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BCL faces P3 billion lawsuit

The embattled BCL mine now faces legal action over an acquisition deal worth 3 billion Pula that it initiated in South Africa but has now failed to see through.

For a period of two years since 2014, BCL was locked in the process of acquiring a 50% ownership of Nkomati mine in South Africa. The transaction was finally given the green light by South Africa’s Mineral Resources Minister, Mosebenzi Zwane, in August this year.

After going through all the necessary processes for acquiring the stake, BCL then failed to trigger the final process of the exchange of shares and the P3 billion payment because it simply did not have the money.

BCL said that at the time it negotiated the acquisition the market was still profitable but when it finally came to fruition, it had become unprofitable.

“The reality of the matter regarding Nkomati is that even though the transfer was approved by the Mineral Resources Minister in South Africa, BCL was simply not in a position to pay, so we never got the ownership of that company,” Permanent Secretary in the Ministry of Minerals, Green Technology and Energy Kgomotso Abi stated.

“Clearly they have their legal options that they can exercise and at this juncture I am not willing to speculate on what action they will be taking,” Abi added.

The move to acquire the South African asset was made after the Polaris II strategy that put the remaining years of life for BCL at 10 and forced management to look elsewhere to continue business by smelting ore at BCL.

Chairman of BCL’s now dissolved board of directors, Dr Khaulani Fichani stated that the South Africans have indicated that they will indeed sue for the P3 billion and that there has been a flurry of communication between BCL’s legal minds and that of Nkomati owners, Norsirlk Africa.

“Now when you get the ministerial approval from South Africa, that they call the section 11 approval, that is a share transfer, now that means that that agreement has now been completed, in other words when that share transfer was approved, BCL owes Norisikl Africa an amount close to P3 billion. It’s the kind of situation we are in, where is that money going to come from? We could either wait for the letter of demand that says listen, we are now following this agreement we signed and according to the agreement, you owe us P3 billion, and we don’t have P3 billion, so that’s when we seek the protection of the courts,” Fichani related.

He further continued: “They promised us that they reserve their legal right, which means that they are going to sue for the P3 billion and this was the real danger because if they came and sued they would control the liquidation process.’’

“There was concern that they would not have the same interests as us because with individual creditors, they would indicate what they want to attach, then sell and leave, but if you do it yourself, as we have done it with a provisional liquidation, we ask ourselves, what can be done?” said Fichani.

Fichani further indicated of the deal with the South Africans: “that agreement was started in 2014 and we got the ministerial approval in August. That meant that we now actually had to make good on our intention to acquire that asset. But the sad thing is that when we talk about the mining business…the prices are cyclical so when the deal was concluded, it was concluded at a time when metal prices were healthy…and at the time of conclusion the metal prices had taken a 180 degree turn and there was no longer a business case for us to do that.’’

“So, our ability to actually follow through with that became a serious liability,’’ he further added.

Furthermore Fichani revealed that between the two options of being liquidated by a creditor or actual liquidation by themselves, they chose the latter as it gave them some level of protection. “In trying to understand why we are here today, in this situation we are in, if you are not able to meet your obligations really, you need some form of protection and the route that was chosen was to seek compulsory liquidation by the shareholder,” Fichani said

He also said that the Nkomati deal had gone through a robust acquisition process that involved both legal and financial transactional advisors. “Just to give the assurance that when you do a deal such as the Nkomati it is not just one individual involved, you are involving the lawyers, and you’re involving the banks, so all of those processes were ticked, it’s not one individual, the banks do their due diligence…we then got our team to do our due diligence as well. All of these steps were done,” Fichani said.

The BCL mine has now been put under the curatorship of Nigel Warren Dickson of audit firm KPMG. Dickson was appointed by the High Court on Sunday to determine the way forward for the mine and in his hands and mind, lies and weighs heavily, the fate of 5000 miners.

However, Abi also stated that at present the liquidator is now in charge of the mine and by extension its future. He further said that the liquidator will determine whether the mine’s assets can be salvaged such as several shafts in Selibe Phikwe which he said “can be worth a profit’’.

“What I wish to say now in terms of who is in charge, it’s the liquidator who can make decisions regarding the of the future of the mine but obviously he has not been part of the BCL situation so in fact he will be in consultation with the shareholder being government and BCL management so that whatever he decides, he will have the relevant information to make the rightful decisions,” Abi declared.

Fichani also stated that among other options, the liquidator will also be charged with assessing whether BCL cannot find a partner so that, “this is not a 100% government owned mining company”.

Dickson is expected to finish his job in a period of four months and thereafter hand in his report back to the High Court. Among a raft of options on the table includes the final liquidation of the mining company, restructuring BCL to operate in a different form or closure of the BCL mines.

He further said that the cost of extracting a pound of nickel at BCL had been exorbitant peaked at $8 while the price for the same pound was only $4. “This then means that for each pound we were producing there was a deficit of $4 per pound,” Fichani said.

He also stated that the liquidator will also have to look at what is to be done to change the current production costs at BCL, something he said the board had battled with for some time.

Fichani further stated that the Polaris II strategy has in fact not failed. “Instead it has presented an opportunity that even the liquidator, considering the business case of BCL now, that part of its centre of gravity clearly is shifting towards Tati. Remember we are saying that, the mines that we have at BCL are old mines, deep mines, we are talking about mining more than 2 kilometres underground. That is a challenge on its own, so our centre of gravity is being helped by the fact that we have Tati on board,” Fichani stated.

He further said that government’s injection of funds and Polaris strategy was beneficial because it cleaned the balance sheet of BCL making it attractive to investors. He also said that even the Nkomati deal materialised because of the company’s clean balance sheet. “There was no way we were going to get a partner if the company’s balance sheet declared that there were huge debts there.”

In terms of the quality of the leadership of BCL, Abi said: “Regarding the competence of the management or the board, hindsight is such a good teacher, anybody with the benefit of hindsight can say we could have done this differently and so forth.”

“Obviously there are things that we could have done better…At the core of things is: if you sell a product at $4 while your operational cost was $8, can you make a profit?”

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Botswana imports in numbers

1st March 2021
Botswana-imports

For so many years, Botswana has been trying to be a self-sufficient country that is able to provide its citizens with locally produced food products. Through appropriate collaborations with parastatals such as CEDA, ISPAAD and LEA, government introduced initiatives such as the Horticulture Impact Accelerator Subsidy-IAS and other funding facilities to facilitate horticultural farmers to increase production levels.

Now that COVID-19 took over and disrupted the food value chain across all economies, Botswana government introduced these initiatives to reduce the import bill by enhancing local market and relieve horticultural farmers from loses or impacts associated with the pandemic.

In more concerted efforts to curb these food crises in the country, government extended the ploughing period for the Southern part of Botswana. The extension was due to the late start of rains in the Southern part of the country.

Last week the Ministry of Agriculture extended the ploughing period for the Northern part of the country, mainly because of rains recently experienced in the country. With these decisions taken urgently, government optimizes food security and reliance on local food production.

When pigs fly, Botswana will be able to produce food to feed its people. This is evident by the numbers released by Statistics Botswana on imports recorded in November 2020, on their International Merchandise Trade Statistics for the month under review.

The numbers say Botswana continues to import most of its food from neighbouring South Africa. Not only that, Batswana relies on South Africa to have something to smoke, to drink and even use as machinery.

According to data from Statistics Botswana, the country’s total imports amounted to P6.881 Million. Diamonds contributed to the total imports at 33%, which is equivalent to P2.3 Million. This was followed by food, beverages and tobacco, machinery and electrical equipment which stood at P912 Million and P790 Million respectively.

Most of these commodities were imported from The Southern African Customs Union (SACU). The Union supplied Botswana with imports valued at over P4.8 Million of Botswana’s imports for the month under review (November 2020). The top most imported commodity group from SACU region was food, beverages and tobacco, with a contribution of P864 Million, which is likely to be around 18.1% of the total imports from the region.

Diamonds and fuel, according to these statistics, contributed 16.0%, or P766 Million and 13.5% or P645 Million respectively. Botswana also showed a strong and desperate reliance on neighbouring South Africa for important commodities. Even though the borders between the two countries in order to curb the spread of the COVID-19 virus, government took a decision to open border gates for essential services which included the transportation of commodities such as food.

Imports from South Africa recorded in November 2020 stood at P4.615 Million, which accounted for 67.1% of total imports during the month under review. Still from that country, Botswana bought food, beverages and tobacco worth P844 Million (18.3%), diamonds, machinery and fuel worth P758 Million, P601 Million and P562 Million respectively.

Botswana also imported chemicals and rubber products that made a contribution of 11.7% (P542.2 Million) to total imports from South Africa during the month under review, (November 2020).

The European Union also came to Botswana’s rescue in the previous year. Botswana received imports worth P698.3 Million from the EU, accounting for 10.1% of the total imports during the same month. The major group commodity imported from the EU was diamonds, accounting for 86.9% (P606.6 Million), of imports from the Union. Belgium was the major source of imports from the EU, at 8.9% (P609.1 Million) of total imports during the period under review.

Meanwhile, Minister of Finance and Economic Development Thapelo Matsheka says an improvement in exports and commodity prices will drive growth in Sub-Saharan Africa. Growth in the region is anticipated to recover modestly to 3.2% in 2021. Matsheka said this when delivering the Annual Budget Speech virtually in Gaborone on the 1st of February 2021.

He said implementation of the African Continental Free Trade Area Agreement (AfCFTA), which became operational in January 2021, could reduce the region’s vulnerability to global disruptions, as well as deepen trade and economic integration.

“This could also help boost competition and productivity. Successful implementation of AfCFTA will, of necessity, require Member States to eliminate both tariffs and non-tariff barriers, and generally make it easier to do business and invest across borders.”

Matsheka, who is also a Member of Parliament for Lobatse, an ailing town which houses the struggling biggest meat processing company in the country- Botswana Meat Commission, (BMC), said the Southern African Customs Union (SACU) recognizes the need to prioritize the key processes required for the implementation of the AfCFTA.

“The revised SACU Tariff Offer, which comprises 5,988 product lines with agreed Rules of Origin, representing 77% of the SACU Tariff Book, was submitted to the African Union Commission (AUC) in November 2020. The government is in the process of evaluating the tariff offers of other AfCFTA members prior to ratification, following which Botswana’s participation in AfCFTA will come to effect.”

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Sheila Tlou: On why women don’t get votes

1st March 2021
Sheila Tlou

BARAPEDI KEDIKILWE

Women continue to shadow men in politics – stereotypes such as ‘behind every successful man there is a woman’ cast the notion that women cannot lead. The 2019 general election recorded one of Botswana’s worst performances when it comes to women participation in parliamentary democracy with only three women elected to parliament.

Botswana’s former Minister of Health, Professor Sheila Tlou who is currently the Co-Chair, Global HIV Prevention Coalition & Nursing Now and an HIV, Gender & Human Rights Activist is not amused by the status quo. Tlou attributes this dilemma facing women to a number of factors, which she is convinced influence the voting patterns of Batswana when it comes to women politicians.

Professor Tlou plugs the party level voting systems as the first hindrance that blocks women from ascending to power. According to the former Minister of Health, there is inadequate amount of professionalism due to corrupt internal party structures affecting the voters roll and ultimately leading to voter apathy for those who end up struck off the voters rolls under dubious circumstances.

Tlou also stated that women’s campaigns are often clean; whilst men put to play the ‘politics is dirty metaphor using financial muscle to buy voters into voting for them without taking into consideration their abilities and credibility. The biggest hurdle according to Tlou is the fallacy that ‘Women cannot lead’, which is also perpetuated by other women who discourage people from voting for women.

There are numerous factors put on the table when scrutinizing a woman, she can be either too old, or too young, or her marital status can be used against her. An unmarried woman is labelled as a failure and questioned on how she intends on being a leader when she failed to have a home. The list is endless including slut shaming women who have either been through a divorce or on to their second marriages, Tlou observed.

The only way that voters can be emancipated from this mentality according to Tlou is through a robust voter education campaign tailor made to run continuously and not be left to the eve of elections as it is usually done. She further stated that the current crop of women in parliament must show case their abilities and magnify them – this will help make it clear that they too are worthy of votes.

And to women intending to run for office, Tlou encouraged them not to wait for the eleventh hour to show their interest and rather start in community mobilisation projects as early as possible so that the constituents can get to know them and their abilities prior to the election date.

Youthful Botswana National Front (BNF) leader and feminist, Resego Kgosidintsi blames women’s mentality towards one another which emanates from the fact that women have been socialised from a tender age that they cannot be leaders hence they find it difficult to vote for each other.

Kgosidintsi further states that, “Women do not have enough economic resources to stage effective campaigns. They are deemed as the natural care givers and would rather divert their funds towards raising children and building homes over buying campaign materials.”

Meanwhile, Vice President of the Alliance for Progressives (AP), Wynter Mmolotsi agrees that women’s participation in politics in Botswana remains a challenge. To address this Mmolotsi suggested that there should be constituencies reserved for women candidates only so that the outcome regardless of the party should deliver a woman Member of Parliament.

Mmolotsi further suggested that Botswana should ditch the First Past the Post system of election and opt for the proportional representation where contesting parties will dutifully list able women as their representatives in parliament.

On why women do not get elected, Mmolotsi explained that he had heard first hand from voters that they are reluctant to vote for women since they have limited access to them once they have won; unlike their male counterparts who have proven to be available night or day.

The pre-historic awarding of gender roles relegating women to be pregnant and barefoot at home and the man to be out there fending for the family has disadvantaged women in political and other professional careers.

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SEZA’s P126 million tender heads to court

1st March 2021

Special Economic Zone Authority’s (SEZA) P126 million Master Planning of Pandamatenga Special Economic Zones Business Case, Urban & Landscapes tender is in court after one of bidders, Moralo Design challenged its disqualification from the tender.

SEZA is transforming Pandamatenga into an Agropolis which will combine modern farming with top notch industrial, residential, commercial and recreational land use. The project is measured at 137, 007 ha which comprises of 84, 500 ha for commercial production, 12 400 ha for the subsistence production, 107 ha will be for Agro-processing while 40 000 ha will be for the Zambezi Integrated Agro-commercial Project (ZIACDP).

In their court papers, Moralo Designs, represented by Jones Moitshepi Firm, said they received a letter from SEZA on or around the 12th November 2020 notifying that their bid has been disqualified at the technical evaluation stage of the tender adjudication process.

In their response, Lonely Mogara who is Chief Executive Office of SEZA said Moralo Designs is not entitled to be heard by the court as the company never participated in the disputed tender hence SEZA knows the bidder as Moralo Design Consortium.

“Moralo Designs had failed to establish any right to be heard by the court. The fact that they had submitted a tender was not guarantee that they would be awarded the tender,” he said.
“The reasons for the disqualification of Moralo Design Consortium’s bid were valid and justified because their bid was insufficient as it lacked vital information as required by the terms of reference.”

SEZA Chief said the requirements for the work plan and project programme were clearly stated in the Invitation To Tender (ITT). Moralo Design Consortium was not penalised for non-existent requirements.  In disqualifying the bid by Moralo Designs Consortium, Mogara further indicated that SEZA considered that there was a requirement for a programme and work plan.

“The purported “project programme” that was submitted by Moralo Design Consortium failed to depict the activity durations, activity phasing and interrelations, milestones, delivery dates of reports and logical sequence of activities constituent with methodology and showing a clear understanding of the terms of reference,” said Mogara in responding affidavit.

He said the ITT required that there be provision of delivery dates within the programme hence Moralo Designs Consortium failed to consult with SEZA when they felt that such a requirement would be impossible to provide.  He continued to say there was an avenue available when the tender was being prepared, but they failed to use it.

“Moralo Designs’ application for interim relief lacks merit and only seeks to delay SEZA from completing the evaluation and award of a tender that will serve the greater good of the nation,” said Mogara.

He went on to say Moralo Designs has no prospects of succeeding in its review application as the possibility of court granting the review are so remote in that the court does not possess the requisite technical knowhow on what constitutes an adequate work plan and what ought to be contained in it.

A bidder disqualified for failure to provide adequate information has no right to be protected by the court. Irreparable harm can only be suffered by one who has shown that there exists a right in so far as having stood the chance of being awarded the tender.

The financial benefit likely to be derived by Moralo Designs- which is highly unlikely- is outweighed by the nature of the project. In the unlikely event that the application for review is successful, they can claim for damages.  The availability of such remedy weighs in favour of the interdict being refused. The refusal stands to benefit the nation more than the financial interest that Moralo Designs seeks to protect.

Moralo Designs failed to establish the urgency of their application. They waited for more than a month and half after the disqualification to approach the court on urgency. Meanwhile when delivering the State of the Nation Address (SONA) last year, President Mokgweetsi Masisi revealed that the detailed design and construction of 12 steel grain silos — with an overall storage capacity of 60 000 metric tonnes — is underway at the Pandamatenga SEZ and the P126 million project will be completed by August 2021.

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