The African Development Bank (AfDB) has advised the government to move in and restart the country’s largest nickel mine as demand for the metal remains high.
The regional bank in its latest monthly update said the government stood to lose out significant revenue should operations at Bindura Nickel Corporation (BNC) remain idle.
The price of nickel has been bullish in recent months at a time when BNC has been idle due to capital constraints.
Demand for the mineral, a product primarily used to protect steel from corrosion, reached a peak of $1 677,50 per ounce at the beginning of April only to retreat to $1 664,30 by the end of the month.
“The price of nickel warrants that the government of Zimbabwe takes a keen interest in the reopening of the Bindura Nickel Corporation underground activities so that the Bindura Smelter and Refinery start operating at full production level,” reads the AfDB report.
In April, BNC, a unit of Mwana Africa Plc, announced that plans to restart the nickel mine were “a step closer” following a fundraising exercise.
It is understood that the China International Mining Group Corporation is planning to invest $21,2 million into Mwana Africa for the resuscitation of BNC.
Mwana Africa holds 84% shareholding of BNC. The investment from the Chinese mining group will result in the resumption of operations at BNC, which was put on care and maintenance in 2008, after a sharp decline in global nickel prices and production problems.
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In his state of the economy update early this month, Finance minister Tendai Biti said despite an increase in production in the mining sector, government anticipated a decline in demand for the country’s commodities, which could be triggered by the eurozone debt crisis.
“One of the downward risks we are facing is the potential decline in the demand of our commodities,” Biti said.
“In the last three years, this economy was driven by strong commodity demand, in particular the price of diamonds, platinum and gold.
“It is foreseeable that with the developments that are taking place in Europe, the eurozone crisis, demand for our commodities might actually slump. “This again will have a negative effect on Gross Domestic Product growth rates.”
