- BNC records zero production from nickel and ore in 2024
- Operational inefficiencies and old machinery affect production
- Leadership challenges and poor nickel quality contribute to the company's struggles
Harare- The question which keeps on banging in investors’ ears and the rest of shareholders is when will BNC revert to its previous years of production triumph. The production loss endured by the company listed on the US Dollar denominated bourse, Victoria Falls Stock Exchange during the third quarter to full year 2024 where it recorded zero levels of production from nickel and ore is a challenge which needs to be closely monitored, not to be held with fingertips.
BNC has been prosperous over the last 9 years except for 2022 encompassed both by volume growth and after-tax profit having reached a record of 23,7 million in 2014. Despite operating in red especially between 2010 to 2013 during the early stages of dollarisation, the company had not suffered to the extent of recording nothing in terms of volumes growth on quarter-on-quarter basis.
The latest performance where nothing was recorded in terms of volumes growth reflects operational inefficiencies which needs management’s immediate attention. Though the commodity prices at global scale especially of Nickel and PGMs remained unfavorable, there are serious inhouse issues which needs immediate scrutiny and serious attention.
The logic is simple: in order to offset losses when prices are low, there is a need to increase production. However, this cant be the case for BNC as the plant is too old and recurrently succumbs to breakdowns. The breakdown of the Sub Vertical Rock Winder in 2023 which missed its repair target during the same year and now expected this year has worsened the old machinery issue. BNC is grappling with old and outdated machinery which frequently affects production time due o breakdowns and hype operational costs.
The continued failures of the plant are hugely contributing to the production misery currently endured by the company. In its 2023 full year financials, the company highlighted hopes to bounce back in full year 2024 but under the current circumstances, it remains gimmick.
Secondly, the company currently laments poor nickel quality which is failing to match Chinese and Indonesia’s nickel. This speaks more to management issues. Its future prosperity hinges on the ability to address the old dilapidate plant crisis and dealing with poor nickel output.
Veritably, the company is struggling with leadership challenges especially over the last 5 years. The change in ownership from Mwana Africa to ASA and then Sotic and now to Kuvimba had affected the company’s stability particularly regarding production and cashflows. The machines failure challenges in offtake agreements and issues related to ore quality all points to an unstable capitalistion and proper management structures. Instead of investing in an asset that remains idle and vulnerable to price fluctuations, it may be wiser to consider restarting the smelter using the existing mining equipment. Maybe the shareholder who once opted out for restarting the smelter was correct.
Such will be fundamental in addressing national and international calamities related to pricing and costs.
At global scale, the nickel prices have fluctuated by over 70% in 2023 a trend that is expected to continue in 2024. Poor metal prices have been a result of excess supply of high-quality nickel especially from the world’s largest suppliers especially China and Indonesia. With a slowdown in China’s economic growth due to COVID-19 pandemic and global geoeconomic fragmentation, the mineral has suffered heavily in terms of pricing. International Nickel Study Group estimates supply to continue edging demand in 2024 just like 2022 and 2023.
This highlights the urgency in addressing ore quality, recapitalisation to increase output and poor prices. This all points to management crisis amid a melting Zimbabwean economy.
Equity Axis News
