Omega Ukama BINDURA Nickel Corporation (BNC) last week said its profit for the year ended March 31, 2020 ― to be announced at the end of the month ― will be significantly lower than previously forecast.
Batirai Manhando, BNC managing director
The nickel miner had initially expected demand “to remain high, with a projected average growth in excess of four percent per year”, after selling concentrate containing 3 002 tonnes of nickel during the six months to September 30, 2019, compared to 2 980 tonnes in the prior comparable period.
“Shareholders and potential investors of BNC are hereby informed that the company is expecting to record a significantly reduced net profit after taxation or a net loss after taxation for the year ended March 31, 2020 versus the net profit after taxation that was originally expected for the same period in terms of the company’s profit forecasts as well as versus the net profit realised in the comparative period last year,” the company said in a statement.
During the year ended March 31, 2020, BNC produced 6 289 tonnes and sold 6 410 tonnes of the base metal, which drove it to an after-tax profit of $18,2 million.
The company, which is now in a “closed period”, according to ZSE listing rules, did not shed more light.
Last week, Finance minister Mthuli Ncube said Zimbabwe’s nickel output stood at 3 936 tonnes during the first quarter of 2020, about 11 percent below output during the same period in 2019.
“Output declines were attributed to scheduled maintenance at some of the major producers,” the minister said in his mid-term budget review.
He said nickel output was also affected by the Covid-19 shutdown of the manufacturing sector in parts of China that reduced consumption of base metals.
“This culminated in rising nickel inventories on the London Metal Exchange from 156 378 tonnes at the start of January to end February 2020 at 235 368 tonnes, resulting in nickel prices falling to US$12 155 per tonne on February 28, down from US$14 285 per tonne in mid-January 2020.
“As a consequence of reduced demand, one primary producer gradually scaled down operations, with capacity utilisation declining from about 85 percent as at end December 2019 to about 50 percent during the first quarter of 2020,” Ncube said, adding that production is projected at 15 000 tonnes in 2020, “which compares unfavourably to output in the previous year”.
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