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BCL’s P600 million liquidation conundrum

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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Dark days as Aviation industry collapses

22nd November 2020
Air Botswana

As the Aviation industry takes a COVID-19 pummeling, for Africa the numbers are staggering, Chief Executive Officer of the International Air Transport Association (IATA), Alexandre de Juniac has observed.

Speaking recently at the African Airlines Association (AFRAA) has been hosting an Annual General Assembly, de Juniac said traffic is down 89% and revenue loses are expected to reach $6 billion. And this figure is likely to be revised downwards in the next forecast to be released later this month. “But the impact is much broader. The consequences of the breakdown in connectivity are severe,” he surmised.

According to de Juniac, five million African livelihoods are at risk while aviation-supported GDP could fall by as much as $37 billion. That’s a 58% fall.

“We have a health crisis. And it is evolving into a jobs and economic disaster. Fixing it is beyond the scope of what the industry can do by itself.”

He said they need governments to act, “And act fast to prevent a calamity.”

“We are in the middle of the biggest crisis our industry has ever faced. As leaders of Africa’s aviation industry, you know that firsthand. Airline revenues have collapsed. Fleets are grounded. And you are taking extreme actions just to survive. We all support efforts to contain the COVID-19 pandemic.  It is our duty and we will prevail. But policymakers must know that this has come at a great cost to jobs, individual freedoms and entire economies,” he said.

de Juniac used the AFRA general assembly platform to amplify IATA’s call for governments to address two top priorities: “The first is unblocking committed financial relief. Airlines will go bust without it. Already four African carriers have ceased operations and two are in administration. Without financial relief, many others will follow.”

Over US$31 billion in financial support has been pledged by African governments, international finance bodies and other institutions, including the African Development Bank, the African Union and the International Monetary Fund.

Unfortunately de Juniac pointed out, in his words, “Pledges do not pay the bills. And little of this funding has materialized. And let me emphasize that, while we are calling for relief for aviation, this is an investment in the future of the continent. It will need financially viable airlines to support the economic recovery from COVID-19.”

The second priority, according to IATA is to safely re-open borders using testing and without quarantines.

“People have not lost their desire to travel. Border closures and travel restrictions make it effectively impossible. Forty-four countries in Africa have opened their borders to regional and international air travel. In 20 of these countries, passengers are still subject to a mandatory 14-day quarantine. Who would travel under such conditions?” de Juniac quizzed rhetorically.

He suggested that countries should adopt systematic testing before departure provides a safe alternative to quarantine and a solution to stop the economic and social devastation being caused by COVID-19.

He admitted that it’s a frightening time for everyone, not least the millions of people whose livelihoods depend on a functioning airline industry. Right now, de Juniac said there essentially is no airline industry. He cited the example that China’s largest airlines sound optimistic, but in a vague way. “They gave no hard data about current yields, loads, or forward bookings, discussing only developments in 2019. Boy, does that seem like ages ago.”

Aviation’s darkest days

The IATA CEO said these are the darkest days in aviation’s history. “But as leaders of this great industry I know that you will share with me continued confidence in the future.

Our customers want to fly. They desire the exploration that aviation enables. They need to do international business that aviation facilitates. And they long to reunite with family and loved ones.”

He said the industry will, no doubt, be changed by this crisis, but flying will return. “Airlines will be back in the skies. The resilience of our industry has been proven many times. We will rise again,” he said.

de Juniac said Aviation is a business of freedom. “For Africa that is the freedom to develop and thrive. And that is not something people on this continent will forget or lose their desire for.”

 

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Business

Inflation increased to 2.2% in October 2020

22nd November 2020

Headline inflation increased from 1.8 percent in September to 2.2 percent in October 2020, but remained below the lower bound of the Bank’s medium-term objective range of 3 – 6 percent, and lower than the 2.4 percent in October 2019.

According to Statistics Botswana, the increase in inflation between September and October 2020 mainly reflects the upward adjustment in domestic fuel prices {Transport (from -3.9 to -2.5 percent)}, which is estimated to have increased inflation by approximately 0.29 percentage points.

“There was also a rise in the annual price increase for most categories of goods and services: Alcoholic Beverages and Tobacco (from 6.2 to 6.6 percent); Clothing and Footwear (from 2.5 to 2.7 percent); Communications (from 0.6 to 0.9 percent); Housing, Water, Electricity, Gas and Other Fuels (from 6.4 to 6.6 percent); Recreation and Culture (from 0 to 0.2 percent); Miscellaneous Goods and Services (from 0.7 to 0.9 percent); Food & Non-Alcoholic Beverages (from 4.2 to 4.3 percent); and Furnishing, Household Equipment and Routine Maintenance (from 2 to 2.1 percent). Inflation remained stable for: Education (4.7 percent); Restaurants and Hotels (3 percent); and Health (1.5 percent). Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices rose from 1.8 percent and 3.1 percent to 2.2 percent and 3.4 percent, respectively, in the same period.”

[Source: Bank of Botswana]

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BDC injects further P64 million into Kromberg & Schubert

22nd November 2020
BDC

Botswana Development Corporation (BDC) has to date pumped a total of P100 million into the expansion of Kromberg and Schubert, a car harnessing manufacturing company, operating from Gaborone Old Naledi.

At the official ground breaking ceremony of the company‘s new warehouse today, BDC Managing Director, Cross Kgosidiile revealed the wholly state owned investment corporation has pumped P64 million into the expansion which entailed building of the new warehouse.

Kgosidiile explained that this follows another expansion project which was successfully launched in 2017, in which BDC invested P36 million, bringing the total investment into Kromberg at P100 million. The MD also acknowledged Botswana Investment and Trade Centre (BITC) as a partner in the project and for having facilitated the acquisition of the land.

 

Giving a keynote address, Minister of Investment, Trade & Industry, Peggy Serame highlighted the importance of infrastructural development in growing the local manufacturing sector and transforming the economy of Botswana.

Serame underscored the value of strategic partnerships between Government and the private sector, noting that when the two work together and pull together in one direction results will be evident and jobs will be created.

“With the prevailing conditions of depressed economy occasioned by COVID-19 pandemic, government is reliant on entities like BDC to bring in revenue and acceleration of private sector development in line with its mandate and strategic plan. This plan is supported by the need to invest in growth sectors and accelerate the implementation of the Economic Diversification Drive,” Serame said.

Minister Serame noted that the partnership between BDC and Kromberg & Schubert begun in 2017 when the P36 million, 4100 square metres factory expansion for the company was launched.

 

She said the launch of the 7320 square meters factory expansion, to be built at the tune of P64 million signals the continuation of the good partnership between the two companies.

 

“I must commend BDC for their continuous efforts to build partnerships with the private sector geared towards contributing to economic development of this country.”

 

Minister Serame also added that BITC through its robust investor aftercare programme continues to provide value added and red carpet to Kromberg and Schubert under their One Stop Service Centre.

 

“In this regard BITC facilitated acquisition of land to enable this expansion. I therefore would like to commend BITC for their timely facilitation to make this expansion possible,” the minister said.

 

Kromberg & Schubert was incorporated in Botswana in 2009; The Company has grown to asset its position as a significant player in the regional automotive industry value chain.

 

The company is also a critical player in the economic development of Botswana, it currently employs 2100 Batswana across its operations. Kromberg exports on average P2.0 billion worth of goods annually, contributing significantly to foreign exchange.

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