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Judith Phiri, Business Reporter
VICTORIA Falls Stock Exchange (VFEX) listed mining firm, Bindura Nickel Corporation (BNC) posted a significant drop in revenue of 43 percent in the half-year ended 30 September 2023 from US$32,5 million reported during the same period last year to US$18,5 million on account of low nickel sales volume and low prices.
Nickel prices are expected to remain relatively low in the short to medium term, while during the period under review, the average London Metal Exchange (LME) cash settlement nickel price was US$20,614 per tonne, 19 percent lower than the previous year’s price of US$25,542 per tonne, reflecting the global decrease in nickel prices.
The average LME nickel prices were heavily affected by demand-supply realities associated with the production of surplus nickel pig iron by Indonesia and the slow recovery in China’s economy. In a statement accompanying the trading results, BNC, a member of Kuvimba Mining House, said tonnes of ore mined at 177 179, decreased by 23 percent compared to the 229 790 tonnes achieved for the same period last year.
“The run-of-mine ore was low due to the deterioration of the sub-vertical rock winder (SVR) bull gear, resulting in a 70 percent decline in SVR hoisting capacity. The decline in hoisting capacity also constrained development work planned for the first half of fiscal year 2024 (FY2024) as ore hoisting was prioritised over waste. Ore head grade, at 1,10 percent nickel, was 13 percent lower than the 1,26 percent nickel achieved in the comparable period due to reduced high-grade massive ore sources. Recovery at 73,3 percent was 13 percent lower than the 84,2 percent recorded in the previous year, in sympathy with the lower head grade and breakdowns at the concentrator plant due to the deterioration of key components,” said the company’s chairman, Mr Muchadeyi Masunda.
He said ore milled was 163 674 tonnes, which was 29 percent lower than the 230 248 tonnes milled in the same period last year due to lower mined volumes. Nickel in concentrate production for the half-year to 30 September 2023 was 1 314 tonnes, 31 percent lower than the 1 918 tonnes produced in the same period last year.
“The decrease was attributable to the lower ore mined and milled. Resultantly, nickel sales volume was 1 416 tonnes, 34 percent lower than last year’s sales of 2,146 tonnes.”
Giving the update on the SVR Bull Gear replacement, Mr Masunda said: “To address the limited hoisting capacity problem caused by the damaged SVR bull gear, the company procured a replacement bull gear, similar in size and duty to the existing one and initiated the Bull Gear Replacement Project. The project is scheduled to be commissioned during the third week of December 2023.”
He said the average LME nickel prices are expected to trend lower in the third quarter of FY2024, settling at an average of US$18,59 per tonne, due to oversupply in the market. While, an anticipated acceleration in Chinese economic growth due to the implementation of additional stimuli, accommodative USA monetary policies and demand for nickel in the energy storage sector are likely to have a positive impact on nickel prices in the medium to long-term.
Going forward, Mr Masunda said: “Despite the challenging nickel price outlook, the company has strategically implemented measures aimed at ensuring a return to profitability and cash generation within the foreseeable future. These measures have been timed to ensure that the group ends the 2024 financial year in a strong position, in preparation for what we believe will be an improvement in the financial year 2025.”
He said the directors have resolved not to declare any dividend in response to the losses and the need to retain cash for operations.
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