It is reported that Munali Nickel's minority shareholders seek to take over control of the company from China's Jinchuan Group Corporation, the majority owner of Albidon amid the company's operational difficulties.
Their quest to assume more responsibility of the control of the country’s sole producer of nickel metal, the shareholders decided to form Action Albidon, a pressure group ostensibly to win back the control of the mine from Jinchuan which is also the sole purchaser of Munali Nickel's output.
A shareholder is quoted by foreign media as having stated the intentions over the running and administration of the mine. Jinchuan of China, a diversified mining group owns 51.3% of equity in the mine recently engulfed in a spate of operational problems which has forced the owners to scale down production of the metal by 21% as the owners seek to reassert the problems that have beset the mine in recent months including earth tremors which caused a sink hole at one of the underground operations prompting ventilation problems to close the mine temporarily before it resumed production recently, though lower than 56,000 tonnes projected per annum from this year.
An investor said that "It is our aim to restore control of the stock to all of the investors after it has become hijacked by the majority shareholder."
Jinchuan acquired a 51.3% stake in Albidon in 2008 and has since injected at least USD 37 million in Munali, helping the mine to restart output which had been halted in 2008 amid low global metal prices.
According to Action Albidon, there are no independent controls at Munali to oversee production of ore, inventories and sales of the product to the single customer Jinchuan.
A Jinchuan spokesman justified the company's control of Munali, saying that it had made significant equity investments in the mine to save it from collapsing during the global economic turmoil. He said that "Jinchuan and Albidon off take agreement was negotiated on the basis of standard commercial terms following a protracted process of negotiations with other major nickel companies."
Albidon's board appointed a panel last week to conduct a comprehensive review of its operations, corporate management, board composition and capital structure, responding to pressure from the minority shareholders.
Albidon's officials said one of the aims of the review is to identify more independent directors to run the mine along with Jinchuan.
A company official said that "The board has committed itself of to acting promptly on the recommendations of its appointed advisor, Riverstone Advisory Pty Limited."
Last week, Albidon lowered its 2011 nickel production by 21%, citing lower than expected production. The mine has been plagued by work stoppages due to accidents and miners unrest affecting its operations since May 2011.
The company's former chief executive, Mr Jian-Hua Sang, resigned his position last month following a spate of mine accidents at Munali and pressure from the minority shareholders.
(Filed by Mr Jeff Kapembwa SteelGuru Correspondent Zambia)
