Bindura Nickel Corporation has halted its smelter construction project and is now completely focusing on the shaft deepening project as the miner aims to boost production in view of an anticipated increase in the global price of nickel.
Management indicated that depressed nickel prices have led to a revision of project priorities as it would not make economic sense to continue injecting more capital into smelter project.
BNC has developed a wait-and-see attitude on the project, mainly hinged on the price of the commodity, and it is the management’s position that the smelter project will be decelerated as long as the nickel market fundamentals have not driven the price to significantly higher levels.
Nickel prices have averaged US$12 000 per tonne since 2015 compared to the average London Metal Exchange (LME) price of US$16 000 per tonne forecast and the industry’s stakeholders are anticipant that the price will hit the US$70 000 mark per tonne in the next three year driven by an upsurge in demand.
The shaft deepening project has been on the cards running on and off for the last ten years and is expected to cumulatively gobble around US$17 million and US$20 million on completion for commissioning next year.
In an interview on the sidelines of the firm’s annual general meeting BNC chief executive officer Batirai Manhando said they were at the finishing stage of the deepening project which is expected to take up at least US$5 million.
“We have stopped smelter construction, it is not a priority at the moment owing to the current nickel prices, we will not put money on the smelter but instead we will be directing money towards deepening project, we project that prices will go up in the next three years and by then the smelter will be running.
“We are at the finishing stage of the deepening project and it is a must commission project in the next financial year , without it we cannot access the mineral ore body below so now we have to spend the remaining $5 million dollars and make sure that the project is commissioned otherwise there is no future to talk about .
“Trojan ore body continues to go down as we deepen the mine so for you to access the ore which is below you have to deepen the mine, so the need to access the ore body has necessitated the project,” said Mr Manhando.
These developments come on the back of a positive financial year up to March 31, 2019 where the concern realised a profit after tax of US$13,5 million, compared to the US$5,8 million recorded in the prior year.
The firm’s revenue modestly rose by 1 percent to US$54 million from US$53,6 million in the comparable period last year.
During the period under review operating profit jumped to $21,3 million which is 139,3 percent in the positive from $8,9 million realised in 2018, mainly attributable to exchange gains recognised on the introduction of the Zimbabwean dollar.