October 8, 2016 / 3:25 PM / 3 years ago

Botswana puts state-owned BCL Mine under liquidation on losses

GABORONE (Reuters) - Botswana’s government will put its largest copper and nickel producer, BCL Mine Limited under provisional liquidation due to non-profitability, Mineral Resources Minister Sadique Kebonang said on Saturday.

Kebonang said the government could not afford the cost of about 7.6 billion pula ($713 million) needed to keep the state-owned firm running.

“A decline in the quality of copper over the years, which was made worse by the recent slump in commodity prices, has made the burden of keeping the mine operational unbearable,” Kebonang told Reuters.

“Pumping such kind of money into the mine would mean we suspend other government commitments such as providing Anti-retroviral drugs and educational funding.”

Kebonang said the government has applied to the high court to place the mine under provisional liquidation and will continue to pay the salaries of 5,000 workers, none of whom have lost their jobs yet.

“The liquidator is the one who will make a decision to either shut it down or restructure the operations such as closing down some shafts that are now too expensive to mine and retrench part of the staff,” Kebonang said.

Copper gained more than five percent in September, its best monthly showing since February 2015, as the industrial metal played catch-up with other base metals after largely underperforming for most of the year amid expectations of rising supply.

Copper mines in the world’s biggest diamond producer, Botswana, have been struggling in the past two years with two others, African Copper’s Mowana Mine and Discovery Metals, liquidated in 2015. BCL mine incurred a 1.2 billion pula loss in operating costs in 2015 due to a slump in commodity prices.

Botswana had planned to sell its stake in BCL once the business returned to profitability, the government said in May.

($1 = 10.6496 pula)

Writing by Nqobile Dludla; editing by Susan Thomas and Stephen Powell

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