eBusiness Weekly
Michael Tome
Business Writer
VICTORIA Falls Stock Exchange (VFEX) listed entity, Bindura Nickel Corporation (BNC) says low resource grade and depressed nickel prices on the global market are threatening the survival of the nickel miner’s operations.
In the trading update for the nine months to December 2023, BNC outlined several challenges that threaten their operations in the current financial year.
Generally, nickel demand has been on a downtrend, affected by several factors that include, but are not limited to China’s slow recovery from Covid-19 and the slow uptake of Electric Vehicles. China’s slow recovery from Covid-19 has incited a decline in the construction sector projects where steel is used substantially.
Nickel is a significant component used in steel processing, hence less steel used in construction reduces the demand for nickel.
The electric car revolution is generally expected to transform prospects of the nickel mining sector, given the product is a major component of hybrid car batteries, but there has been a growing use of other battery alternatives using Lithium Iron Phosphate (LFPs).
As it stands, nickel surplus is expected to reach 140 000 tonnes in 2024, from a reported 2023 surplus of 200 000 tonnes in an estimated 3,2 million tonnes market.
Glut and subdued global nickel demand have consequently led to a rapid slump in global nickel prices, and are expected to remain under pressure during the 2024 calendar year.
Among all LME base metals, Nickel experienced a substantial decline last year, dropping by 48 percent during the calendar year 2023, dropping from $31 200 per tonne at the beginning of January to $16 300 per tonne at the end of December 2023.
This was also attributable to the increase in Indonesia’s production of lower purity class 2 nickel which is used in steel making. Analysts expect nickel prices to remain subdued in the last quarter of the 2024 financial year and to settle at an average of US$17 000 per tonne during the year.
However, the commodity has rallied 8,6 percent this month and is on track for its first monthly gain since July.
Three-month performance on the London Metal Exchange shows that nickel rose 0, 4 percent to $17 675 a tonne on Thursday last week after touching $17 830, on November 10, 2023.
Locally, the operating environment remains fickle, foreign exchange instability and power shortages notably affected operations in the quarter to December and this is expected to persist in the last quarter of BNCs financial year.
Generally, the turbulent operating environment is anticipated to keep Zimbabwe’s economic activity below its potential.
Operationally BNC was at a disadvantage, affected by the breakdown of its Sub Vertical Rock Winder (“SVR”) bull gear since September 2022.
This breakdown led to a decline in the SVR hoisting capacity, which declined to just 25 percent of its installed capacity. The breakdown fix is, however, expected to be complete in the first quarter of 2024 from the initially scheduled October 31, 2023.
BNC finance director Mr Believe Dirorimwe (pictured) said the mining company is growingly becoming vulnerable to a myriad of viability challenges in its operations.
“Currently, the Company is faced with several challenges that threaten the survival of the business and the restart of the mine following the replacement of the SVR bull gear.
“These challenges include low nickel price on international markets, high domestic input costs, particularly electrical power costs, which have increased by more than 60 percent over the last 16 months,” said Dirorimwe.
He however cited the need for more capital injection to improve operational viability considering the overall low resource grade and the prevailing depressed Nickel prices on global markets.
“The company recognises the need to acquire the required investment capital and for a sustainable electrical power tariff. There is a need for capital to refurbish underground mining mobile equipment and the concentrator plant, and development of the mine which has been lagging for the past two decades.”
According to BNC despite facing operational challenges, particularly the prevailing low Nickel price, Trojan Nickel Mine is sitting on approximately 13 million tonnes of nickel ore at an average grade of 0,97 percent.
“This substantial resource gives a life of mine of at least 10 years at maximum design production capacity.”
According to BNC, no ore was mined or milled during third quarter of the 2024 financial year stemming from the above-mentioned SVR breakdown.
In the comparable period last year, the company mined 51 770 tonnes of ore, milled 50 907 tonnes of ore, and produced 275 tonnes of nickel in concentrate. As such, no nickel in concentrates sales were recorded in the period compared to last year’s 207 tonnes.
Consequently, the lack of production resulted in a significant decline in financial performance and the company incurred a loss for the quarter.
