It was quite clear in his first press conference as Minister of Mineral Resources, Green Technology and Energy Security that Advocate Sadique Kebonang faces daunting challenges, though he provided a brave re-assuring face in the midst of all. PHILLIMON MMESO reports
Sadique Kebonang faced a probing media and he kept his composure as he strutted through a myriad of issues that make his ministry. On his first days as the full cabinet minister, he was thrown into the deep end as Government – the major shareholder of BCL Investment – decided to put the two mines owned by the company being BCL and Tati Nickel Mine under liquidation. This resulted in thousands of jobs being lost and as a new minister he had to deliver the devastating news both in Selibe-Phikwe and Francistown.
On the BCL Group, Sadique said it has now been put on final liquidation and faces about nine hundred creditors who are seeking their dues. He said no serious offer has been received for the BCL assets though there are some offers. He said after the due diligence it was discovered that two shafts have no economic value, hence they will be closed down. On the interest shown by Emirates Investment House (EIH), Kebonang said after the lapse of the exclusivity to the company to do due diligence process, the provisional liquidator has written to all interested parties that had expressed interest in all or majority of the assets of the BCL Group. “The deadline for submission of expression of interest was June 12, 2017,” he said. Kebonang said when BCL reopen it will create 2500 jobs while Tati Nickel Mine will employ 1000 people. After Government put BCL Group on provisional liquidation, Norislk Nickel – the Russian Miner who sold BCL Tati Nickel and Nkomati mines interests – sued Botswana government to recover more than $270m after a BCL walked away from a deal. Norilsk agreed to sell operations including its 50 per cent at Nkomati mine to BCL Group, which 100% is owned by Botswana’s government, for $337m in 2014, later reducing its price to $271m. This was part of BCL Polaris II strategy.
But BCL filed for liquidation in October last year just before the transaction was due to be completed on the grounds that it was unable to afford the purchase price. On the issue, Kebonang said Botswana is currently negotiating with Norislk Nickel to settle the issue. “We absolutely have no control over the lawsuit as we are just shareholders but we are currently speaking with the Russians to solve the issue,” he said. He said they are taking into cognisant the reputation of the country, thus negotiating with the Russians to solve the impasse. Kebonang said the decision to close BCL was not a political decision but rather based on the situation on the ground. “When BCL Group was put on provisional liquidation they had less than P10 million in their account against a wage bill of P65 million,” said Kebonang.
Norislk Nickel responds
Contacted for comment on the BCL Group issue and whether Botswana government is in negotiations with them, Norislk Nickel Communications Manager Tom Ferreira said that the issue is very sensitive but was happy that there is progress.
Another burning issue for Kebonang is Lerala mine which is owned by Kimberly Diamond Limited which was recently put under care and maintenance leaving close to 200 of its employees in the lurch. The Mine is notoriously known for just closing without prior notice. This was the third time in its history that Lerala mine has closed shop, having shut down in February 2009 and July 2012. Kebonang said that the diamonds which were mined will be preserved and sold to pay the employees.
The De Beers deal
Recently it was announced that Botswana government and DeBeers have started negotiations over the contract. It was alleged that President Ian Khama has pushed for early negotiations so as to close all deals before vacating office in 2018. De Beers and Botswana currently jointly own Debswana and DTC Botswana which are involved in the exploration, mining, manufacturing, and trading of diamonds. Kebonang said the reason they have started the negotiations process early was because DeBeers is in the process of starting Cut 9 process at Jwaneng mine to expand the lifespan of the mine beyond 2024. The project, which cost $3 billion (£2.33 billion), was for the expansion of Botswana's richest diamond mine in 2010 to uncover 100 million carats of diamond and extend the life of the mine to 2024. “This is going to require a significant capital outlay and De Beers wanted binding assurance from government, hence early negotiations,” he said, adding that this compelled them to negotiate the extension of their 10-year marketing and sales agreement, which is due to lapse in 2020. According to Kebonang, such negotiations normally can take more than three years to complete, hence the need to start them early.
Another thorny issue on Kebonang’s table is the expansion and selling of Morupule B to Japanese contractor, Marubeni. Marubeni was awarded the tender to expand Morupule B power plant by another 300MW (Unit 5&6). The two units were to be Botswana’s first Independent Power Producers (IPP) project where the contractor funds construction of the power station and recoup their investment from selling power to BPC. In December last year, Botswana government signed a Power Purchase Agreement with Marubeni contractor but in January this year, the Japanese demanded that government pay sovereign guarantee upfront. Kebonang said they are currently working on the sovereign guarantee which will be presented before Parliament in the next session. But even before it reaches Parliament some senior officials have vowed not to support the P8 billion guarantee. When appearing before the Public Accounts Committee (PAC) recently, the Permanent Secretary in the Ministry of Finance and Economic Development, Solomon Sekwakwa expressed some misgivings regarding the deal. “Government had re-thoughts about giving a guarantee to the Marubeni-Morupule B project considering the risk that comes with it. There are certain things that need to be discussed like how we are protected,” he informed the PAC. He said government felt that some of the demands that come with giving the project guarantee were unreasonable, noting such amount cannot be afforded. The Japanese contractor won the contract last year together with South Korea’s Posco Energy, which will carry out the operations and maintenance of the plant. Taking a cue from Kebonang, Botswana Power Corporation (BPC) Chief Executive Officer Dr. Stefan Schwarzfischer, revealed that refurbishment of at Morupule A will be completed by the end of the year. He revealed that Unit 1 will start supplying power in 2017 and the last unit will be completed by the end of December 2017.
Minerals Development Company Botswana (MDCB)
Early this year MDCB fired its Chief Executive Officer (CEO) Paul Smith after he was accused of side-lining other stakeholders when taking major decisions. Appearing before PAC, Permanent Secretary in the ministry of Mineral Resources, Green Technology and Energy Security revealed that Smith had done more harm to the company hence decision to fire him. Former Orapa mine General Manager Sebetlela Sebetlela was appointed interim CEO while government was still looking for replacement of Smith. Kebonang informed the media that the board MDCB has appointed former Okavango Diamond Company CEO Toby Frears. He is a former Debswana executive having served as head of diamond sorting and valuing operations at the Diamond Trading Company Botswana (DTCB), where he was previously head of sales.
Morupule Colliery Expansion Project
Morupule Colliery, which is a subsidiary of Debswana Diamond Company, produces coal which is mostly supplied to Botswana Power Corporation's (BPC) Morupule A and B thermal power stations. In 2012 Morupule Colliery Limited (MCL) 1 expansion project was commissioned. The project was launched in October 2010 at a cost of BWP1.7bn ($218m). The main purpose for the expansion was to supplement the supply of coal to Morupule B power station. The project is currently stalled as farmers around the area are not satisfied with the compensation from the company. Kebonang said some of the demands from the farmers are just ridiculous. “We don’t agree with the value they put on their properties as they have exaggerated them. We have engaged some property valuers to help us,” he charged. The expansion project is being funded by a BWP1.2bn ($154m) bank loan provided by Stanbic Bank in Botswana, First National Bank of Botswana and Barclays Bank of Botswana. A further BWP506m ($65m) was raised from shareholders.