Why EIH wants BCL

SHARE   |   Tuesday, 07 March 2017   |   By Phillimon Mmeso
BCL Mine BCL Mine

The interest shown by the Dubai royalty under their Emirates Investment House (EIH) Company to buy the whole BCL Group has attracted mixed reactions from industry players. Some argue that it is surprising that in less than four months the mine which government said was not profitable has already find a buyer while others have welcomed the developments as it will save  the copper mining town of Selibe Phikwe from becoming a ghost town. BCL Enterprises, which is a stated-owned company, has already signed a memorandum of agreement with the Dubai billionaires.

Buying Polaris II prospects
A source close to the deal has revealed that while on the surface the Arabs are seen to be interested in opening and operating both the BCL and Tati Nickel Mines, deeply they have been lured by Polaris II strategy. The strategy was made and adopted two years ago by the BCL management in order to transform the company into a diversified enterprise. It was modelled around the Russian’s Norilsk Nickel Mining Company (NNMC) system under which it managed to open and purchase mines around the world. Though many felt that POLARIS II was the downfall of Dan Mahupela’s management, those close to the mine have revealed that the strategy is BCL gateway to diversification. Through the Polaris II strategy, the mine’s thrust was to expand and sustain the nickel production circuit, develop a copper production circuit, iron production circuit, coal production and beneficiation circuit, chemicals and by-products as well as to develop precious metals and other minerals circuit. As a clear indication that the Arabs will adopt POLARIS II strategy they have already showed interest in buying the 50% BCL stake at Nkomati and Chrome Mine in South Africa. Nickel, copper production circuit. The strategy, which was already in motion in the development of nickel and copper production circuits, saw BCL in 2014-2015 embarking on exploration of nickel resources at Maibele near Tshokwe village. When the mine was put under temporary liquidation they had already applied for a mining licence to mine Maibele North as an open pit and to continue exploration and drilling to evaluate the potential for underground mining. BCL, which was in joint venture with Botswana Metals Limited, had three prospecting licences at Maibele (PL110/94, PL 111/94 and PL 54/98). Exploration resulted in three discoveries of Nickel-Copper and Copper-Silver mineralisation known as Airstrip Copper. Selkirk Nickel mine situated near Francistown has a value of P1.4 billion over a 6-10 years lifespan and the Maibele Nickel prospect has an in situ value of P1.9 billion. The mining was to start this year, and the EIH has their work cut out regarding the production as the licence to mine is said to have already been given. Another progress made by the Mahupela administration is the exploration works at Dikoloti, 5 km west of Selibe mine with metallurgical test work being the focus. One of the reasons BCL wanted to acquire Norilsk Nickel Mining Company in Africa was based on the  Nkomati toll concentrate valued at P250 million per annum as well as the P216 million worth of concentrate from Tati Nickel Mine which will be treated at the Smelter.

Iron Ore circuit
Another big catch for the multibillion Emirates Company is the Iron Ore circuit In 2012 BCL was given exclusive prospecting rights for two prospecting license tenements within the Mahalapye area, PL160/2012 and PL161/2012 respectively, to explore for hematite iron ore and associated manganese. Another POLARIS II project, which is said to have made the Emirates Investments Group develop interest into  BCL is the Molopo Iron ore project which is  valued at  P970 million as well as the Moeng Manganese joint venture. Ikongwe Iron Ore project, which is valued at $9.2 million as well as the Iron from slag project with a revenue stream of $64 million (P700 million), is another appealing project. The state-owned company had constructed a standalone blast furnace, Pula Steel, to produce billet from the readily available iron, coal and limestone ingredients from Botswana. This, according to sources, will enable EIH to enter into steel production business which is currently dominated by the Chinese companies.

Coal circuit
In 2015 BCL was granted coal exploration licence and when it was shutdown they were about to commerce work. The study on the Coal/Waste to Liquid (CTL) prototype plant done with a Canadian company was completed last year, Converde and that the study for a captive coal fired power station has been completed. This will enable EIH to embark on having their own power station thus reduce cost of production at their operations. In December 2015 BCL completed a visibility study which has proven the viability of a range of chemical products which include fertilizer, stock feed and detergent soap. Part of IEH through its subsidiary Elite Agro LLC is expected to be in charge of the products. It was established in 2010 as an independent business unit, and adopted a structured approach which allowed it to move into the world of corporate farming swiftly and professionally combining top local management with international technical expertise. This result is a rather small team of professionals who set the largest Farm and largest Potato Farm today in the UAE.

Gope Diamonds
At the time of its closure BCL Investment through its subsidiary Maibwe Diamonds (BOD) where they hold 51% had discovered a number of diamondiferous kimberlites at their Prospecting Licence number 86 (PL86). BCL exploration projects in the Gope area are estimated to have a potential value of over P20 billion. It is alleged that in mid-2016 it was discovered that the drilling showed that the diamond is of high grade and quality. Maibwe project has a potential in situ value of $1.9 billion (P21 billion). In 2013 Botswana Diamonds signed a joint venture with Brightstone Mining on the block. BCL subsequently took over the block in 2015 and created Maibwe Diamonds. Botswana Diamonds retains a 15% position in Maibwe Diamonds.

Why interest in Africa
Over the years the oil reserves in the Middle Eastern Country have been running dry and hence it adopted a strategy of making Dubai’s geographic location as a commercial hub to access Europe, the Middle East and Asia. It has offered economic incentives for companies which wanted to invest there such as 100% business ownership, tax free environments and no trade barriers. Recently Dubai started to develop more interest in Africa and has developed the Africa Gateway Smart Application, a free app to help its members access African investment opportunities. A number of UAE companies have made significant investment inroads in the continent. DP World runs the port of Dakar in Senegal and own ports in Mozambique, Algeria and Djibouti. Dubai Investment Group owns 35 per cent of Tunisia's Tunisie Telecom. Istithmar has invested in aviation in the Horn of Africa and hotels and other facilities in Rwanda, Tanzania and other places. Etisalat owns 82 per cent of Sudan's Canar Telecom, a 51 per cent stake in Tanzania's Zanzibar Telecom (Zantel) and 50 per cent of West Africa's Atlantique Telecom operating in Benin, Burkina Faso, Togo, Niger, Central African Republic, Gabon and Ivory Coast.