Bindura Nickel Corporation Faces Profitability Challenges Amidst Shutdown and Falling Nickel Prices
Bindura Nickel Corporation (BNC), a key player in the nickel mining industry, has issued a warning to its shareholders and potential investors regarding an expected significant downturn in profitability for the remainder of the fiscal year 2024. This downturn is attributed to an extended shutdown period combined with the prevailing low nickel prices on the global market, potentially impacting the value of the company's securities.
Managing Director, Mr. Thomas Lusiyano, revealed that preliminary assessments indicate an anticipated loss after taxation for the six months ending March 31, 2024, which is projected to be eight percent higher than the loss recorded in the corresponding period last year. Stakeholders are advised to exercise caution and seek professional advice when dealing with the company's securities until a further announcement is made by the end of April 2024.
The challenging operating environment in 2023, particularly the deterioration of the Sub-Vertical Rock Winder (SVR) bull gear at the Trojan Nickel Mine (TNM), significantly hampered BNC's financial performance. The company undertook the SVR Bull Gear Replacement Project, leading to a temporary shutdown from September 22, 2023. Despite initial plans for completion by October 31, 2023, unforeseen technical challenges have extended the project's timeline to the end of April 2024, resulting in a six-month shutdown.
During this period, BNC recorded no nickel in concentrate sales due to the shutdown, contrasting sharply with the 207 tonnes of nickel concentrates sold in the same period the previous year. The decline in production has directly contributed to the company's financial struggles, with ore mined and ore milled experiencing significant reductions compared to the previous year.
Furthermore, global nickel prices have witnessed a substantial drop, decreasing by 48 percent from US$31,200 per tonne at the beginning of January to US$16,300 per tonne by the end of December 2023. This price slump is largely due to market surplus conditions driven by increased production in China and Indonesia amidst subdued global demand. China's focus on high-purity class 1 nickel for electric vehicle (EV) components and Indonesia's production of lower purity class 2 nickel have contributed to the current market dynamics.
