BNC smelter’s fate linked to nickel price stability

BNC says the pace of work on its smelter will be determined by the level of global nickel prices that can support
completion of the project Africa’s only integrated nickel processor, Bindura Nickel Corporation (BNC), says
completion of the refurbishment exercise for its smelter, which stagnated at 83 percent, depends on the stability in level of the project-linked global nickel prices.

The smelter project, which was scheduled to be completed in 2018, has been on hold for years after BNC indicated its completion depended on increased supportive international nickel prices.

The integrated mining company indicated the pace of progress on the smelter restart project was being carefully managed to prioritise cash flow requirements.

The project, is estimated to cost US$30 million, was accorded national project status, which gives BNC a number of incentives, including the duty-free importation of capital equipment.

BNC said it was important to emphasise that the long-term strategic and economic value of the Smelter was optimal when the nickel price was elevated.

The original plan was based on an international price of $16,250/t.
“We were estimating that it will become viable at a nickel price of around US$16 500 per tonne but now we have gone beyond that, what we are waiting to see is the stabilisation of that price above that threshold which seems to be holding for now,” managing director, Thomas Lusiyano said.

Global Nickel prices have continued to surge after touching a seven-year record high in September 2021, climbing above US$20 000 per tonne.

Operationalisation of the Smelter will require significant additional and power supplies as well as other operating costs.
In 2015, BNC raised US$20 million through a bond issue to finance the restart of the smelter. The five-year bond has a coupon rate of 10 percent per annum.

By 2017, the company had raised a significant amount of the required funds to finance the project, but only enough to take it to 83 percent completion.

Lusiyano said the smelter refurbishment was one of the projects the company was keenly positive would increase value delivered to shareholders.

Fitch Solutions, a top globally recognised data, research and analytics firm, expects nickel prices to average US$16 500 a tonne in 2021 and US$16 540 in 2022. Further, global nickel prices are expected to rise above US$17 000 a tonne by 2023, while the trend is projected to continue into 2025.

The World Bank, in its commodity forecast report, estimated nickel prices would fall to US$16 000 per tonne in 2022, but sees the spot price of the commodity growing after the correction to reach US$18 000 per metric tonne.

Meanwhile, the IMF’s metal cost, insurance and freight (CIF) report expects the price to rise from US$18 000 per metric tonne to US$19 000 in 2026.

Additionally, the global lender expects that the nickel CIF price will grow, as the overall metal price on the world markets declines.-The Herald