LIVINGSTONE MARUFU
The Bindura Nickel Corporation (BNC) is lobbying the Reserve Bank of Zimbabwe (RBZ) to increase the forex retention threshold for miners
to above 80% to help the company improve its production level and
cover for the forex gap created after the payment of electricity in US dollars. Nickel miners retain 50% forex.
The development comes at a time when local mining companies are at
loggerheads with the RBZ to get a higher forex retention level to ramp
up production and keep up with the rising cost of doing business in the
country.
BNC managing director Batirai Manhando told Business Times that
the company needs more forex to complete its various projects around
the country.He said in the absence of foreign direct investment, the company needs to complete its projects from its own coffers.
“We are lobbying that RBZ increases our forex retention level to the northwards of 80% so that we continue to be viable and improve
productivity levels,” Manhando said.“We had earlier agreed a 50% forex
retention level with the monetary authorities, but that was before electricity was to be paid in forex by exporters and before the interbank forex trading platform was launched.
That model has to be reviewed because we are now paying for electricity in forex and retaining skills.Certainly 50% is not adequate,”Manhando added.
Meanwhile, BNC has posted a 158% increase in net profit to US$9.3m from US$3.6m in the same period last year due to the revaluation of foreign denominated loans, payables, and a decrease in costs.
During a half-year 2020 presentation recently, Manhando told analysts that the company was banking on firming nickel prices and the completion of a smelter in the 2020 financial year, as the company seeks to get more value from mineral through beneficiation.
Revenue for the period increased by 8.4% to US$28.4m, from US$26.4m due to volume growth as well as sustained price recovery. Total assets jumped 8% to US$108.2m, from US$99.3m. Retained earnings were up 24% to US$33.8m, from US$27.2m due to the profit for the period.
Manhando said the board was of the view that as long as the nickel market fundamentals have not driven the price to significantly higher levels, it would not make economic sense to continue injecting more capital into the smelter project.
The company is expecting an improvement of nickel prices in 2020 to change the fortunes of the company.
