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BCL’s P600 million liquidation conundrum

Publishing Date : 11 March, 2019

Author : TSAONE SEGAETSHO

A daunting legal process waits while dust is settling in the explosive fracas between government led by Minister of Mineral Resources, Green Technology and Energy Security, Eric Molale and the outgoing BCL liquidator Nijel Dixon-Warren-the two parties are in a process of solving their differences amicably but the burden of liquidation remains a monkey on the state’s back, now even more heavily.


This week Molale revealed that already the process to get rid of Dixon-Warren, who he believes he has been incompetent with handling BCL liquidation, is ongoing and a “task team” has been installed specifically to handle the liquidation. When presenting his ministry’s Committee of Supply Speech on Tuesday before Parliament, Molale sounded like a man who would not wait to get rid of Dixon-Warren as he suggested his task team is working around the clock in addressing all the aspects of liquidation process, “including shortening of time.”


“Further, my ministry is engaging the Attorney General and Master of High Court to explore options of removing the liquidator. In parallel there are ongoing discussions between the liquidator and the task team towards removing the core mining assets out of liquidation to allow for government to take control of the disposal of the assets or closure if no investor is identified. Cabinet will be briefed in the shortest possible time,” said Molale this week.


The relationship between Molale and Dixon-Warren hit the rocks last year after the two men disagreed on whether there should be more money injected in the liquidation. Government led by Molale also complained that the BCL liquidator was incompetent and asked when Dixon-Warren would wind up BCL assets. Responding to government’s lack of funding on the liquidation, Dixon-Warren trimmed the staff which was hired to do care and maintenance at the mine from 520 to 390 much to the annoyance of Molale who went to Parliament and revealed that he is going to fire the liquidator.


Since last year, Molale has been working on a process to get rid of the liquidator and sources close to the process have revealed that the two men had to reach an amicable solution. According to information received by this publication, the liquidator was already frustrated by government’s lack of funding after finding that Dixon-Warren had P80 million in the liquidation account. According to information Care and Maintenance at the mine is P15 million and totally the liquidation is P20 million per month.


In an interview with this publication Dixon-Warren said he does not understand where the relationship between him and government went sour. The departing liquidator said he just found out that he is being removed and is not fighting it and prefers the amicable exit.
Dixon-Warren revealed that the last time government funded the liquidation was last year August and he was left with raising money from debtors. Around P200 million was collected and has been able to sustain the liquidation since the last quarter of 2018, according to Dixon-Warren.


According to Molale BCL should be placed under judicial management after Dixon-Warren leaves.  The liquidator said government will have to negotiate with him for an amicable pay out as it will be inheriting his assets, all the mine owned by the mining company, BCL mining plants and the infrastructure.. He said he will also have to deal with other creditors and negotiate compensation or any amicable deal.Dixon-Warren said there is going to be a “smooth” transition and an “amicable handover” as operations will continue to make sure nothing is disrupted in winding off of the BCL mine.

BCL stands to gobble a lot from the government budget

Dixon Warren has revealed that P600 million has already been spent on liquidation since the process bega in 2016. According to Molale Government will spend more on BCL rehabilitation this year. The total recurrent budget estimates for the financial year 2019/2020 is P733 061 670 and this represent an increase of P327 127 210 or 81 percent from this year’s allocation of P405 934 460, according to Molale. This significant increase is mainly due to BCL funding for rehabilitation meaning the mine will gobble a lot from government fiscal budget in this coming financial year.

According to Dixon-Warren there is a need for Government to fund drilling and exploration projects which will show what or how the mine is worth. For Phase 1 of the project, Dixon Warren said, around P50 million and P100 million is needed, meaning more money from the Government until winding off.

Investor scare

So far two “serious” investors have shown interest in buying the BCL mine. When speaking to this publication it was not clear to Dixon-Warren whether BCL will find a white night investor or will close down. A new investor is expected to come with at least an injection of between P1.5 billion to P3 billion.


However, according to Dixon-Warren, interest investors are scared of the lack of information on resources and viability of the mine. According to the outgoing BCL liquidator, BCL is an old mine and there should be ongoing exploration operations which should inform potential investors on the viability of the mine. Some would want to know the cost of closing the mine and resources which can be mined underground.


Despite the recent survey or study mining and exploration companies by the respected Fraser Institute showing that Botswana is top when it comes to be an ideal mining jurisdiction for mining and exploration companies, some observers believes otherwise. According to the study, Botswana has encouraging investment in exploration and its jurisdiction is seen to provide attractive mining policies. However observers believe some investors apparently would not touch BCL because Botswana is currently being seen as a risky destination for investment due to the ongoing tension between the incumbent president and his predecessor.


Also, investors who met with Dixon-Warren have qualms with the P2.8 billion which should be set aside for Environmental Rehabilitation Liability even in the event of a closing plan when the mine goes for closure. The sum of P2.8 billion was seen as an environmental rehabilitation and reclamation obligation by a report carried out by Dixon-Warren in 2015 and this amount remains an obligation few buyers would be willing to accept given the present value on site at BCL.

BCL tremors

When his exist was being planned, Dixon-Warren was still investigating the recent tremors which sent the town of Selibe Phikwe into panic. Dixon-Warren revealed that he sought for expertise of a South African consultant who would cost them P120 000. Before seeking the help of the SA consultant, the liquidator revealed that locally the tremors would not be investigated because of lack of resources and capacity, hence the roping in of foreign consultants. The SA consultant however found out that the tremor was minor.


“I had procured a consultant from South Africa. Last week a South African consultant came and investigated the tremors and he said the earth shaking was not serious and very small to cause a disastrous impact on the Phikwe community,” said Dixon-Warren. Dixon-Warren said the noise heard in Phikwe will further need an acoustic specialist to investigate. He said the specialist who is coming in few weeks time will detect the reason for the noise that came out during the tremor.

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