Amid a myriad of operational problems, Jinchuan majority owned Munali nickel mine in Zambia may probably resume operations by mid January after the company was placed on care and maintenance arising from falling metal prices and lack of cash flow.
The sole nickel miner, 51% owned by China's Jinchuan mining Group and Albidon of Limited and listed on the Australia stock exchange said it had plans to revive operations by mid January 2012 after making some management decisions.
According to sources close to the mines and Mine workers Union of Zambia, a there have been indications by management that the current problems affecting the mine might be resolved before or around mid January to enable operations to resume.
The sources said that "The management at the mine has made headways in sources for funds to resume operations and this was chiefly on account of lack of cash flow to sustain the mine and the falling nickel prices on the international market."
Local reports citing mine workers general secretary Mr Nkole Chishimba, who led a delegation for an on the sport check and meeting with management, as saying that the mine was optimistic of resuming operations by early 2012.
According to Mr Chishimba, the mine was not operational after being placed under care and maintenance because the recovery rate, production levels and low world nickel pieces made it unviable. The more than 2,000 workers at the mine are still on management payroll awaiting decisions from the owners on the sustainability of the mine.
Mr Chishimba is quoted as saying that during a recent visit to the mine site, located about 60 kilometers south of Lusaka, the Zambian capital, management at Albidon Munali nickel mine were confident that operations would resume by mid January after finding an equity partner. It is however, hot clear whether Albidon and Jinchuan Mining Group have parted ways as the latter was instrumental in recapitalizing the mines last year when it acquired 51% equity and ploughed in USD 37 million.
He added that "They told us that they will start operations by mid-January because by then, they will have found an equity partner. For now, all workers would continue to draw a salary."
Mr Chishimba appealed to the government, as a shareholder, to play a proactive role in order to prevent such instances and guarantee the future of the mine. There was no immediate comment from mines minister Mr Wilbur Simuusa who earlier on summoned senior management at the mine to decide the destiny of the mine following its closure for want of resources Munali mine, which was primed to produce 900,000 tonnes early last year and later increase to 1.2 million tonnes of nickel, which after the financial crisis dropped its forecast to less than 56,000 tonnes per annum after a spate of problems, is Zambia's only nickel producer.
According to data, the problems at the miner were heightened after the June 18th 2011 incident which resulted in the mine operations being suspended after management discovered a sink hole in one of the operations underground.
Other natural calamities befell the mine, forcing management to seal off the mine to secure the lives of the equipment and the workers. It later invited the initial designers of the mine to assess the way forward, although the report on the findings has not been made public.
The mine, despite its potential was forced to downwardly revise the year end production target twice from the initial 90,000 tonnes to 55 500 tonnes and later by about 21% to 44,000 tonnes for 2011 in June 2011.
In September 2010, Munali nickel was forced to further take drastic measures by suspending trading of shares at the Australian bourse arguing that the company had over declared the production levels of nickel.
Recently, the company’s owners decided to opt for a restructuring program in which Jinchuan had offered to take a leading role in the process intended to among other things reorganizing the senior management at the company and restructuring existing finance facilities to reduce its debt portfolio.
Other efforts were intended at attracting new strategic investors to participate in raising capital and recruiting new independent directors and managers. Nickel is a bi product used in among other products electric guitar strings, magnets and rechargeable batteries. Their magnetic property makes it important for use in computer hard drives.
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(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
