21 Apr 2016

One of the country’s biggest mineral extracting companies, BCL is confident that it remains a viable business entity despite some financial challenges.

BCL managing director, Mr Dan Mahupela expressed the sentiment in a press briefing in Gaborone on Wednesday.

He said factors linked to BCL’s financial situation, among them the decline in global commodity prices, would be overcome by their turnaround strategy in the long run.

“It is now common knowledge that there has been a lacklustre demand for commodities leading to record low prices in commodities in 2015, and this decline is still being experienced,” Mr Mahupela said.

He added that commodity prices dropped to an all-time low and that about 70 per cent of nickel producers the world over incurred significant losses.

Furthermore, he said BCL underground operations could not achieve target production owing to under capitalisation of mine infrastructure and equipment.

Mr Mahupela also said that the 2015 smelter shutdown cost them P754 million.  “The smelter shutdown, planned for 62 days, was completed in 112 days leading to a 50 day loss of production in 2015.  

The time overrun was associated with contractor work permits; inclement weather condition; contractor payments and extra work associated with small ore piping assembly,” he said.

He said the time overrun led to a loss of revenue amounting to P230 million of BCL Metal and P40 million of Nkomati Toll Revenue, a total of P270 million.

But he said his company remains optimistic of achieving its business reorganisation strategy.  

He added that they have short and long-term approaches to ensuring that BCL remains a sustainable business.

“This includes a short-term mine optimisation plan, which includes improving mine shafts and smelting capacity,” said Mr Mahupela.  

He also said they have the Polaris II strategy, which is part of a long-term plan, 20 years (2013-33) that focuses on expanding current operations and acquiring new businesses.

Among the milestones already achieved under the strategy, said Mr Mahupela, was to restructure the BCL balance sheet, complete the Pula Steel plant, gain US$ 23 million per annum revenue from Nkomati concentrates as well as the acquisition of 85 per cent in the Tati Nickel Mining Company.

Mr Mahupela added that they have decided to dispose of some assets such as the company aircraft as well as some BCL houses.  He reminded members of the press that BCL occupies a strategic position in the economy and that it  directly employed 4 300 people.

He also noted that it supports downstream industries that provide the mine with goods and services. ENDS