Mowana Copper Mine struggles to pay wages

Nicholas Mokwena BG reporter
Monday, 15 October 2018
Mowana Copper Mine Mowana Copper Mine

Trouble could be brewing once again at Mowana Copper Mine as the mining company is struggling to pay salaries for employees for the month of September 2018, Botswana Guardian has learnt.The mine, now owned by Leboam Holdings, a subsidiary of Cradle Arc has been closed before and there are fears that failure by the mine to pay salaries could herald the start of problems at the mine where Cradle Arc is expected to produce at least 5 700 tonnes of contained copper during the second half of this year.

A memo dated October 5, 2018 from General Manager Dominic Doherty says salaries would be paid in tranches with the final one being done at the end of this month. He explains that due to unforeseen breakdowns during the month of September, production from the Mowana Copper Mine was severely reduced, and expenditure on repairing broken equipment was at unexpectedly high levels.

“The result of the reduction in income from copper production and the additional expenses has impacted on the company’s cash flows and consequently we regret that payment of September salaries was delayed. We understand the serious impact that delays in receiving salaries has on individuals and the difficulties that you and your families face as a results,” the general manager said.

Doherty said management team is committed to ensuring that the salaries are paid in full and promised that the welbeing of all staff is their priority. “This includes planning to ensure that we all have a future here at Mowana Copper and that you can continue to derive benefit from the mine for years,” he said, adding that continued production is key to this effort. 

He explained that “payment of September payroll has begun with first tranches, equating to “30 percent of your total September earnings, having been made yesterday, Thursday October 4, and funds should be reflecting in your accounts from today (October 5). The company will be making a further payment at the beginning of next week with the intention of making whole outstanding payment by the end of October.” Doherty promised that they will work hard to get through these short-term challenges.

He promised to meet the employees on a one by one basis to hear their queries. Interestingly in another memo sent on October 3, 2018 and copied to Heads of Departments (Leboam Holdings and Penmin), Doherty explains that the salaries, which were due on September 30, 2018 have been delayed “due to the recent extended public holiday which has affected the clearance of our funds into our Botswana account.”

The general manager explained in the memo that they are doing all they can to ensure that salaries are paid within the shortest possible time. Efforts also continue to be made to minimise postponements and frequent delays in payment of your salaries, he said.Doherty could not be reached for comment at press time.

Production was first halted at the mine in 2015, when copper prices fell. Fresh market data however shows that copper has risen by at least more than 50 percent.Following the suspension of its operations at Mowana Mine mid October 2015, the mining contractor, Diesel Power Limited then approached the High Court to have Messina Copper (Botswana), a subsidiary of African Copper liquidated.

The previous owner, Messina Copper (Botswana) then suspended operations at the Mine, where close to 400 workers lost their jobs. In March 2017, new owners, Leboam Holdings resumed operations ramping up to an initial 12,000 tonnes a year of copper concentrate.

Then Minister of Mineral Resources, Green Technology and Energy Security Advocate Sadique Kebonang told Parliament in April this year that the liquidator has entered a Liquidator Term Loan Agreement, the terms of which the liquidation sale proceeds will be paid by the purchaser over a period of 24 months from January 2018. 

He explained that full repayment of this loan is expected to be completed in January 2020 unless early settlement is effected. In the interim parent company Cradle Arc has commissioned Tamesis Partners in London to initiate a refinance enquiry whereby the full liquidation and development capital is being raised.

The minister stated that there are six major funds and other capital providers who are currently performing their due diligence processes. The Advocate said if successfully refinanced, it will settle the liquidation balances and finalisation of all outstanding balances should be expected by end of July 2018.

Last modified on Monday, 15 October 2018 08:59

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