I am not resigning - Mahupela

SHARE   |   Monday, 25 April 2016   |   By Phillimon Mmeso
I am not resigning - Mahupela

The Managing Director of the embattled BCL Mine Dan Mahupela has stood firm, insisting that he will not step down from his position as he has demonstrated his astute leadership skills. Mahupela said in an interview said he is not to blame for the current problems facing the mine, attributing such to market forces like the lacklustre demand for commodities in 2015. “We had developed a strategic plan on how to make the mine operations float with the advice from our financial advisers Rand Merchant Bank (RMB) and at that time the prices of copper and nickel was at US$ 9/Ib,” said the calm and seemingly upbeat BCL MD.
However when updating Parliament in February this year, the Minister of Minerals, Energy and Water Resources Kitso Mokaila said that BCL management was too slow to turn around the fortunes by cutting on the operational costs. At the time he was thinking of either firing the whole Exco and or bringing in a consultant to help run the mine. He has so far not exercised these options, choosing instead to have Government guarantee a P1 billion loan for BCL with Barclays Bank.

Costs cutting
In reaction to the comment, Mahupela refused to comment on what the minister said, maintaining that as far as he is concerned they have done well in cutting costs. Driving his point home, the defiant graduate of Queens University, Kingston, Ontario, Mahupela pointed out that as part of cost saving measures they have managed to save P144 million in 2015. “Optimised BCL business plan has reduced operating costs by a further P122 million,” said the holder of BSc. Mining Engineering, Mining and Mineral Engineering. But in a clear sign of shareholder frustration with the leadership of the copper mining company, Minister Mokaila informed parliament that he still wonders why BCL still owns an expensive jet while the mining industry is not doing well.


Disposal of assets
Mahupela, who has been at the helm of BCL for over six years now, said that as part of disposal of assets they are going to sell the aircraft and BCL houses including those at Tati Nickel Mine in Francistown in order to realise value and unlock capital. The total value of the assets to be disposed of, according to Mahupela, is P536 million. The BCL board of directors late last year rejected a budget proposal by BCL management budget proposals for 2016 questioning the inconsistencies in the figures contained in the budget proposals. The blame was put on the then Divisional Manager Finance and Administration Jonathan Vergeer who was forced to resign recently. Put to him there is a concern that the poor financial performance of BCL can be put on the Finance Department Mahupela became slippery with information choosing to say that he cannot discuss the performance of his team with third parties.

DCEC investigations
Recently the corruption bust organ, the Directorate of Corruption and Economic Crime (DCEC) raided the copper mining company and the confident yet shy looking executive sprang to life to declare his innocence - “I am clean and have nothing to hide.” He revealed that recently the DCEC confiscated some files, especially of companies which were contracted to refurbish the smelter, and didn’t tell them what was the nature of their investigations. The alleged investigations by DCEC, according to Mahupela, caused some uncertainty among their financiers and in some cases jeopardised viable alternatives to grow the business.

Union demonstrates
Botswana Mine Workers Union (BMWU) last week held demonstrations in Selebi-Phikwe protesting against the looming retrenchment and failure by management led by Mahupela to consult. The former manager at Debswana, who had been calm and seemingly confident during the interview when explaining about his optimisation plan, showed irritation when talking about the conduct of BMWU. “They are accusing the management of not consulting them yet we have held several meetings with them regarding the manpower rationalisation and the financial situation faced by the company. Instead of demonstrating we should sit down and engage each other in order to find a lasting solution to the current situation,” he said, adding that as management they also feel the pain of the employees.

He said that they don’t have numbers of employees who will be retrenched as they have to consult with all the stakeholders. In his address to the media, Mahupela said the manpower rationalisation is being undertaken in line with the business reorganisation project. For the underground mines, the aim is to achieve significant efficiencies through mechanisation from the current 40 tonnes per man to 110 tons per man. Though he did not mention which shafts will be mostly affected by the retrenchment, Mahupela had earlier stated that Phikwe Central Shaft is the most expensive to operate with cost of operation at US$6.50/Ib.

As part of mine optimisation plan Phikwe Central is going to focus on the mechanised bulk mining methods of Cut and Fill Stopping and Bord and Pillar Stopping. “The high cost, labour intensive conventional stopping methods will be discontinued,” he said, adding that this will reduce cost for the shaft to US$5.42/Ib. South East Extension Shaft, according to Mahupela, will not be affected by the mine optimisation plan as it is not suitable for bulk mechanised mining methods as is the deepest shaft at 1.5 km with high ambient rock temperatures and requires refrigeration which comes at excessive capital. He said that this makes it impossible to reduce costs at South East Extension Shaft.

Upon assuming office Mahupela came up with POLARIS II aimed at diversifying BCL Mine from just a copper and nickel mining company but to have other interests. Some industry experts cast doubts on the projects labelling BCL Mine as being dangerously ambitious and lacking focus. According to Mahupela, if it was up to him he will close BCL Mine and concentrate on POLARIS II as he feels the project has brought excitement to the mining company. Since its implementation POLARIS II has achieved some milestones which include the restructuring of the BCL balance sheet and revenue from Nkomati Mine concentrates standing at US$23 million per annum as well as acquisition of Tati Nickel Mine from Norilsk Nickel. As a veiled attack on those who dismissed it as a waste lot of money Mahupela said they have only spent P179 million, which is far less than what they could have used in the project. BCL – 100% owned by Government – has now prioritised some of the projects which were supposed to be implemented in POLARIS II and have identified key projects. “Key Polaris II projects identified for continued funding in 2016 were Maibele Nickel Prospect, Maibwe Diamonds, Selkirk Nickel Project and the Sulphuric Acid and fertiliser projects,” he said, insisting that closing BCL Mine was not an option.