On the 19th October 2016 the curtain finally closed on more than 4000 BCL employees. The employees’ fate was sealed by a communiqué from the infamous BCL liquidator-Nigel Dickson Warren of KPMG. An excerpt from the communiqué reads as follows;
‘’…I am currently making an assessment of the companies to determine what are the best options for the assets. Unfortunately, while this assessment is being done I have no option but to officially terminate your employment with effect from 31 October 2016…’’
What is most painful about this whole situation is that the casualties of this calamity are still in denial; while others are just confused. And this is perfectly understandable because government embarked on a mission of sending daily conflicting messages to them through a series of meetings. The last dose of this dazzling ‘concoction’ was delivered by Minister Botlogile Tshireletso at a BDP function in Bobirwa on the 15 October, where she is reported to have echoed the canard that the poor former BCL employees would receive their monthly salaries for a period of Eighteen months!
What events preceded this historic catastrophic event? The first was the commodity prices that took a sudden nose dive against expectation and fell way below the forecasted price. The authority that gives commodity price forecasts –the Consensus Group, had given a forecast of 9 per cent, but even then BCL placed themselves at 5 per cent. But the prices plummeted further below 5 per cent. The second was the shutdown meant for refurbishment of the smelter. BCL had anticipated that the refurbishment would take 62 days, but it took much longer, which caused BCL to eat into the reserves it had. Further, the refurbishment was unusually expensive as management sought to increase the operating capacity of the smelter to accommodate the matte from Nkomati mine in South Africa. To their credit, BCL management did not give up in spite of these devastating setbacks;theyare said to have developed a rescue plan for the mine that they named ‘$4 per pound plan’. The plan was designed such that the mine would continue operating as a going concern under the current low nickel prices. In the plan, the company was to restructure and close down some shafts which were not doing well. Of course some employees were to be laid off, but not on the scale and magnitude precipitated by the liquidation exercise as we have witnessed.
BCL management did not come up with this plan just to save their jobs if anybody would have that thought; they simply knew that BCL cannot fail. It is one of the economy’s largest employers whose failure can plunge the economy into recession.
The act of resuscitating a dying company is not unprecedented. It was done in the US following the 2008 global recession. The Obama administration injected billions into companies like General Motors and AIG simply because these companies could not fail. Did BCL management present this plan to the shareholder? If so, was the plan not convincing? If they were not convinced, shouldn’t they have sought a better plan? What was the advice of government economists and the treasury? Did they say that there would be no harm if BCL failed?
Who should take the fall for the BCL demise?
