Edcon, Southern Africa’s biggest non-food retailing group which sells textiles and footwear and owns Jet Stores, Jetmart, CNA, Edgars and Ackerman is suffering from something akin to a metaphorical financial influenza-it is literally begging lenders, landlords and creditors to go easy on it as it currently debt trapped.
Information reaching BusinessPost is that the metaphorical flu may infect the Botswana stores as the South African economy has an inextricable link to that this country, therefore if South Africa catches flu Botswana sneezes. Last year data revealed that South African economy entered recession in the second quarter of 2018 for the first time since the global recession of 2009 and this could be one of the major factors of Edcon’s financial woes.
Pundits and observers on the other hand believe Edcon business of selling goods on credit appears not sustainable as people tend not to pay in the midst of economic recession which has rendered many to be unable to afford the cost of living. Edcon has 30 stores in Botswana employing approximately 300 people and these jobs and shops are expected to shrink according to experts. Edcon has been in business for nearly 90 years and operate in stores across South Africa, Namibia, Botswana, Lesotho, Swaziland, Mozambique, Ghana, Zimbabwe and Zambia.
Four principal brands: Edgars, Jet, CNA and thank U. According to Edcon latest financial results, the group has 187 stores outside of South Africa. The financial results states that, sales from stores outside South Africa contributed 12.2 percent (9.1 percent excluding Zimbabwe) of retail sales for fiscal 2018, down from 11.9 percent (9.4 percent excluding Zimbabwe) during the prior period. Following media reports that Edcon is failing to pay rent on many South African malls, this week the group has devised a plan to fight its impending financial woes.
Edcon financial woes is expected to lead into loss of 140 000 jobs at South Africa. Last year the group closed many stores in Botswana avoiding what was termed retail cannibalization-one of the contributors to the company’s financial blow. Retail cannibalisation occurs when a company’s new stores steal customers from existing stores in a development that has got the eventual reduction of overall sales even though sales in the new stores generally do well.
South Africa’s biggest non-food retailer recent financial woes are due to weak consumer spending and economic growth in South Africa. Edcon was taken over by banks and bondholders in 2016 to avoid nose-diving. Edcon shops of Jet sells quality value fashion, home and beauty merchandise targeted at lower to middle-income customers- these are the hardest hit by South African recession.
Edgars on the other hand is expected to salvage a lot of business because it targets middle to upper-income customers who control the economy, but this type of consumers takes a lower share of the South African population. Now Edcon plans on “recapitalisation programme”to reduce their financial woes. Edcon Spokesperson Michael Rubenstein would not comment on how the recent developments are exactly going to affect Edcon business in Botswana.
This week Rubenstein passed a recent statement from Edcon CEO Grant Pattison to BusinessPost and the spokesperson said the announcement applies to all Edcon businesses, even those in Botswana. This suggests that the financial woes at South Africa also affects Edcon local businesses. "The restructuring and recapitalisation of Edcon has passed its next hurdle with the Edcon Board having recently approved the structure of the proposed recapitalisation plan, and in response lenders have extended waivers to allow time for implementation.
This will allow sufficient time for the number of necessary due diligence and governance processes to be completed. At this stage, we can’t release any additional detail as we remain subject to Confidentiality Agreements. The Board fully appreciates the support that is being received from all Group stakeholders and the commitment that has been shown for the viability of the business. We will make further announcements in due course,” said Pattison’s recent statement.
Pattison’s recent statement comes after last year December Edcon press statement where the company confirmed that it is in discussions with numerous stakeholders with regard to the Group’s continued recapitalisation programme. Pattison commented, “Edcon’s balance sheet recovery programme has been underway for some time as we continue to focus on completing a recapitalisation of Edcon.
Part of the process is the continuing discussions with various stakeholders: which include lenders, landlords, potential new investors, and others, as we explore and discuss various options.” Edcon want malls to reduce rent and lenders to go easy on it. South Africa’s Sunday Times reported that on 7 December Edcon had sent out a letter to its 31 biggest landlords asking for a two-year 41 percent "rent holiday" in exchange for a five percent stake in the business in a bid to stave off liquidation and the loss of up to 140 000 jobs.
A report by the Sunday Times newspaper stated that Edcon had sent out a letter to its 31 biggest landlords asking for a two-year 41 percent "rent holiday" in exchange for a five percent stake in the business in a bid to stave off liquidation and the loss of up to 140 000 jobs
Edcon is facing collapse or possible liquidation according to South African experts. According to Sunday Times who had seen a letter from Edcon to landlords, the group is desperate to an extend that it is planning to offera 5 percent stake in the business in exchange for a two-year agreement on rentals.
According to the South African Sunday publication, Edcon is doing all these to secure P1.6 billion in emergency funding from banks and the Public Investment Corp. According to latest financials, Edcon’s total net third party debt as at 30 June 2018 was P6 billion. According to Edcon, another element of the programme to ensure successful recapitalisation of the balance sheet has been to lower store costs, which were well-controlled for the three-month period ended 30 June 2018 increasing by only 0.6 percent to P1.4 billion. Financial results for the thirteen weeks ended 30 June 2018 the Edcon Group reported retail sales of P4 billion for the quarter, at a gross profit margin of 38.9 percent.
The future of Botswana’s largest copper and silver operation, Khoemacau Copper Mining, looks promising as the new owners, MMG Group, commit to the mine’s expansion plans. MMG, an Australian headquartered company owned by China, has expressed its dedication to doubling Khoemacau’s production and transforming it into one of the most significant high-grade copper operations in Africa.
Nan Wang, the Executive General Manager for Australia and Africa at MMG, stated that while the immediate focus is on maintaining a consistent production level of 60ktpa, there are solid plans to increase Khoemacau’s production capacity. The company aims to double its production from 3.65Mtpa to 8.15Mtpa, resulting in an increase in payable copper from approximately 60ktpa to around 130ktpa.
To achieve this expansion, Khoemacau has completed a pre-feasibility study on the project and a solar power initiative. The next step is to conduct a feasibility study, which will pave the way for increased production capacity. Additionally, Khoemacau has identified extensive exploration opportunities across its license area, positioning the company for an exciting new phase of development.
The current Khoemacau operation reached full production and nameplate capacity in December 2022, following over a decade of investment totaling over P10 billion. This significant investment allowed for an intense exploration program, resulting in the development of the most automated underground mining operation in Botswana. The first concentrate was produced in June 2021, and the product entered the export market in July of the same year. Throughout 2022, the company has been working on the pre-feasibility study for the expansion project, with the feasibility study scheduled for the following year.
The expansion plans will involve the construction of a new world-class process plant in Zone 5, where the current mining of ore takes place. This new plant will be larger than the existing one in Boseto, which currently receives ore from Zone 5. The expansion will also involve the development of new underground mines, including Mango, Zone 5 North, and Zeta North East. These additional mines will bring the total number of underground shafts at Khoemacau to six. The ramp-up of production from the expansion is expected to occur in 2026.
Khoemacau, which acquired assets in the Kalahari Copper Belt after the liquidation of Discovery Metals in 2015, currently employs over 1500 people, with the majority being Batswana. The Khoemacau Mine is located in north-west Botswana, in the emerging Kalahari Copperbelt. It boasts the 10th largest African Copper Mineral Resource by total contained copper metal and is one of the largest copper sedimentary systems in the world outside of the Central African Copperbelt.
The mine utilizes underground long hole stoping as its mining method and conventional sulphide flotation for processing. Resource drilling results have shown the existing resources to have continuity at depth, and there are several exploration targets within the tenement package that have the potential to extend the mine’s life or increase productivity.
The Zone 5 mine has already ramped up production, and further expansion in the next five years will be supported by the deposits in the Zone 5 Group. The estimated mine life is a minimum of 20 years, with the potential to extend beyond 30 years by tapping into other deposits within the tenement package.
In conclusion, the commitment of MMG Group to Khoemacau’s expansion plans signifies a bright future for Botswana’s largest copper and silver operation. With the completion of pre-feasibility and feasibility studies, as well as significant investments, Khoemacau is poised to become one of Africa’s most important high-grade copper operations. The expansion project will not only increase production capacity but also create new job opportunities and contribute to the economic growth of Botswana.
Khoemacau Copper Mining, a leading copper mining company, has recently announced its acquisition by MMG Limited, a global resources company based in Australia. This acquisition marks a significant milestone for both companies and demonstrates their commitment to continued investment, growth, and sustainability in the mining industry.
MMG Limited is a renowned mining company that operates copper and other base metals projects across four continents. With its headquarters in Melbourne, Australia, MMG has a strong track record in mining and exploration. The company currently operates several successful mines, including the Dugald River zinc mine and the Rosebery polymetallic mine in Australia, the Kinsevere copper mine in the Democratic Republic of Congo, and the Las Bambas Mine in Peru. MMG’s extensive experience and expertise in mining operations make it an ideal partner for Khoemacau.
MMG’s commitment to sustainability aligns perfectly with Khoemacau’s values and priorities. Khoemacau has always placed a strong emphasis on safety, health, community, and the environment. MMG shares this commitment and applies the principles of good corporate governance as set out in the Corporate Governance Code of the Hong Kong Listing Rules. As a member of the International Council on Mining and Metals (ICMM), MMG adheres to sustainable mining principles, ensuring responsible and ethical practices in all its operations.
Over the past 12 years, Khoemacau’s current shareholders have made significant investments in the development of the company. With approximately US$1 billion deployed in the project, Khoemacau has successfully transformed from an exploration and discovery phase to a fully-fledged operating copper mine. The completion of the ramp-up of the Zone 5/Boseto operations has set the stage for the next phase of expansion.
With the acquisition by MMG, Khoemacau is poised for an exciting new chapter in its development. The completion of a pre-feasibility study on the Khoemacau expansion and a solar power project has paved the way for increased production capacity. The feasibility study will be the next step in doubling the production capacity from 3.65 million tonnes per annum (Mtpa) to 8.15 Mtpa, resulting in a significant increase in payable copper from approximately 60,000 tonnes per annum (ktpa) to 130,000 ktpa. Additionally, Khoemacau has extensive exploration opportunities across its license area, further enhancing its growth potential.
The CEO of Khoemacau, Johan Ferreira, expressed his gratitude to the current owners for their stewardship of the company and their successful transformation of Khoemacau into a fully operational copper mine. He also highlighted the company’s focus on the expansion study and its vision for the future with MMG. Ferreira emphasized that the partnership with MMG will ensure Khoemacau’s long-term success, delivering employment, community benefits, and economic development in Botswana.
MMG Chairman, Jiqing Xu, echoed Ferreira’s sentiments, stating that the acquisition of Khoemacau aligns with MMG’s growth strategy and vision. Xu emphasized MMG’s commitment to creating opportunities for all stakeholders, including shareholders, employees, and communities. He expressed confidence in Khoemacau’s expansion potential and the company’s ability to realize its full potential with the support of MMG.
The sale of Khoemacau to MMG is subject to certain conditions precedent and approvals, with the expected closing date in the first half of 2024. This acquisition represents a significant step forward for both companies and reinforces their commitment to sustainable mining practices, responsible resource development, and long-term growth in the mining industry.
In conclusion, the acquisition of Khoemacau Copper Mining by MMG Limited signifies a new era of investment, growth, and sustainability in the mining industry. With MMG’s extensive experience and commitment to responsible mining practices, Khoemacau is well-positioned for future success. The partnership between the two companies will not only drive economic development but also ensure the safety and well-being of employees, benefit local communities, and contribute to the overall growth of Botswana’s mining sector.
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.