Government is running helter-skelter to find a technical partner and have BCL mine re-opened following a compelling case necessitated by the rising copper and nickel prices in the global market. Government has developed desperation following a collapse of an earlier attempt to sell the mine to foreign investors.
Government’s stringent time frame, is also necessitated by the ruling Botswana Democratic Party (BDP)’s frantic desire to salvage at least one of the Selibe Phikwe constituencies. Information passed to this publication indicates that BDP is aware of the sombre mood in Selebi Phikwe, a situation set off by the closure of the mine, sluggish growth as well as ineffective SPEDU initiative.
BDP currently holds one of the Selebi Phikwe constituencies (Selebi Phikwe East) under the custodianship of Minister of Presidential Affairs, Governance and Public Administration Nonofo Molefhi. “We are in talks with various companies; one in Australia and another Canadian company. We are basically looking for a possible technical partnership,” revealed a cabinet minister, who spoke to this publication.
“It would not be advisable for government to open Tati Mine without the Selebi Phikwe smelter. There would be no business in doing that and we would not be making money from that kind of arrangement.” The insider revealed that there were some who suggested only the opening of Tati Nickel Mine instead of the BCL mine, a decision which some also argued it would not make economic sense for Botswana in both job creation and revenue generation.
According to the impeccable source, one company had developed interest in coming on board, but wanted to be given 12-18 months to assess the mine before committing to a partnership with the Botswana government. Government however, prefers a deal that would be struck before the 2019 general elections, something which would also see the marriage based on political expedience rather than marriage.
The government had taken the decision to close the BCL and Tati Nickel Mine during the country’s golden jubilee celebration following the dramatic fall in commodity prices as well as perennial losses by the BCL group. Government indicated that it could not afford over P8 billion it needed to recapitalise the mine and to keep it going. In the process, over 6000 jobs were lost, bringing misery to the residents of Selibe Phikwe, Francistown and surrounding areas.
World Bank and International Monetary Fund (IMF) also indicate optimistic forecast about nickel prices going forward. Nickel prices grew by 5.7 percent in February continuing a medium growth. Since February 2016, when the price of nickel reached a 13 year low nickel prices have rebounded by 61 percent and averaged at $13.3925 per metric ton in March 2018.
The price of nickel is the indicator of a situation in different business industries such as steel and car production. Because nickel is a very popular component of alloys the previous year was not very clam for the nickel market because of the new direction of politics in china and ecological problems in the Philippines which reduced the supply of nickel.
Various leading economists expect nickel deficit and high prices as a result. The world bank in its commodity forest report estimated that the average spot price for nickel will grow slightly further in 2018 to US$ 10 559 per metric ton from US$10 100 in 2017. Over the next decade, the price will grow to us$18 000 per metric ton.
The IMF’s report revealed similar expected rise from US$9.227 per metric ton in fourth quarter 2017 to US$9.438 in 2018 and growth to US$9.557 in 2019. What for longer term forecasts, experts estimate a very slow growth to US$9.987 per metric ton by 2022. The two agencies also reveal that Copper prices will rise following disastrous performance in 2015 and 2016, though IMF expects some decline in future of copper prices.
Government also has the responsibility, to rehabilitate the land, as required by the law. It is international practice that once a mineral deposit is exhausted, mining companies have a responsibility to work towards land rehabilitation – the return of disturbed land to a stable and productive condition.
This include engineering works to decommission and dismantle infrastructure, complete rehabilitation, grade landforms for effective drainage, cap and cover tailings facilities, as well as implementation of post-closure monitoring networks. Minister of Environment, Natural Resources Conservation and Tourism, Tshekedi Khama told parliament this week that government is developing a detailed and costed rehabilitation plan that would be implemented to address the BCL mine and the periphery environmental issues. The question had been asked by former Minister Minerals Sadique Kebonang, who had wanted to know, the intention of government with the aftermath of BCL closure.
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.