Reconstruction order aims to revive struggling Zim...

Reconstruction order aims to revive struggling Zimbabwean nickel giant

Nyashadzashe Ndoro

Zim Now Reporter

Bindura Nickel Corporation, Zimbabwe’s largest nickel producer, has been issued with a reconstruction order by the government, citing financial difficulties and equipment breakdowns.

The company, a subsidiary of State-owned Kuvimba Mining House, has been struggling with depressed global nickel prices, high input costs, and significant mining depth, leading to a shutdown of its Trojan Nickel Mine since September 2023.

The reconstruction order, issued under the State Indebted Insolvent Companies Act, aims to provide a framework for the company to address its financial challenges and return to solvency. The move is expected to protect the interests of stakeholders, including employees, creditors, and shareholders.

Justice Minister Ziyambi Ziyambi appointed Mutsa Remba as the administrator, who will oversee the company's affairs and develop a restructuring plan to address its financial difficulties.

“The board of the company under reconstruction shall be divested of the control and management of the company’s affairs, and 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,” reads part of the notice gazetted by the government.

Remba has experience as an assistant administrator of Hwange Colliery, which was also placed under reconstruction in 2022.

The reconstruction order comes after BNC completed the Sub-Vertical Rock Winder Bull Gear Replacement Project, which was expected to pave the way for a production restart.

The company, however, remains cautious about resuming operations due to a combination of factors, including depressed global nickel prices, high input costs, particularly electrical power, significant mining depth, and low resource grade.

BNC’s Managing Director, Tinashe Lusiyano, this week, highlighted the challenges facing the company, stating that nickel prices remain depressed on global markets, at unsustainably low economic levels for the business.

He added that the situation is compounded by high input costs, particularly the cost of electrical power, significant mining depth, and low resource grade.

Lusiyano said in a recent cautionary announcement: “nickel prices remain depressed on global markets, at unsustainably low economic levels for the business”.

He said that the situation is compounded by “high input costs, particularly the cost of electrical power, significant mining depth and low resource grade”.

The company is also facing challenges in mobilising the requisite capital for retooling, specifically for acquiring additional underground mining equipment and upgrading the processing plant.

This has led to a delay in the resumption of mining operations, despite the completion of the replacement project.

The reconstruction order is expected to provide a temporary reprieve for BNC, allowing the company to restructure its debts and develop a plan to return to profitability.

The process is, however, expected to be complex and challenging, with many stakeholders affected by the outcome.

Employees, creditors, and shareholders are likely to closely monitor the developments as the reconstruction process unfolds.