BCL has always been unprofitable

Please allow me some space in your newspaper to comment on the article Opportunities for BCL abound that appeared in the March 19th, 2021 issue of the Botswana Guardian. In the article, it was stated that Premium Nickel Resources ( PNR) was the preferred bidder for the Phikwe copper- nickel mine. In the mid 1970s, I worked as an exploration geologist for BCL. Based at a field camp near Mmadinare, we were involved in the search for copper- nickel orebodies like the one at Phikwe. We identified three such orebodies at that time: Dikoloti, Phokoje and Lentswe. Like the Phikwe orebody, the copper mineral was chalcopyrite and the two- nickel minerals were pentlandite and pyrrhotite. And the host rock was also the same, a blackish amphibolite. We then conducted deep diamond drilling and analysed the ore for copper and nickel content. However, at the time it was felt that their grade ( copper- nickel content) was too low to justify mining. Had these orebodies been mined then losses would have resulted.

Mining at Phikwe commenced in 1973. At first, mining was opencast – the ore was extracted from an open pit. This is cheaper than underground mining since the copper- nickel ore is extracted from a shallow depth and costs of ventilation, building shafts and the removal of floodwater simply do not exist, or are minimal.

However, from the beginning many problems have made ore extraction difficult and costly here and hence less profitable ( and they will remain even if the mine is reopened). Firstly, the Phikwe orebody is not a high- grade deposit; it only contains 0.7 percent nickel and 0.8 percent copper. That makes a total copper- nickel content of just 1.5 percent. This means that every tonne ( 1 000kg) of ore mined it contains a mere 15kg of coppernickel. That’s not much! The rest of the orebody – 985kg – is simply waste material and of no value! But it still has to be removed at a high cost. Now to put things into perspective, copper orebodies in the Zambian Copperbelt have been mined continuously since the early 20th century and contain much greater reserves of ore; also the grade of the ore may exceed five percent. And nickel orebodies mined at Sudbury, Canada, contain much higher values of nickel than the Phikwe orebody. And the orebody at Eagle Mine in Michigan, USA, boasts 3.6 percent nickel and 2.9 percent copper – that’s a total copper- nickel content of 6.5 percent. That mine is a money- spinner given the fact that nickel prices are higher than copper prices.

Secondly, the Phikwe orebody shows a feature known as boudinage; in other words, the thickness of the orebody varies considerably even over a short distance. In fact, the thickness of the Phikwe orebody varies between one metre and 38 metres. Where the orebody is thin, it may be uneconomic to mine since the amount of overlying rock to be removed is much greater relative to the thickness of the ore itself. It’s all to do with the stripping ratio – overburden weight/ orebody weight.

Finally, the dip, or angle of inclination, of the Phikwe orebody varies between 150 and 800. The steeper the orebody, generally the greater the cost of mining it. If the orebody dips at a shallow angle, then a greater tonnage can be extracted using open pit mining. And copper- nickel minerals do not contain 100 percent copper or nickel. For example, chalcopyrite contains just 33 percent copper.

Since 1980, the Phikwe orebody has been mined underground with increased costs. For these reasons, geologists in the early days of the mine estimated that the Phikwe orebody could be mined for a period of no more than twenty years; those who were more optimistic gave the mine 25 years – up to 1998. But against all expectations, mining continued at Phikwe for 43 years until it was closed in 2016. But this was not because the mine was always profitable during this period. In fact, in most years it made a loss and only survived because government was subsidising its operations. Although much of the loss was due to the above- mentioned problems, some of the loss was also because of weak management, and it was only when Montwedi Mphathi became BCL boss that there was a turnaround in the mine’s fortunes for a time. So if PNR were to buy the mine, the management must be world- class so as to avoid the mistakes of the past. And even world- class orebodies can fail to break even if the management is not up to the job!

Although additional reserves have been identified in recent years, extracting them would involve higher costs since they occur at a greater depth below the surface. This means that, amongst other things, shafts will have to be deepened, new haulageways ( tunnels) constructed and ventilation systems expanded. There would also be a higher risk of flooding from underground water and hence possible rock falls.

Recent reports suggest that PNR would most likely shut down the smelter at the mine. Now copper- nickel ore undergoes two main treatment processes before it is exported. Both processes remove impurities from the ore. Firstly, concentration; this increases the coppernickel content from 1.5 percent to about seven percent.

After the later smelting process, the end product is matte which contains 78 percent copper- nickel ( this was the form in which copper- nickel was exported before from the Phikwe mine). Now if the copper- nickel is exported as a concentrate, its value will be much lower than if it is exported as matte. So smelting clearly adds much value to the end product.

The article also mentions that financiers will not be comfortable in funding projects that pollute the air. And smelting at Phikwe leads to the emissions of sulphur dioxide into the air, something which Phikwe residents will be all too aware of. Some years ago, I carried out an investigation into the effects of air pollution from the Phikwe smelter on the soil, vegetation and water resources in the local area. Now the prevailing wind direction here is from the east. This means that fumes from the smelter chimney affected mainly areas to the west of the mine where they may descend to ground level.

Monitoring stations in the area monitored air pollution levels – values of more than 80 milligrams of air pollutants per cubic metre are considered dangerous. The results showed that to the west of the mine, including the industrial site, values regularly exceeded 80mg/ m3 and may be as high as 146mg/ m3. And values of over 1 500mg/ m3 have been recorded close to the smelter itself.

Now the sulphur dioxide gas from the smelter chimney may also react with water in the clouds to produce a weak sulphuric acid; this may then mix with

rainwater to produce ‘ acid rain.’ Now when this acid rain reaches the ground it enters the soil and makes it more acidic and less suitable for plant growth ( plants prefer a soil pH of about 7, or neutral; values below 7 indicate that the soil is acidic).

I conducted a soil sampling programme in the area and found out that areas to the west of the mine often had pH values of 5 or below. In such acidic soils, some important plant nutrients, such as phosphorous and calcium, become more insoluble and so cannot be absorbed by the roots of plants. In contrast, in areas to the east and south east of the mine, such as Botshabelo, soil pH values were higher (> 6.5) and so favoured plant growth.

And it’s not only the air that is polluted here. During the concentration of the ore, the waste material was pumped into a nearby tailings dam where the water becomes very acidic ( pH 3). This water was periodically discharged into nearby streams or passed into the soil where it may have contaminated underground water supplies. Iron sulphate also collected at the base of these dams and may have also added to the problem. So we

can see the concerns of these financiers; however, we have seen that the closing of the smelter comes at a cost – less income from the sale of the end product.

Reports also suggest that copper prices may increase in coming years as a result of an increased demand for the metal.

But the price will also depend on the supply of copper – how much is produced. Now it is likely that following the COVID- 19 pandemic copper mines will substantially expand production and new mines, such as the Khoemecau mine in Botswana, will open. As the supply of copper increases, then its price may eventually fall. Metal prices can also be cyclical – history has shown that periods of high prices are followed by low prices especially if there is an economic recession when the demand for metals may plummet.

Since the closure of the Phikwe mine, potential buyers have come and gone, including one major investor from the Middle East. One reason for this might be the problems that I have already mentioned. And even if an investor decides to buy the mine, the mine cannot reopen overnight. The mine has been closed for four years now and the mine workings

may now be in a poor state due to flooding, tunnel collapse and other problems. So large sums of money will be needed to fully rehabilitate the mine before PNR makes any money, and that might take several months.

Recent reports also indicate that some of the rejected bidders have much greater cash reserves. And the mine is nearing the end of its life.

Will it be really worth it? Will PNR finally pull out like its predecessors, or will it be prepared to face the many challenges should it go ahead and reopen the mine?

Although reopening the mine will benefit Batswana and create much needed jobs, we need to face reality. So let us not be too excited about the interest shown by PNR.

The Phikwe mine has had a troubled past and history has a habit of repeating itself! We have been excited before but only then to be disappointed. And what happened to that large company which promised to set up a factory here assembling aircraft with the promise of a few thousand jobs?

Cautious Geologist