via BNC to retrench – DailyNews Live Ndakaziva Majaka, BUSINESS WRITER • 2 December 2015
HARARE – ASA Resources, formerly Mwana Africa’s Zimbabwean unit, Bindura Nickel Corporation (BNC), says it is set to lay off about 300 employees in its second half at a cost of about $1,5 million.
BNC new chairman Yim Kwan told an analysts briefing in the capital on Monday that the group — which posted a $3,4 million loss after tax in the six months to September compared to an $8,5 million profit recorded prior comparative period —was going to cut its workforce and ramp up production.
“If we are to lay off an excess of 300 workers at an estimated cost of $1,5 million to $1,8 million. This is a measure meant at cost cutting because going forward we want to boost production,” Kwan said.
The retrenchments are understood to have started in October and will be complete by year end.
Kwan who is also parent company Asa Resources financial director said the group had slipped into the loss on the back of reduced production and weak commodity prices.
He pointed out that the average realised price for nickel in concentrate for the period was $7 654 compared to $11 809 per tonne last year while volumes sold were 29 percent down at 2 762 tonnes.
During the period under review, the price of nickel sank to $7 145 per tonne — levels last seen in mid-2003.
However, the price rebounded rising 5,7 percent — the biggest increase in three years — to settle at $8 770 a tonne on the London Metals Exchange.
Nickel’s spectacular fall since the middle of last year may have come to a halt, but without significant, enduring output cuts and stronger demand from China’s stainless steel mills the reprieve could be brief.
Other forecasters back that assessment, including Deutsche Bank, which has picked a $13 000 per tonne average in the first quarter of 2016.
However, Kwan said the miner was going to concentrate on higher volumes, with expectations for a better second half rife.
“The reduced profitability has resulted in a retained profit of $ 3,1 million compared to $3,8 million in the prior period,” said Kwan.
The miner’s revenue also slumped 56 percent to $20,6 million, as Trojan Mine production slumped 28 percent during the half due to a planned shutdown in July to facilitate upgrade of a power supply system at the mine.
The mine milled 231 224 tonnes compared to 310 000 tonnes in the prior year.
Turnover comprised 2 762 tonnes of nickel in concentrate at a value of $20,6 million compared to 3 879 tonnes and $46,4 million recorded prior period, translating to a decrease of 29 percent in tonnes sold and 56 percent in value sold compared to the prior period.
Cost of sales decreased 13 percent to $18,3 million versus last year’s comparative period of $ 22,6 million.
“In response to the declining nickel prices, the mining plan of Trojan Mine has been revised. The revised plan entails reducing the original tonnage by about 50 percent while maximising higher grade massive and minimising lower grade disseminated ore,” said Kwan.