SMM re-opening boon for Turnall

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Turnall Holdings says it is following efforts to resuscitate operations at Shabanie Mashava Mines (SMM) with keen interest as doing so will unlock working capital for the group.

Since the closure of the mines three years ago, Turnall has been importing chrysotile fibre from Brazil and Russia at $1 3000 per tonne, almost double the local price. In a statement accompanying its full-year results for the year ended December 2011, chairman Herbert Nkala said at the end of the year, the company’s net borrowings stood at $11,8 million comprising $9,3 million secured largely for purchasing and chrysotile asbestos and $2,5 million representing a portion of the Preferential Trade Area loan.

Fibre raw material stocks amounted to $5,5 million.

“The company is keenly following current efforts by the relevant authorities to speedily expedite the opening of the local mines, said Nkala. “The re-opening of the chrysotile asbestos mines will bring working capital relief to the company and reverse the current cash outflows towards fibre imports.”

Government through the Zimbabwe Mining Development Corporation last year said it had taken over control of the two mines.

However, businessman Mutumwa Mawere is still challenging the acquisition of the mines.

Zimbabwe Mineral Development Corporation chairman Godwills Masimirembwa in January said the two mines would be fully operational this year.
SMM was placed under reconstruction in 2004 after government said the resources giant, controlled by Mawere, had accumulated huge debts to the State.
At its peak in 1999, SMM produced 115 000 tonnes of chrysotile asbestos. Nkala said during the year under review, the company was “burdened” by the need to import chrysotile fibre from Brazil and Russia.

“The importation of fibre impacted on the business from two fronts. Firstly, margins were negatively affected in an effort to maintain prices at affordable levels in the targeted low-cost housing segment. Secondly, the company was forced to maintain high fibre stocking levels in order to deal with the long lead times. The company, as a result, kept two to three months stockholding of fibre in the process tied cash outflows towards fibre imports.”