BCL to close

SHARE   |   Monday, 20 June 2016   |   By Ditiro Motlhabane
Dr Tombale Dr Tombale

Chairman of the ailing BCL mine Dr Akolang Russia Tombale has jumped ship, amidst controversial developments that threaten to paralyse production and bring the miner to its knees. Dr Tombale, who is the current Chief Executive Officer (CEO) of another struggling parastatal –Botswana Meat Commission (BMC) – dropped the bombshell on Thursday night just weeks after cabinet vowed to crack the whip following an accident that killed four miners in May. The accident, which followed shortly after major financial embarrassment was uncovered at the mine, could be the last straw that broke the camel's back and forced the exit of the most senior man in the BCL structure. Now government has to find a replacement to pick up the pieces at the second largest private sector employer in the country with a labour force over 4200.

Too late


But that may be too little too late. The Patriot on Sunday is reliably informed that a request for further funding by BCL was rejected by Cabinet on Friday morning after the mine gobbled over P1 billion ABSA/Barclays loan that Government guaranteed recently. Sources said after government stepped in to save BCL from what seemed like imminent collapse, it later emerged that management had underestimated the mine's financial distress, that it actually needed close to P2 billion. This now means that Government will have to service this debt as the mine is incapable of raising enough money to meet its obligations. Financial problems at BCL have been exacerbated by the April 2015 failed expansion strategy marked by the signature acquisition of all Norilsk Nickel Africa assets, which included the troubled Tati Nickel Mining Company (TNMC).

Continued depressed commodity prices have put the brakes on the ambitious Polaris II, which was hailed as the master stroke that would have catapulted BCL out of the doldrums. These investment decisions were sanctioned by Dr Tombale's Board of Directors. Without any bail out from government BCL will close shop in the next three months, impeccable sources close to the developments said. This will mean that the mine will be placed under care and maintenance with only a skeletal staff. Efforts to reach James Molosankwe - BCL Communications Manager – failed by the time of going to print despite numerous calls made to his number. 

Jumping ship

Dr Tombale denies that he is abandoning a sinking ship, but rather says he is taking retirement from the Board, which he has led since 2010. It emerges from Dr Tombale's parting statement that BCL has never been divorced from controversy as in the past they had to deal with "some difficult problems such as the tax issues in the Republic of South Africa" and to quell simmering tensions between Board members from different stakeholder-companies who before 2010 were involved in alleged conflict of interest. To Tombale, this was one of the biggest risks the company had ever faced. Dr Tombale admits that any entity that has been operating for some time will go under if it cannot redefine its current operating model in the face of the fundamentally changed environment. He says BCL Limited is no exception, and its future lies in redefining its operating model to meet any emerging needs of the future.

Tombale explains that BCL Limited operates some of the lowest grade ores in the world in very deep shafts, and at depths in excess of 1000 meters underground - making these mines very costly to operate; very dangerous to operate in terms for potential accidents and difficult underground conditions (e.g. high temperatures). "The mines have been operating for a very long time for more than forty (40) years. As a result the future in no longer in these mines especially with the ability to withstand long mineral down-turn price cycles. The future of the country lies in development and exploitation of its mineral resources in a manner as to drive its industrialization such as in some of the leading economics in the world," he said, expressing hope in the new BCL Limited Polaris II strategy despite it being impacted negatively by the current mineral commodity prices downturn.

Six restructuring exercises

BCL has gone through at least six (6) restructuring exercises, three (3) Technical Partners to the Botswana Government who have served in the Board of Directors.  The first Technical Partner was a leading mineral company in the world that had profound impact in all aspects of the economy of one of the most developed countries of the Motherland Africa. They terminated their association with BCL Limited in 2002/03 passing the baton to a smaller company run by some of the brightest International entrepreneurs in the world mineral industry. The last Technical Partner was one of the largest International nickel companies in the world. "These people and companies have contributed immensely to the survival of BCL Limited even at the time when they did not believe in the viability of the company," said Tombale.

BCL background
BCL consumes about 20% of total electricity usage in Botswana or 43% of BPC’s own power generation. BCL is a major consumer of Morupule coal. BCL Limited began its operations in August 1956 with a meeting arranged by John Buchunan, Chairman of Minerals Separation Limited between Tshekedi Khama, Regent of the Bangwato Tribe in the Bechuanaland Protectorate and Sir Ronald Prain, Chairman of Roan Selection Trust(RST). An agreement between the parties signed on the 2nd June 1959 and subsequently ratified by the British House of Lords. This agreement with RST Exploration Limited, a subsidiary of Roan Selection Trust, formed BCL to operate the concession and to commence mining of Copper and Nickel discovered in the Selebi Area in 1963. In 1966 higher grade ore was discovered at Phikwe. The Selebi Phikwe ore deposits are owned and operated by BCL Limited in which the Botswana Government has 7.5%; Lion Ore Mining International Group has 6%, Botswana RST Ltd 85% and 1.5% by others. Botswana RST (Botrest) liquidated in October 2007, was a holding company of BCL Limited owned by the Botswana Government 30%, Lion Ore Mining International Limited 25%, public shareholders 40% and other shareholders 5%.