BCL liquidation to cost Botswana R310m over next four months
Vice President Mokgweetsi Masisi said government would inject R310-million into provisionally-liquidated nickel miner BCL throughout the four month-long liquidation process, which should be concluded by February 2017.
Masisi has announced that government would with effect from October, pay up to P60 million (R78-million) per month to meet the financial obligations of provisionally-liquidated BCL.
Altogether, the government would inject P240 million (R310-million) into the company throughout the four month-long liquidation process, which should be concluded by February 2017.The mine, together with subsidiaries Tati Nickel Mining Corporation (TNMC) and BCL Investments, were liquidated two weeks ago to prevent the loss of the mines and assets to creditors, who were owed a total of P9 million.
The company’s already precarious financial position worsened since 2014 due to high operational costs incurred in the use of obsolete machinery to extract poor grade nickel ore. It was also exacerbated by subdued demand and pricing for minerals in the global commodity market.Addressing a press conference in Gaborone on Thursday, VP Masisi said the government settled for the liquidation last month after the cash-strapped BCL asked for a P1 billion capital injection.
He said the government decided not to grant request as it came a few months after it guaranteed, in April, a P1 billion (US$100 million) credit facility, which was depleted without stabilising BCL operations and finances.
“So we met and decided to come up with the best strategy to control the situation. We deliberated on this at a full cabinet meeting, using all the details we had found, all the legal advice, as well as the best financial advice from real experts who have been in this business.
“A decision was then made to seek a provisional liquidation as the solution because it allowed for a managed, soft-landing. This liquidation process will cost the government no less than P60 million a month, and we have already secured that money,” Masisi said.
Two weeks ago, the government appointed Nigel Warren-Dixon of KPMG as provisional liquidator. Among other things, the liquidator is expected to assess the viability of BCL and determine whether it should be sold to investors, or closing down the mines in the event of investors shunning the invitation for offers.
Africa News Agency