BINDURA Nickel Corporation (BNC) managing director David Murangari says the company has put on hold a US$100 million investment planned for another nickel mine in the midlands.
Murangari told businessdigest that the Hunters Road BNC long-planned investment, has been shelved owing to weak prices of the nickel obtaining on the international market.
Â â€œRight now we cannot talk about Hunters Road project because the mines that we have are not operational. We have to wait until the situation changes,â€ Murangari said.
This comes after the nickel miner announced this week that operations at Trojan and Shangani Mines would remain under care and maintenance until world nickel prices become viable for business.
BNC also warned of job cuts.
The company had been reinvesting in its operations in the country with a view of extending minesâ€™ life spans while hoping that once prices become attractive, the mines would go on for another 20 or more years.
â€œThe drastic action to curtail expenditure was taken in order to ensure the long-term survival of the company,â€ said the company in a statement this week. â€œBNCâ€™s intention is to maintain the critical infrastructure to allow a return to production as and when more favourable business conditions return.
Regrettably, it will not be possible to avoid a large-scale retrenchment.â€
The company says it will remain on care and maintenance for some time.
The ZSE-listed nickel producer temporarily shut down operations in November last year after world nickel prices fell rather dramatically. Murangari says it is costing the company US$13 000 to produce a tonne while the price on the international markets are ranging from US$9 000 to US$10 000 per tonne.
But BNCâ€™s holding company Mwana Africa plc has not lost all hope despite the negative developments on the nickel front amid reports that the London Stock Exchange-listed junior would re-open its Freda Rebecca Gold Mine, which had also been put on care and maintenance.
Mwana Africa owns 53% of BNC and a controlling shareholding in Freda Rebecca Gold Mine.
Strong demand for metal in China and India kept prices surging in the past years but a global economic recession has not brought joy to businesses worldwide.
Zimbabwe mines missed the global commodity rally of the last five years because of administrative pricing and implicit taxation on the back of many schemes by policy makers that negatively affected the sector.
With that, they missed the biggest opportunity in a century to beef up the physical capital and strengthen their financial reserves. The threat and confusion regarding indigenisation scared off potential exploration, while power shortages and the associated illogical exchange rate regime left big scars on the mining landscapes that are much more visible than the dump sites the mines created.
BY CHRIS MURONZI