• 400 lose jobs
• Court order granted this week
• Mine failing to pay suppliers
About 400 Batswana have been left unemployed after UK-based mining firm, African Copper shut down operations at its Mowana mine this Wednesday.
The Business Weekly & Review established that on Wednesday afternoon, a company called Diesel Power, which was contracted to the mine by Mowana Mine, sought a court order to liquidate the financially struggling operation. African Copper is said to have failed to settle its bills.
Mowana Mine spokesperson, Moruntshi Kemorwale confirmed that the mine suspended operations after Diesel Power sought the court order. Although he did not divulge details, he said that the matter will be in court on 19th of this month to determine the way forward.
Botswana Mine Workers Union (BMWU) President Jack Tlhagale said Mowana Mine management met with the union this week Wednesday to inform them the union leadership of the impending liquidation.
“We are looking out for fair payments of employees’ benefits, but that will have to wait until the court case is resolved because employees will have to be in creditors brackets,” he said.
What came to the fore is that the mine has been failing to service its financial obligations, which Kemorwale blames on the dwindling copper prices as global demand on commodities takes a tumble. Diesel Power, a subsidiary of Buildmax was awarded a US113 million (approximately P1.2 billion) contract to provide hard rock open cast mining services to African Copper’s Tlhakadu and Mowana open pit mines in the Northeastern Botswana, for a 52 month period.
The company has for some time now been mining, yet Mowana Mine failed to pay it. A decision to liquidate the company was apparently taken as a last resort by Diesel Power to recuperate its money under all coasts.
A few months back, Tlhakadu Mine was reportedly bankrupt and had to shut down, while the company sought to increase production at Mowana Mine, but a decline in copper prices affected revenue.
Salaries of employees were also being paid vary late for the most of this year. After Copper prices took a 27 percent tumble over the past 12 months, industrial metals prices are currently at US$2300 per ounce, a six-year low.
In May this year, the company signed an unsecured loan facility of US$1.5 million (P15 million) from the Copper-belt Development Foundation (CDF), the ultimate controlling party of African Copper’s 73.44 per cent. The loan was to finance the company’s running capital. Interestingly, African Copper’s running capital has been financed by debt from as far back as 2010 from ZCI Limited (ZCI), a company incorporated in Bermuda. ZCI is owned 71 percent by CDF.
As at 31 March 2015, the company had US$107.5 million (Over P1 billion) of debt outstanding (including accrued interest) with its majority shareholder ZCI.
Two months back, the company was compelled to delist from the Botswana Stock Exchange (BSE) following reports that authorities at the London Stock Exchange compelled the company to delist. The UK-based bourse took the decision after realizing that the company shares were no longer meeting the listing requirements, because the company was illiquid and failing to raise capital on the AIM. The source said the juniors’ trading activity has been reduced as to warrant a continued listing. The LSE forced de-listing follows another delisting from Toronto Stock Exchange (TSX) in Canada which occurred in 2009, after the TSX also kicked the junior to consider delisting after it allegedly failed to meet the listing requirements. African Copper is another copper mining outfit, which has been on the red, owing to reduced demand and subdued copper prices. This year, the company shut down its Tlhakadu Mine, a high-grade copper-silver open-pit plant, some 70 kilometers from the Mowana processing infrastructure. Only Mowana Mine was left in production. However due to subdued copper prices and dampened demand, the company has been operating on debt.