Competition Authority approves acquisition of BCL assets by PNR
In a regulatory approval that moves the resuscitation of the former Copper and Nickel mining giants a step closer, Competition and Consumer Authority (CCA) — Botswana’s business dealings watchdog has given green light to the sale of some BCL assets to Premium Nickel Resources Botswana.
In a statement last week, the authority notified the market of the decision it made in relation to the proposed acquisition by Premium Nickel Resources (Pty) Ltd (“PNRB or the Acquirer”) of certain assets of the business of BCL Limited (“BCL”) (in liquidation), more particularly certain business assets related to the Selebi Mines (hereinafter the “Selebi Assets” or the “Target”).
The transaction was notified to the Authority on 16th December 2021 and the merger assessment was completed on 13th January 2022. The Primary Acquiring Enterprise, PNRB, is a limited liability company duly incorporated in terms of the Company Laws of the Republic of Botswana.
PNRB is wholly owned by PNR Selebi (Barbados) Limited (“PNR Barbados”). PNR Barbados is in turn owned by PNR International Limited (“PNR International”) which is wholly owned by Premium Nickel Resource Corporation.
The Acquirer does not directly or indirectly control any enterprise in Botswana. PNRB is a special purpose vehicle that was incorporated for the purpose of acquiring the Selebi Assets. Other than that, PNRB does not have any activities in Botswana, it does not produce or sell any products into or from Botswana.
The Target comprises certain assets of the business of BCL, a limited liability company incorporated under the Laws of Republic of Botswana. BCL is wholly owned by Minerals Development Company Botswana (Pty) Ltd (“MDCB”) which is in turn wholly owned by the Government of the Republic of Botswana.
BCL has been in liquidation since October 2016 following deterioration of Copper prices in international commodity markets. The company is currently under the care of the Liquidator, Trevor Glaum N.O who has assumed the powers of the board of directors of BCL. Prior to its liquidation, BCL mined and produced nickel-copper-cobalt (“Ni-Cu-Co”) at the BCL Mine site. The Ni-Cu-Co was exported out of Botswana to international markets such as Norway in Northern Europe.
When assessing the Substantial Lessening of Competition, the Competition Authority discovered that the transaction not expected to substantially lessen competition due to the absence of product overlaps in the activities of the merging parties. The merger, according to the CCA is not expected to result in the reduction of the number of players in the market, “hence will not affect the structure of the market.”
In terms of the Acquisition of a Dominant Position, it was found that the proposed transaction will have no effect on the market status quo; and as such, the merged entity is not expected to attain any dominant position on account of the transaction. In addition, there are Ni-Cu-Co producing companies identified in given geographic regions and having greater market shares to pose effective competitive constraints to the merging parties. Furthermore, the transaction is not expected to negatively impact on rivalry nor harm consumers.
With regards to Public Interest Considerations, the merger assessment findings reveal that the proposed transaction will not have an adverse effect on levels of employment in Botswana. Following the liquidation of BCL, at least 5000 workers of BCL were retrenched with 480 staff remaining for purpose of providing security and care and maintenance activities. The Competition Authority says the proposed transaction will result in a gradual increase in employment and resuscitate the town of Selebi-Phikwe post implementation.
The Authority determined through the analysis of the facts of the merger, that the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the relevant market in Botswana. “Furthermore, the proposed merger will not have any negative effect on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.” stated the Authority in the statement.
Pursuant to the provision of section 53 of the Act, the Competition Authority unconditionally approved the proposed acquisition by Premium Nickel Resources (Pty) Ltd (“PNRB or the Acquirer”) of certain assets of the business of BCL Limited (“BCL”) (in liquidation), more particularly certain business assets related to the Selebi Mines (hereinafter the “Selebi Assets” or the “Target”).
However, as stated under section 61 of the Act, the Authority underscored that the approval does not override or negate any other mandatory statutory approvals or processes that any of the parties to this merger must comply with under the Laws of Botswana. In September 28, 2021 Premium Nickel Resources Botswana (“PNRB“) announced that it has executed a definitive asset purchase agreement (“APA”) with the Liquidator of BCL Limited (“BCL”) to acquire the Selebi, and Selebi North (together the “Selebi Assets”) nickel-copper-cobalt (“Ni-Cu-Co“) assets and related infrastructure formerly operated by BCL, with the closing of the transaction, and transfer of ownership of the assets, expected within 120 days.
PNRB also announced that it was negotiating a separate asset purchase agreement to finalize terms for any prioritized Tati Nickel Mining Company (“TNMC”) assets that may be purchased. PNR submitted its indicative offer to the BCL and TNMC liquidators in June 2020 to acquire the assets of the former producing BCL Mining Complex and separately the TNMC operations located in north-eastern Botswana.
On February 10, 2021, PNR was selected as the preferred bidder and on March 22, 2021, PNR entered into a memorandum of understanding providing for a six-month exclusivity period to complete additional work and negotiate the asset purchase agreements. The Selebi Assets include two shafts and related infrastructure (rail, power, and water). Shaft sinking and plant construction started in 1970. Mining concluded in October 2016 when the operations were placed on care and maintenance due to a failure in the processing facility. PNRB’s redevelopment plan is based on the re-characterization of the remaining resources and the ability to produce both a Cu concentrate and a separate Ni-Co concentrate
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.