VICTORIA Falls Stock Exchange-listed Bindura Nickel Corporation (BNC) says it will implement strict budgetary controls and cost containment measures in the final quarter of its 2024 financial year in response to the difficult operating environment.
Nickel prices on the London Metal Exchange experienced a significant decrease of 48% to US$16 300 per tonne during the calendar year 2023.
On the domestic front, the company is facing foreign exchange instability and power shortages.
The increase in electricity cost has compounded already inordinately high-cost structures, threatening the viability of the local mining industry.
The company’s overall performance during the nine months and third quarter ended December 31, 2023, was also affected by the deterioration of the sub-vertical rock winder bull gear, which broke down in September 2022.
The sub-vertical rock winder is one of the company’s major pieces of fixed mining equipment and is used to hoist ore from underground.
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The deteriorating sub-vertical rock winder bull gear subsequently resulted in its hoisting capacity declining to 25% of its installed capacity by September 2023.
In a trading update for the nine months and third quarter ended December 31, 2023, BNC said it would focus on commissioning the sub-vertical rock winder after bull gear replacement.
“To achieve long-term sustainability, the business recognises the need to implement strategic initiatives focused on full recovery and operational efficiency,” it said.
“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 sub-vertical rock winder 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% over the last 16 months; and the 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.
“The company recognises the need to acquire the required investment capital and for a sustainable electrical power tariff, considering the overall low resource grade and the prevailing depressed nickel prices on global markets,” BNC said.
“Efforts are ongoing with respect to these critical issues that have a huge bearing on the viability of the business. The company is cautiously optimistic that the success of these ongoing efforts will lead it on to a path of sustained gradual restart of the mine from the ongoing shutdown that started on September 22, 2023.”
To address the limited and deteriorating hoisting capacity problem, the mining firm procured a replacement sub-vertical rock winder bull gear, similar in size and duty, and initiated the replacement project, necessitating a transient shutdown from September 2023.
The project was initially scheduled for completion by October 31, 2023, but it faced unforeseen technical challenges that extended its completion to the end of February 2024.
As a result of the shutdown, no ore was mined or milled, and no nickel in concentrates was produced during the third quarter of financial year 2024.
In the comparable period, the company mined 51 770 tonnes of ore, milled 50 907 tonnes of ore, and produced 275 tonnes of nickel in concentrates.
No nickel in concentrates sales were recorded during the period owing to the shutdown.
Nickel concentrates sales for the same period last year was 207 tonnes.
Lack of production resulted in a significant decline in financial performance and the company incurred a loss for the quarter.