Mowana Mine set to bounce back on Dutch deal
Deal will pay P800m creditor claims More than 320 workers already on-site Creditors to vote on bidder’s offer Dutch bidder to pump OPEX, CAPEX
ADutch wealth manager is moving to take over Mowana Mine, clearing most of the P800 million owed to various creditors, pumping in more working capital as well as funding the purchase of new plant and equipment.
BusinessWeek has learnt that preparations for Mowana Mine’s reopening are progressing steadily with 328 workers employed on site. About 400 workers lost their jobs when the copper mine near Dukwi went into judicial management in December 2018. At the time, the troubled mine had been resuscitated from a liquidation dating back to 2015.
This week, documents seen by BusinessWeek indicate that Max Power Limited, a company run by Dutch wealth manager Gregory Elias, has laid an offer before Mowana Mine’s creditors that involves full and part payment for creditors according to their classification. Smaller trade creditors with proven claims of less than P250,000 will get full payment, while those with higher claims will get 25 thebe of every pula owed above P250,000.
Employees who worked up to the judicial management and those who worked under the care and maintenance period that followed will also have their outstanding amounts settled. Previously, BusinessWeek reported that Mowana Mine’s workers were owed a collective P7.2 million for unpaid salaries dating back to October 2018, as well as historical bonuses.
Outstanding amounts to government such as taxes and royalties will also be settled in full. Mowana owed the tax collector P13 million in unpaid Value Added Tax and Pay As You Earn (PAYE) obligations at the time of its closure. Documents previously seen by BusinessWeek showed that from January 2017, the company deducted PAYE worth about P6 million from its workers, but did not pass it along to the Botswana Unified Revenue Service (BURS).
Creditors are scheduled to convene on or before November 15 to consider Elias’ offer.
“It is expected that implementation of the scheme will ensure that the future of Mowana Mine is secured and that it will bring significant economic benefit to Botswana for many years to come,” the mine’s judicial manager, John Hinchliffe told BusinessWeek.
“Benefits include revenues for the government in terms of taxes and royalties, secure employment for over 300 people and payment in full to all former employees of their terminal benefits.
“There will also be significant benefits to the local economy both at business and individual level.” Hinchliffe said preparations for production were ongoing at the mine, as part of the funding agreement with Max Power.
Elias’ Max Power first moved to take over Mowana Mine by snatching up the 40.1% equity held by ZCI Limited in Leboam Holdings, the owner of Mowana Mine. Last week, Max Power moved to take over Cradle Arc, the company holding the balance of the shares in Leboam Holdings.
The Competition and Consumer Authority (CCA) has been notified of both acquisitions and a decision is due.
Elias, who is cited as the sole director and shareholder of Max Power, has a long career as a wealth manager for the high-income clients in the Netherlands, the Dutch Antilles’ island of Curaçao.
It is unclear whether Elias is acquiring Mowana on his own behalf or on behalf of clients. The CCA said while it was not aware who the beneficial owners behind Max Power were, due diligence had been conducted into the transaction.
“The CCA conducts due diligence on all notified transactions and this would involve seeking information from a variety of sources including sector regulators, where possible, key stakeholders such as competitors, public bodies, interested parties and the public including essential partners such as the media,” the authority’s spokesperson, Gideon Nkala told BusinessWeek in a written response.
He added: “Whilst our interests in merger transactions is mainly to determine whether the merger will substantially lessen competition or not and whether the said merger raises any public interest concerns that outweigh the competition restrictions, for instance job creation, it is important to note that we exist within an ecosystem of supportive legislation and with other public institutions.
“For instance, in matters of tax, we would refer any tax-related concerns to BURS and corruption issues to DCEC (the Directorate on Corruption and Economic Crime).
“In fact, the Competition Act makes it clear that any merger approval by the CCA does not relieve the enterprise from obtaining necessary approvals from other bodies.”
Meanwhile, Max Power Limited, workers and other stakeholders will be hoping the latest attempt to resurrect the mine is more sustainable. Previous assessments have revealed that while there had been robust fundraising before Mowana restarted operations in 2016 after the 2015 closure, the mine quickly burnt through the cash owing to lower copper prices, below target production and high costs.
Additional debt brought on to keep operations going only served to increase operating costs. Copper prices have been trending at high levels this year, on the back of the global recovery and inventory shortfalls in key markets.