Botswana government was dealt a heavy blow when the Emirates Investment House Company (EIH) which has shown interest in buying the BCL Investment pulled out of the deal. Information gathered by this publication reveals that the Dubai-based company which has just completed due diligence assessment both in Botswana and South Africa has now chickened out of the deal. The main contention between EIH and Government is said to be the Norilsk Nickel deal in which the former is suing Botswana for the breach of contract. As part of the deal, BCL was to pay Norilsk Nickel US$337 million payable in cash for all the assets. In addition, BCL were to assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with each asset. The agreed deal structure envisages the assignment of the Nkomati concentrate off-take agreement from Norilsk Nickel (Metal Trade Overseas AG) to BCL. In addition, Norilsk Nickel (via MTO) will enter into a matte off-take agreement with BCL, whereby the matte will be supplied for processing to Norilsk Nickel’s Harjavalta refinery in Finland. BCL has failed to fulfil all the agreements forcing the Russian company to sue them. Chief executive of Norilsk’s Africa operations Michael Marriott said that the way the country acted on the deal has brought question over whether it is one of the safest and best places to invest in the whole of Africa. “The way that the government of Botswana has acted over BCL brings the validity of that reputation into question. The negative ramifications could be felt across the economy of the whole country,” he said. EIH, which was impressed by the BCL’s POLARIS II strategy, were shocked when government brought in another investor to now buy the Nkomati and Tati Nickel Mining Company. “The Arabs are interested in buying all the assets and not pieces as the main reason they wanted to acquire it was based on the POLARIS II strategy,” revealed the source. The Ministry of Mineral Resources, Green Technology and Energy Security had engaged the former BCL Divisional Manager – Corporate Strategy Mark William as he is the architect of POLARIS II strategy.
EIH wanted whole assets
His presentations and explanation of POLARIS II is said to have impressed the Arabs who were more than ready inject over P3 billion into BCL Investments, the owners of BCL and Tati Nickel Mines. The Dubai billionaires, who were headhunted by government, wanted Botswana to settle their debt with Norilsk Nickel before they could sign the Memorandum of Agreement. “The Arabs were shocked when they expected government to discuss with them their proposal when they learnt that a new investor has been brought to also do the due diligence,” said the source close to the deal. When enquiring on what is going on, EIH were informed that the new investor is interested in Nkomati and TNMC operations while EIH will be sold BCL mine only. “This infuriated the Arabs as it was never their intention to invest in one operation and has never been their deal with Botswana government,” said the source. TNMC and Nkomati Mines are the most profitable operations while at BCL only the smelter is attractive. In 2014 Norilsk Nickel took decision to withdraw its foreign assets especially in Latin America and Africa. The global mining giants wanted to concentrate on their tier 1 assets, which are mostly based in the Polar region. BCL, which wanted to be a regional mining force through their POLARIS II strategy, bought 85% shares of MMC Norilsk Nickel at Tati Nickel Mining Company, making them (government) 100% shareholders at the mine through BCL Enterprises. BCL also bought 50% Norilsk Nickel shares at Nkomati Mine in South Africa and were yet to complete the transaction. One of the main reasons for acquiring the Nkomati was to have its concentrates treated at BCL’s Smelter.
When Norilsk Nickel wanted to sell their assets in Africa one of the first companies they approached was their partner at Nkomati Mines, African Rainbow Mines but they turned down the offer citing weak markets. Though Ministry of Minerals Resources, Green Technology and Energy Security are mum on the other investor citing confidentiality, close sources to the deal have revealed that South African billionaire Patrice Motsepe through his company, ARM is the new entrant into the deal. Government officials only hinted that the international player has incorporated businesses in South Africa. After the closure of the BCL Investment mining operations being BCL and TNMC Mines, ARM was one of the companies that were said to be interested in the assets, especially the Smelter but the coming of the Arabs overshadowed their interest. Government has now extended liquidation process of BCL by another month to allow ARM carry out the due diligence assessment at TNMC.