Effects of fallout between Molale and BCL Liquidator
- How Molale, BCL Liquidator fell out
- BCL Mine faces a cave in
- Phikwe area underground water faces contamination
- Mine equipment to be irrevocably damaged
- Liquidator could face criminal charges
The fallout between Minister Eric Molale and BCL mine Liquidator Nigel Dixon-Warren has resulted in a deliberate starvation of funds for the BCL care and maintenance.
By exactly the 31st of May, BCL will be flat broke resulting in the halt of care and maintenance exercise. The mine will as a result flood and possibly collapse leading to hazardous environmental catastrophe, risking thousands of lives in Selibe Phikwe and surrounding areas.
On the 8th of April 2019, Dixon-Warren filed an affidavit with the High Court of Botswana in which he sought direction to either conduct a ‘Hard Shut Down’ of the BCL Mine and surrender the BCL Mining License back to the Department of Mines or transfer back the custody and control of BCL Mine back to government, so government could take over the BCL liquidation process. In the affidavit seen by The Botswana Gazette, the liquidator reveals that there has been a complete breakdown in his relationship with government as represented by Eric Molale, Minister of Mineral Resources, Green Technology and Energy Security. The breakdown he said, led to Molale writing in December 3rd 2018, to the Master of the High Court complaining about the liquidator’s conduct. On the same date, the Master of the Hough Court requested a response from Dixon-Warren which he filed on the 7th of December 2018. No further response to the liquidator’s retort was filed. Further, Dixon-Warren also spoke of a number of public statements by Minister Molale in the affidavit, wherein he said that government is taking urgent steps to remove Dixon-Warren as the liquidator.
This is despite that to the best of his knowledge; no such application to the Master of the High Court was made, according to Dixon-Warren. Whether because of the breakdown in relationship or for another reason, the liquidator said government appears to have taken a decision not to continue funding BCL for care and maintenance.
As at 28 February 2019, records show that the level of funding for BCL’s care and maintenance costs was at P78.5 million, but the figure has since fallen drastically. Dixon-Warren, in court documents reveals that the available funding will only fund the care and maintenance up to the 31st of May, just over a month from now.
PHIKWE AREA UNDERGROUND WATER FACES CONTAMINATION
“I cannot continue with care and maintenance as I do not have the funds, I will soon be forced to undertake a hard shut down of the mine,” he revealed in his filing affidavit, further adding that the hard shutdown would mean switching off the pumps that are constantly de-watering the mine and allow the mine to inundate with water. Within a short period of time, he said, all of the underground equipment will be irrevocably damaged. Further, the Mineral resources will also be sterilised.
“There will be no provision to prevent further pollution of the surrounding environment. This would be catastrophic,” the liquidator divulged in the affidavit. Independent experts caution that inside the mine, there is sulphur, should it react with the water flooding the mine, it will result in sulphuric acid formed, which could contaminate underground water and possibly put at risk the lives of residents of Selibe Phikwe as well as surrounding areas. Further, flooding of the mine according to independent experts could also completely collapse the structures of the mine, which poses a serious hazard to the lives of Selibe Phikwe residents. The town alone has around 50 000 residents, but it is surrounded by other villages. Of recent, there has been earth tremors at Selibe Phikwe, which were attributed by area Member of Parliament (MP) Dithapelo Keorapetse to flooding at BCL which has loosened the structures of the mine.
“Unless I either obtain substantial additional funding or am able to transfer the mine to government or someone with the resources to comply with the obligations by no later that the 31st May 2019, I will be forced to cease all care and maintenance operations and will have no other option but to commence a hard shutdown of the mine,” he disclosed.
On Monday 15th April, the liquidator commenced the process of issuing notices to terminate all contracts with third parties and service providers for care and maintenance. Further, about 360 staff members employed to conduct the care and maintenance will have to be given the boot. These employees were responsible for de-watering the shafts to maintain access to areas of the mine to allow for mining operations to recommence. Other duties were the measurements and treatment of water before discharge into the environment and repairs of the main infrastructure underground and on surface. The care and maintenance funding from government was received in four tranches based on the initial budget submission in October 2016 for the period ending 28 February 2018. Court papers reveal that the last tranche of funding was received in September 2017. It emerges that no further funding was availed since then despite regular requests by the Ministry for further budgets to be prepared and submitted.
LIQUIDATOR COULD FACE CRIMINAL CHARGES
What places the liquidator between a rock and a hard place is that he is legally bound to not neglect his liquidation responsibilities failing which he would have conducted criminal offenses and could be held liable. However without funding, he is unable to conduct such duties. From December 2018 to January 2019, evidence shows that instructions were issued to the liquidator by inspectors appointed by Chief Government Mining Engineer in terms of Section 6 (2) of the Mines and Quarries Act which requires that care and maintenance activities at BCL remain and be maintained at the same level at which they were commenced in 2016. Some required maintenance activities to be undertaken at a higher level than before, while some required infrastructural improvements such as lining surface water dams which can be undertaken at a significant cost according to court papers filed by Dixon-Warren.
The liquidator had cut the care and maintenance expenditure from P20 million monthly to P15 million, because of the unavailable funding. Should he have not taken the decision to reduce spending, he said he would have exhausted the funds already. He however opposed the instructions on grounds that they fail to take into account the current activities available on site and the limited funding available. He said implementation of such would cost him over P136 million.
According to the paper trail, Dixon-Warren in his capacity as liquidator has been placed on an impossible position, caught between competing obligations.
Section 65 of the Mines Act provides for the rehabilitation and reclamation to be undertaken for the period a mining license is extent. While he maintains that he has done what he could, without funding; he cannot comply with the requirement. However, failure to comply with Section 65 is an offence in terms of Section 82 of the Mines Act. Court papers reveal that although he has appealed against such instructions, his appeals have not been determined and he does not know if or when they will be determined.
“Since I have given notice of my intention to surrender the Mining Concession and cease operations, I expect further instructions in terms of Section 75 (1) (b) of the Mines Act.”
Further, Section 81 of the Mines Act provides that if the holder of a mineral concession is in breach of any of the provisions of the Mines Act, the Minister may require the holder to show cause why a penalty should not be incurred for such a breach. If a penalty is imposed, it may be up to P50 000. Accordingly as the holder of a mineral concession by virtue of being liquidator, Dixon-Warren may be liable for penalties under the Mines Act for non-compliance.