt. Gen. Dr Ian Khama when he visited the mine.
Gaoetswe said BCL was doing so in order to access ore from the two productive shafts. The deepest shaft is about 2km deep while other shaft was 1km deep and this attributed to high operating costs against the declining copper prices.
Gaoetswe said high costs of operations were a result that the mine uses near-obsolete mine technologies which are still in use because it cannot afford new technologies.
The mine, which is the main employer in the town, and source of life, does not want to risk the option of converting the mine to open-cast because study has proved the undertaking was not economical as the mineral ore was too deep.
The mine’s metallurgist, Enock Mukosora, explained that the facility was struggling with subdued production, attributing the cost to prices that had dropped in the past 12 months.
“Market prices have dropped from as high as US$8 to around US$4.50 compared to normal operating costs of around US$7,” he said, adding that the highest prices of copper/nickel the mine ever recorded was in the period between 2001 and 2002 when the prices went up to US$19.
The Minister of Infrastructure, Science and Technology, Nonofo Molefhi, said government was working hard to embark on a turn around programme by assisting the mine to pay its debts.
Molefhi said again, a task force of five Cabinet ministers have been set up to conduct a thorough study of the BCL business model designed to save the mine and that was still underway.
Since a few months ago, BCL was a blue chip company that was on an upward trajectory – buying mines in Botswana and across southern Africa and planning to diversify away from copper and nickel.
Botswana underwrote a $100 million loan from Barclays Africa Group Ltd. to the mine in April while on the other hand there are plans to raise $250 million in a bond sale and use some of the proceeds to repay the debt and also fund its purchase of a 50 percent stake in South Africa’s Nkomati mine from OAO GMK Norilsk Nickel.
BCL agreed in 2014 to buy 50 percent of Nkomati and 85 percent of Botswana’s Tati Nickel Mining Co. from Norilsk, the world’s biggest producer of the metal, for $337 million, further the mine continues to negotiate down how much it has to pay after commodity prices declined and after the transfer of mineral rights in South Africa was delayed. This has yet to be finalized.