BOTSWANA’S state-owned BCL, a nickel mining and smelting company, is embarking on a strategy to secure extra sources of metal, and its first step is the $337m purchase of Norilsk Nickel’s African assets.
The transaction, which secures a 50% stake in African Rainbow Minerals’ Nkomati mine in SA and 85% of Tati in Botswana, will be funded out of cash and debt, said BCL’s divisional manager of corporate strategy, Mack William.
BCL has a 1-million-tonne capacity at is smelter and it is currently using about 65%. Taking the Nkomati concentrate will lift the plant to full capacity, Mr William said in an interview.
The Botswana firm used to treat Nkomati’s concentrate, but a few years ago it diverted its concentrate to another smelter, he said.
BCL is undertaking a study at its metallurgical complex to grow capacity at the smelter and better utilise its concentrator, which has capacity for 3-million tonnes of ore a year. “It will position the smelter as the ultimate destination for all nickel concentrate in Southern Africa,” Mr William said.
As part of the Norilsk transaction, BCL has entered into an offtake agreement of its nickel matte with the Russian company, which will treat it as its refinery in Finland.
Analysts said Tati was a short-life asset and most of the price paid by BCL to Norilsk was for Nkomati.
BCL will investigate various options to extend the life of Tati by five or seven more years from 2016, Mr William said. Tati is 80km away from BCL’s operations that treat the mine’s concentrate.
He declined to quantify the scale of the debt and environmental rehabilitation liabilities BCL has taken on as part of the Norilsk deal.
BCL had a relationship with Nkomati and African Rainbow Minerals when it used to treat its concentrate, and will rekindle those relationships during the finalisation of the transaction in the next six months.
For the original source of this article, click here: http://www.bdlive.co.za/africa/africanbusiness/2014/10/23/bcls-norilsk-deal-the-first-step-in-its-hunt-for-nickel