LEFOKO MOAGI*
1.0 Purpose
The purpose of this note is to update Parliament on the BCL Group liquidation and the leasing arrangement of houses in Selebi-Phikwe by the Government of Botswana for former employees of BCL Limited.
2.0 Update on Liquidation Processes
2.1 BCL Group of Companies, that is BCL Limited (Pty) Ltd (“BCL”), BCL Investments (Pty) Ltd (“BCLI”) and Tati Nickel Mining Company (“Tati”), were placed under provisional liquidation by the High Court of Botswana on 9th October 2016. All mining operations were put into care and maintenance on the 7th October 2016, immediately after the decision to liquidate the Mine was made. The decision to close the Mines was made after BCL’s financial challenges continued and a further P2 billion was requested from Government over and above the Barclays Bank loan advanced in March 2016. Government as a guarantor of the Barclays Bank loan settled it after the company was put into liquidation.
2.2 Government took a decision to cover the costs of care and maintenance of the Mines to preserve the assets for potential investors. Care and maintenance mainly entails continuously dewatering the Mines and ensuring that the pumping infrastructure, access to the underground workings via the various winding plant and ventilation, are maintained. In addition, water pumped to the surface needs to be treated to prevent pollution of the environment.
2.3 The Liquidator has since received indicative offers from Qora Limited (“Qora”), a company registered in Guernsey; Premium Nickel Resources Corporation (“PNR”), a company registered in the Province of Ontario, Canada; and Msymba Groupe SA (Pty) Ltd (“Msymba”), which is registered in the Republic of South Africa. PNR was selected as the preferred bidder by the Liquidator, and they have been given an additional six (6) months to undertake a more detailed due diligence on the assets before they can make a binding offer, if they are interested in the assets, and the transaction will be concluded shortly thereafter. Otherwise, if there is no interest from the preferred bidder, the Liquidators will decide what to do with the assets, including stripping off the assets for sale followed by rehabilitation of the mining sites.
3.0 Leasing of BCL Houses for Former Employees
3.1 Following the placement of BCL Group of Companies, including BCL Limited, BCL Investments and Tati Nickel Mining Company, under provisional liquidation by the High Court of Botswana, the Government of Botswana took a decision to rent company houses for the former employees of the companies. Currently there are 1,187 BCL housing units occupied by the former employees of BCL Limited with an average monthly rental cost of P2,302,000.
3.2 The decision to pay rent on behalf of former Mine employees was made with a view to:
a) cushion the negative impact of closure of the BCL Group Mines on the former employees;
b) give the families occupying the BCL houses time to make alternate arrangements for accommodation;
c) reduce the risk of vandalism to the houses which could negatively impact the BCL estate if the houses were otherwise left vacant; and
d) avert potential mass exodus from Selebi-Phikwe township which could paralyse the economy of the town.
3.3 The arrangement was extended five times, with the last approval for extension made in March 2021. The last approval extended the lease arrangement until 31st March 2022. The approval also aimed to cease the arrangement thereafter, due to budgetary constraints. Government noted the following concerns or risks associated with the cessation of paying rent for the former employees which will result in their eviction from the houses:
a) Homelessness and Increased Poverty: This would happen in the area as there would be job losses when families have to leave Selebi-Phikwe. With the current arrangement, the former BCL employees and family members are able to do piece jobs or some work while staying rent free;
b) Health and Safety Repercussions: If tenants are required to vacate the properties, it would lead to a mass movement of people in and around Selebi-Phikwe during the COVID-19 pandemic which could lead to mass spreading of the virus and a resultant spike in COVID-19 cases in the region;
c) Vandalism of Vacant Properties: The Liquidator is already struggling with vandalism of houses and the vandalism is greatly increased if the houses are left vacant. It is a possibility that some tenants might damage the properties before vacating, which would be an additional cost and loss of value to the Government and the estate.
3.4 Government engaged the Liquidator to explore possible options to avert the above unintended consequences and they both agreed on a new arrangement which will allow the former employees to continue staying in the houses for a further twelve (12) months, without imposing significant burden on Government budget.
3.5 During the twelve (12) months period, it is anticipated that the liquidation process would advance to a stage were PNR would complete their assessment and finalise the transaction if interested. This is envisaged to improve the local economy from whence houses could then be taken up.
*STATEMENT TO PARLIAMENT ON BCL GROUP LIQUIDATION PROGRESS AND THE LEASING OF BCL HOUSES FOR FORMER BCL LIMITED EMPLOYEES by MINISTER LEFOKO MOAGI, MINISTRY OF MINERAL RESOURCES, GREEN TECHNOLOGY AND ENERGY SECURITY