Source: AFP via Getty Images

Ghost Town Chronicles Meltdown of Botswana’s Metals Industry

  • Copper, nickel mines shut in wake of commodity price slump
  • Rebound in diamond prices, demand helps keep economy afloat

The streets of Selebi Phikwe in northeastern Botswana no longer teem with trucks, and once-busy shop assistants and bank tellers wait for the rare customer.

Since state-owned mining company BCL Ltd. closed its loss-making copper and nickel operation that was the economic lifeblood of the area two months ago, the settlement of 50,000 has become a virtual ghost town. The government says it can’t afford the 8 billion pula ($752 million) needed to recapitalize the mine. Instead, it’s asked former central bank Governor Linah Mohohlo to oversee a plan to rescue the region.

“There is despair, anguish and sorrow,” said Dithapelo Keorapetse, one of the town’s two members of Parliament. “The future for many is uncertain. For some there is no future.”

The mine closure is symbolic of the malaise among Botswana’s metal producers that bore the brunt of the commodity price rout. The copper and nickel industries have been decimated as a result of the BCL shutdown and the earlier closure of shafts owned by Discovery Metals Ltd., African Copper Plc and Tati Nickel Mining Co. Together they accounted for about 4.5 percent of the southern African nation’s exports in the first half of the year.

Diamonds Sparkle

Botswana’s savior has been its diamond industry, the backbone of the economy since the first deposits were discovered in 1967. The gems are expected to generate 27 percent more revenue this year than in 2015, thanks to a rebound in prices and global demand, President Ian Khama told lawmakers in Gaborone, the capital, on Dec. 5.

While the International Monetary Fund expects economic growth to rebound to 3.1 percent this year, after a 0.3 percent contraction in 2015, that’s still well below the 5.2 percent annual average for the previous decade.

Established in 1956, the BCL mine employed 4,406 workers who have now lost their jobs. Six of them committed suicide, according to Joseph Molambane, chairman of the Botswana Mineworkers Union’s Selebi Phikwe branch. Most of the others have returned to their home villages.

“I thought I had a future and had not prepared for this,” said Dimpho Magang, 23, as he waited outside the mineworkers’ union offices to register for retrenchment payments. “I got an internship here in 2014 and had hopes of growing my career. That’s gone now.”

Mohohlo, who led the central bank from 1999 until October this year, is supposed to oversee the implementation of a plan aimed at revitalizing Selebi Phikwe and creating 6,586 jobs in the town. The government says it will contribute 655 million pula toward establishing 20 projects in industries such as agriculture, tourism, manufacturing, and information technology, while Mohohlo and a state-funded unit will seek to raise another 1.1 billion pula from private investors.

Mohohlo didn’t respond to a request for an interview or e-mailed questions.

Buyers Interested

The government hopes to find a buyer for the BCL mine and has received inquiries from firms in South Africa, Mozambique and Canada, according to Mineral Resources Minister Sadique Kebonang. In the meantime, the mine has been placed under the control of a provisional liquidator who’s due to file a report with the High Court on Feb. 7 indicating whether operations should be revived or shut permanently.

A recent surge in metals prices has provided a glimmer of hope to Selebi Pikwe’s residents that the mine could restart. Copper has jumped 22 percent on the London Metal Exchange since the mine was shut on Oct. 8, while nickel has advanced 11 percent.

“Residents of Selebi Phikwe understand what is going on and they, together with mineworkers, were consulted on the mine and reasons for the suspension in operations,” Amogelang Mojuta, the town’s mayor, said by phone. Plans are being drafted and implemented “to rescue the town. I am confident the town will survive.”

Norman Kelaotswe, deputy president of the mineworkers’ union, is skeptical.

“There’s nothing government can do to replace the BCL mine,” he said in an interview. “BCL’s wage bill was 60 million pula monthly and that was circulating in the Selebi Phikwe economy. Nothing Mohohlo or the unit does will replace that.”

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