THE Government of Zimbabwe has issued a reconstruction order on Bindura Nickel Corporation’s Trojan mine, as the country’s biggest nickel producer suffers the impact of equipment breakdowns and a collapse in global prices.
In a notice gazetted on Thursday,Mutsa Remba was appointed as the administrator by Justice Minister Ziyambi Ziyambi, which will be able to send the company into reconstruction. This means that control of the company is now under his watch, who has the job of rebuilding it.
“The board of the company under reconstruction shall be divested of the control and management of the company’s affairs, and any person managing or controlling the company’s affairs in any capacity other than as simply a member of the board referred to above shall continue in office subject to the control and direction of, and be answerable to, the administrator.”
Remba has been an assistant administrator of Hwange Colliery, which was also placed under reconstruction in 2022.
The government can use the State Indebted Insolvent Companies Act to try and rescue distressed state-affiliated companies. BNC is 70%-owned by state-owned Kuvimba Mining House.
Nickel troubles
BNC mirrors the crisis of most Zimbabwean mining firms – they have short fall of capital to reinvest in their mines just as metal prices are falling and costs are rising.
Trojan has not produced any nickel since last year, when a key piece of the plant, the Sub-Vertical Rock Winder (SVR) bull gear which lifts ore from underground, failed. This forced a plant shutdown in September. A replacement winder has now been installed, but the company “continues to face several constraints that are likely to result in delays in the resumption of mining operations”, BNC said in a stock exchange notice on Thursday.
BNC has warned that its losses for the six months to March will widen by 8% compared to the same period of last year.
Nickel prices are stuck at “unsustainably low economic levels for the business”, the company said.
The low prices cannot match high input costs, especially power – which increased by 40% for miners last year. BNC’s mine is deep, making production costly, while grades are low.
“In addition, BNC needs to mobilise the requisite capital for retooling, with particular emphasis on increasing the availability of underground mining mobile equipment and the processing plant,” says the company.
Nickel hit record highs of $100,000 per tonne in 2022, helped by supply fears after the Ukraine war. But a surplus supply has driven prices to less than $19,000 per tonne. Prices have fallen by 25% from this time last year.
Source NewZimbabwe
