BNC placed under reconstruction

BINDURA Nickel Corporation (BNC), which is facing the negative impact of a global decline in nickel prices, has been placed under reconstruction, an Extraordinary Government Gazette published yesterday shows.

The reconstruction order, as outlined in Section 4 of the Reconstruction of State-Indebted Insolvent Companies Act (No. 27 of 2004), is published in the Government Gazette under General Notice 523A of 2024.

Under this Act, the relevant minister is empowered to issue a reconstruction order when there are indications of fraud or mismanagement, leading to doubts about a state-indebted company’s ability to repay any credit received from public funds.

On Thursday, the nickel company cautioned that ongoing low nickel prices, high input costs — particularly electrical expenses — substantial mining depth and low resource grade persist are negatively impacting its operations.

It noted that despite the completion of the Sub-Vertical Rock (SVR) Project, which caused a temporary shutdown of BNC’s Trojan Nickel Mine (TNM) from September 22, 2023, the company continues to encounter various challenges that are expected to cause delays in the resumption of mining activities at TNM.

In the trading update for the quarter ending December 31, 2023, the company emphasized that nickel prices remain subdued in the global markets, reaching economically unsustainable levels for the business.

Internationally, nickel prices on the London Metal Exchange witnessed a notable decline, attributed to market surplus conditions resulting from increased production in China and Indonesia coinciding with subdued global demand.

However, a reconstruction order was issued yesterday.

In issuing the reconstruction order under Section 4 of the Reconstruction of State-Indebted Insolvent Companies Act (Chapter 24:27) (No. 27 of 2004), Minister of Justice, Legal and Parliamentary Affairs, Ziyambi Ziyambi, appointed Ms Mutsa Mollie Jean Remba as the administrator.

Mr Ian Mtetwa is the assistant.

The Extraordinary Government Gazette reads: “The Minister of Justice, Legal and Parliamentary Affairs hereby, in terms of section 4 of the Reconstruction of State-Indebted Insolvent Companies Act (Chapter 24:27) (No. 27 of 2004) (“the Act”) — (a) issues a reconstruction order in relation to Trojan Nickel Mine Limited; and (b) appoints Ms Mutsa Mollie Jean Remba to be the administrator of the company under reconstruction, together with the following assistant administrators under her control and direction— (c) appoints Mr Ian P Mtetwa to be the assistant administrator of the company, acting under the control and direction of the administrator . . .”

The gazette added from the date of publication of the order the company under reconstruction shall be under the control and management of the administrator and the board of the company under reconstruction shall be divested of the control and management of the company’s affairs.

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.

The reconstruction order confers upon the administrator the power, subject to the rights of the creditors of the company, to raise money in any way without the authority of shareholders for the reconstruction of the company.

Meanwhile, Minister Ziyambi revoked Ms Remba’s previous appointment as assistant administrator of Hwange Colliery Company Limited.

The mining house yesterday issued another cautionary statement indicating that the SVR winder, finalised on April 12, 2024, is now operational and ready for production.

However, the company said it still faces multiple constraints despite the SVR Project’s completion, which could lead to further delays in restarting mining operations at TNM, reads part of the cautionary statement.

“However, despite the completion of the SVR Project, the Company continues to face several constraints that are likely to result in delays in the resumption of mining operations at TNM,” reads part of the statement.

“As was reported in the Trading Update for the quarter that ended 31 December 2023, nickel prices remain depressed on global markets, at unsustainably low economic levels for the business.

“The prevailing low nickel prices come against a backdrop of high input costs, particularly the cost of electrical power, significant mining depth and low resource grade, following the termination of high grade massives.”

BNC expressed the need to secure the necessary capital for retooling, focusing on enhancing the availability of underground mining mobile equipment and the processing plant, with ongoing evaluations of the potential impacts of these critical issues.

It added that assessments regarding the ramifications of these critical issues are ongoing.

“Assessments regarding the ramifications of these critical issues are ongoing.

“The results of the assessments may have a material effect on the price of the Company’s securities. The results of the assessments may have a material effect on the price of the Company’s securities.”