Member of Parliament for Selibe Phikwe West Dithapelo Keorapetse has called on Government particularly Ministry of Mineral Resources, Green Technology and Energy Security to intervene in crises he terms “soiling of BCL value”. Keorapetse says BCL mine which was closed in October 2016 deteriorates everyday under liquidator Nigel Dixion Warren posing a serious threat to the value of the mine and making it unattractive to potential investors day after day.
BACKGROUND ON BCL CLOSURE
BCL faced its demise in October 2016 when government took a drastic decision to place the mine under provisional liquidation. Official reasons from the sole shareholder was that copper and nickel were poorly performing on the international market, and that BCL was running at perennial losses making it too steep for government to continue with recapitalisation.
After taking over as provisional liquidation in 2016 Nigel Dixon Warren, tasked with the safe and proper dissolution of BCL Group sent over 5000 BCL workers packing and immediately announced the reinstatement of 400 employees. The retained workers remained onsite undertaking the care and maintenance of the mine shafts, equipment and the smelter. At liquidation BCL assets were valued at over P10 billion with the smelter alone valued at over P3 billion.
Care and maintenance is a term used in the mining industry to describe processes and conditions on a closed mine site where there is potential to recommence operations at a later date. During a care and maintenance phase, production is stopped but the site is managed to ensure it remains in a safe and stable condition. In the case of BCL, the care and maintenance process involved safe dewatering of the mine underground shafts and high level management of environmental risks.
The retained workers were tasked with maintenance of the smelter, ore processing plant, equipment and most importantly securing the mine assets and the whole site. This was initiated with a view that BCL which has been in operation for the past 40 years before closure would rise to economic feasibility upon recovery of copper and nickel commodity prices in the global market.
Botswana Chamber of Mines Chief Executive Officer Charles Siwawa, a renowned mining expert shared with this publication in 2016 that the mine could still be operational under a restructured business model, explaining that the underground resource still contained high grade ore deposits is some BCL shaft. “Care and maintenance is a pivotal undertaking in the liquidation process of a complex and large scale industrial company like BCL , it will be vital to safeguard the value of the mine and prevent deterioration of its assets which could later compromise the mine’s worth before potential investors”
CURRENT STATUS OF THE MINE
However two years later after BCL closure the Area MP says under the current status of BCL and custodianship of Nigel Dixon Warren it will be difficult for government to find any interested investor, who would recommence operation of the mine and bring Phikwe back to life. He particularly eludes that BCL Liquidator is doing a poor job as far as safeguarding the mine value and its asset. Recently reports have been coming in , suggesting that there are earth tremors felt from underground causing fears and suspicion that Phikwe and surrounding areas might collapse in due time.
According to reports from Phikwe a rumbling sound hits the town and surrounding areas on a regular basis, both during the day and at night, discharging some quakes and waves that shake buildings and resident houses. Keorapetse says safe for safety and environmental ramification, the experienced tremors signals complete decay of the mine‘s underground components as Nigel Dixon Warren is failing dismally to capacitate and monitor effective protection and safeguarding of the BCL assets.
Recently Liquidator relieved some of the care and maintenance employ of their duties on the basis that the wage bill was stretching his allocated funds, a decision that received backlash from observers and commentators. Former BCL mine geologist told WeekendPost this week that “ineffective dewatering of the underground shaft would result in complete decomposition of the mine making it extremely difficult to resuscitate the mine to operation once identified investors avails the funds.
“It will be extremely costly to return back BCL to operation if the care maintenance employ is doing a shoddy job , if the underground assets lose value by day BCL might never be reopened” he said. Keorapetse further dismisses a team assembled by Department of Mines to investigate the issue saying they lack the technical ability to handle such a highly technical study.
“We have been informed that Minister Molale has dispatched a team of Department of Mines to Phikwe. I’m also informed that the team has been asking people in the town some questions regarding the tremor; this is laughable because this is not a sociological, Economic, demographic survey, it is a complex scientific study that should involve geotechnical engineers or rock mechanics,” she said. According to Keorapetse the authorities sent to Phikwe do not have the necessary expertise and experience to conduct proper investigation as well as technical knowhow.
“There is no Geotechcial Engineer/Rock mechanics engineer at the Department of Mines that can do proper investigations. Going around interviewing people presupposes that the authorities are clueless and incompetent and cannot help with providing answers to what is happening,” he said. The Phikwe West lawmaker saidno one can help with this phenomenon apart from ex-BCL employees or experts sourced from outside government.
He said Liquidator has decided to run the Care and Maintenance process with expatriates who do not have the right skills citing the current General Manager overseeing Care and Maintenance who according to him is not a mining engineer by profession. “He is a misplaced expatriate and can’t help us take a good care of this important national asset. We need institutional memory to handle a complex environment like BCL,” reiterated the Phikwe legislator.
He suggested that exercises by Liquidator to lay off some care and maintenance staff last year December got rid of all skilled and experienced staff that were heading the shafts and replaced them with people that are fresh from school. “What is he trying to achieve from that? Obviously it’s cost cutting at the expense of Care and Maintenance. I call upon department of mines and labour to do serious audit of labour requirements for such a technically complex and high risk undertaking of Care and Maintenance of BCL mine,” he said.
During the last sitting of parliament Minister of Mineral Resources Eric Molale told legislators that he was in a process to part ways with BCL Liquidator but was prevented by the law as liquidator was appointed by the High Court. “We may need to relook at the law; I don’t think someone who has spent years in accounting should be permitted to take care of anything to do with mining at that scale without being at least compelled to hire specified highly specialized technical staff. Everyday BCL is becoming unattractive to potential investors because it’s deteriorating under the Liquidator” reiterated Keorapetse.
Nigel Dixon Warren has since rubbished Keorapetse‘s claims saying he had confidence in his stuff. Dixon Warren said dewatering of the underground shafts was progressing well. He denied claimed that there was some blasting being carried out underground also adding that it is far-fetched to suggest any of the shafts could collapse when they did not do so during the mining years when blasting occurred daily. Department of Mines told WeekendPost on Wednesday that a team of experts is on the ground conducting investigation at the mine which would inform how government progress going forward.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.