(NEWZIMBABWE) Indigenisation hits Bindura Nickel’s restart plans

Indigenisation hits Bindura Nickel’s restart plans
26/07/2011 00:00:00
by Gilbert Nyambabvu

CONCERN over the country’s Indigenisation programme is undermining efforts to raise finance for the restart of operations at Bindura Nickel Mine (BNC), company officials have said.

The Zimbabwe Stock Exchange-listed nickel miner and processor was placed on care and maintenance in 2008 as the local operating environment worsened and world market prices for the metal went into a tailspin.

BNC operates a smelter and refinery complex in Bindura which is fed by the nearby Trojan Nickel Mine supported by Shangani Mine which is located between Gweru and Bulawayo.

However the miner’s holding company Mwana Africa says efforts to raise financing for the restart of operations have been hit by investor worries over Zimbabwe’s indigenization programme.

Mwana Africa had opted for what officials described as a “sequential” restart of operations beginning with Trojan Mine but a proposed placement with international investors in March was hit by concern over the indeginisation programme.

"Our presentation to a wide group of international investors was well received and it became clear that more than sufficient demand would be achieved to meet our target. Within a few days of the proposed closing the Zimbabwean Government issued regulations on indigenization which resulted in investors withdrawing their support for the fundraising,” Mwana Africa chairman, Oliver Baring said in a statement published with the group’s recent results.

“It is a sobering thought that as a result of this event we were unable to restart Bindura’s Trojan Mine, with the resultant ongoing uncertainties for our 2,170 employees, their dependants and of course our shareholders.”

Analysts warn that legislation requiring all foreign firms to ensure locals control at least 51 percent of their shareholding could scare away potential investment and undermine the country’s economic recovery.
Mwana Africa controls 52.9 percent of BNC which it acquired from Anglo American Corporation in 2003.

Mwana’s chief executive, Kalaa Mpinga said concern over the country’s empowerment programme was unfortunately drawing investor attention away from Zimbabwe’s otherwise improving prospects.

“There are a number of positives in the Zimbabwe economy which are often overlooked. Annual inflation continues its downward trend (and) the low inflation figures have brought with them the stability required for businesses to operate normally,” Mpinga said.

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“The agricultural sector is poised to grow (while), buoyed by favourable international prices and a stable operating environment, production of most minerals in Zimbabwe (has) continued to show an upward trend.

“These performances in the agricultural and mining sectors not only create employment, but also generate substantial foreign currency inflows into Zimbabwe as well as tax revenues for the country.”

However, despite the financing challenges, Mwana Africa said it was committed to the resumption of operations at BNC.
“We have detailed plans in place for the restart of operations at BNC,” Mpinga said.

“Whilst this task has been made difficult by uncertainties in the Zimbabwe mining industry regarding government indigenisation legislation, we remain committed to securing the restart of this unique asset in the Southern African region.”