It is reported that Zambia and Chinese government are disturbed at the abrupt closure of the sole nickel miner in the Southern African nation chiefly attributed to adequate cash flow and failure to implement the restructuring program to revive the company.
Mr Wilbur Simuusa mines minister of Zambia said that it was regrettable that the mine, one of the country's Greenfields had been temporarily shut down for insufficient operating cash flow and regretted having not been advised on the impending closure.
Mr Simuusa, a mining engineer, stated that the closure was unfortunate and has sought a meeting with senior mine management and other officials to seek a recourse to the development which has left more than 2,000 workers out of employment until further notice.
He said that "I was not told about the impending closure and that is why I have summoned the owners of the mines for a meeting to discuss the matter."
Chinese ambassador to Zambia Mr Zhou Yuxiao said that it was unfortunate that the mine was forced to shut down operations, after a spate of problems it faced in recent months and hoped the mine owners would find a solution to the problem. He added that "It is regrettable and I hope the management and its shareholders will find ways of resolving the problem without further delay."
Recently minority shareholders had petitioned for the restructuring of the mines to avert closure after it was embroiled in a series of natural calamities which in some instances resulted in the mines suspending operations for the safety of the workers and equipment.
Jinchuan Mining Group, a Chinese leading producer of copper, nickel and other base metals recently stated in its restructuring program that it would seek ways of recapitalizing the mine and avoid closure as it was cardinal to its nickel producer which was used as a bi-product in the Far East Asia and Europe.
However the delay has been compounded by the declining price of nickel on the world market which has affected the company's cash according to a statement by co owners, Albidon Mining limited, the Australian based and listed miner on its website recently.
Albidon company stated that operations at its Munali Nickel Mine, located about 60 kilometers south of the Zambian capital Lusaka, have been suspended due to serious cash flow caused by a decline in global nickel prices.
According to the company's acting managing director, Mr Harry Ou Wang, the declining nickel prices by around 23% in the last four months has resulted in serious cash flows at the company. It added that that the situation has been worsened by less than budgeted for recoveries at the mine.
This has in turn placed the company's operations at the mine in a financial quandary and feared that this may allow the company's scare resources to be applied to the restructuring that is needed to improve its efficiency in future. Despite the development, the mine has remained resolved and that all available opportunities to guarantee alternative finances are being sought.
Strategies in the revival plan include reorganizing and restructuring existing finance facilities to reduce debt and align payments, attracting new institutional and strategic investors to participate in raising capital and recruiting new independent directors and managers.
In 2010, Jinchuan, upon taking the 51.3 majority stake ploughed into the company USD 37 million to sustain operations. However, the financing was short term and was outlived by the spate of natural disasters that have affected the mines since June 18th 2011 including a sink hole being created at one of its underground operations, resulting in blasting of the mineral being done in isolate places.
It was forced to scale down nickel concentrate production by 21% from the forecast 56,000 tonnes in 2011. In 2010, it was productive and the miner hoisted over 78000 tonnes of ore with 81% nickel quality within three months of 2011.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
