Norilsk Nickel joins race for BCL smelter 

SHARE   |   Monday, 07 August 2017   |   By Phillimon Mmeso 
Norilsk Nickel joins race for BCL smelter 

In a dramatic turn of events, Norilsk Nickel – which sold its mining assets in Botswana being Tati Nickel Mine and their shares at Nkomati mine in South Africa to BCL Group – is said to have also expressed interest to buy the BCL Smelter. A highly placed source at Norilsk Nickel has revealed that the Russian company which in 2014 decided to disinvest from Africa is seriously considering buying some of the BCL group of companies. BCL Group has three companies being Tati Nickel Mine, BCL Investments (Pula Steel, minerals exploration company, BCL Smelter) and BCL Mine. Though they have not made the offer to government as they are still in negotiations over the lawsuit, the Russian mining company is said to be considering taking back their mines and make proposal about other BCL assets. Recently when addressing Parliament, the Minister of Mineral Resources, Green Technology and Energy Security Sadique Kebonang said government has initiated action through Mining Development Company Botswana (MDCB) to resolve the Nkomati share purchase agreement with Norilski Nickel issue amicably. “Due diligence and valuation exercises are being carried out to establish the value of the Nkomati assets as a basis for negotiating a commercially acceptable solution to the parties involved,” he said. He said the due diligence and valuation exercises are expected to be concluded by the 15th of August this year after which negotiations with Norilsk Nickel will start. On why Tati Nickel and BC Investments were not put under final liquidation like BCL Limited, Kebonang said they have received firm offers from different interested groups who want to be able to transact and take them out of the provisional liquidation. The Russians are said to be interested in the smelter which is the biggest in the region with a capacity to treat up to 850 000mt of nickel/copper concentrates per annum. When the negotiations with government begin, the Russian Mining giants are expected to put a proposal to MDCB to buy some of the BCL group assets. It is not clear if Norislk Nickel will join forces with African Rainbow Minerals who used to be their partners at the Nkomati Mine in South Africa to buy the BCL Smelter. ARM, which is owned by South African billionaire Patrice Motsepe, is said to have also shown interest in the BCL Smelter.  Before the closure of the mine, the BCL smelter used to treat nickel/copper concentrates across the region including from Nkomati but was still operating below its capacity. The BCL Smelter has not been in operation since it was refurbished in 2015. The refurbishment of the smelter cost BCL P728 million. If it was in operation, it will have a replacement value of between US$2 billion and US$3 billion. According to the Local broking firm Motswedi Securities in their report by researchers Garry Guma and Moemedi Mosele, BCL smelter has the potential to turn around the fortunes of BC L and that of Selibe- Phikwe. “The BCL smelter is one of the projects we believe has the potential not only to contribute positively towards the profitability of BCL but also turn Botswana into a hub for the smelting and refining of copper/nickel in the region,” reads their latest report.

The smelter lost value 

Since its closure last year, the BCL smelter is said to have lost value and will be bought for a song, said an inside source. Its value is said to have dropped significantly and might be less than US$ 1 billion now from between US$ 2 billion and US$ 3 billion. In a press briefing recently, MDCB Acting Chief Executive Officer Sebetlela Sebetlela said they cannot ascertain how much the smelter has lost value.

Norilsk Nickel 

In 2014 Russia’s OJSC MMC Norilsk Nickel took a decision to depart entirely from its African portfolio, as its exit strategy from Norilsk Nickel Africa (in Botswana and South Africa). The Russian mining company - which is mainly focused on nickel, copper, platinum and palladium around the world - in 2014 sold 85% stake in Tati Nickel to BCL Group which was embarking on an ambitious project known as POLARIS II. This also saw Norilsk sell its 50% participation interest in the Nkomati nickel and chrome mine in South Africa to BCL. The transaction was the largest in a series of asset disposals by Norilsk Nickel since its new strategy was presented in October 2013 with the aim to exit from non-Tier-1 mining operations. It also marked Norilsk full business exit from Africa. Interestingly, Norislk Nickel didn’t close their South African offices, a strategy which was meant to assess the mining business within the region. Contacted for comment Norilsk Nickel Communications manager Tom Ferreira declined to comment, safe to say that they are still in negotiations with Botswana government over the share purchase agreement (SPA).