Botswana will maintain 1.4 billion pula ($130 million) of annual spending on state-owned BCL Ltd. even as it wants to move away from mining, because the copper and nickel producer employs as many as 5,000 people, the vice president said.
“Only for the reason of wanting to save jobs, and the hope and promise that prices might go up, the government kept on putting in more money,” Mokgweetsi Masisi said in an interview. “There will come a point where a decision is made. We have got about 15 more years to go. It’s hot, deep, poor-quality ore — it’s like flagging an old woman and asking her to run in the Olympics.”
The southern African nation, which is the world’s biggest diamond producer, plans to sell its stake in BCL as soon as it returns to profitability, it said in May.
The price of copper, used to make cables, has increased 3 percent in 2016 after plunging for three straight years while nickel has rallied 17 percent following the biggest annual decline since 2008 last year.
“We will be continuously reviewing what it costs to us — the value proposition has got to be taken into account,” Masisi said. “We’re pouring in about 110 million, 120 million pula every month. It’s unprofitable, unsustainable and expensive.”
Botswana underwrote a $100 million loan from Barclays Africa Group Ltd. to the mine in April.
BCL plans to raise $250 million in a bond sale and use some of the proceeds to repay the debt and also fund its purchase of a 50 percent stake in South Africa’s Nkomati mine from OAO GMK Norilsk Nickel.
BCL agreed in 2014 to buy 50 percent of Nkomati and 85 percent of Botswana’s Tati Nickel Mining Co. from Norilsk, the world’s biggest producer of the metal, for $337 million.
BCL continues to negotiate down how much it has to pay after commodity prices declined and after the transfer of mineral rights in South Africa was delayed. This has yet to be finalized.
Bloomberg