BNC names Tagwirei associates to board after takeover, as HY profit rises

Bindura Nickel Corporation (BNC) has appointed three associates of commodity baron Kuda Tagwirei to the board, after the recent takeover of the country’s largest nickel miner by Sotic International, linked to Tagwirei’s partners Trafigura.

Sotic International, a commodities company based in Mauritius, bought UK-listed Asa Holdings’ controlling 74.13% stake in BNC in October.

In a notice on Thursday, BNC announced the appointment of Christopher Fourie and Jozef Behr to the board. Fourie is a director of Sotic International, while Behr is the commodity company’s head of trading.

Fourie, an investment banker, has served as head of Mergers and Acquisitions at Puma Energy, which is jointly owned by Trafigura and Sonangol and is the Zimbabwe partner of Tagwirei’s Sakunda Holdings.

BNC also appointed Obey Chimuka, MD of Fossil Contracting, a company associated with Tagwirei. Chimuka was recently also appointed to the Great Dyke Investments, the Zimbabwe-Russia joint venture developing a platinum mine at Darwendale.

Tagwirei’s Landela Mining Ventures was announced as the new local partner at the project, where his partners are Afromet JSC, which is 100%-owned by Russian investor Vi Holdings. Chimuka also sat on the board of Sakunda Supplies.

Olivier Barbeau, Oliver Chidawu and Toindepi Muganyi stepped down from the BNC board.

The BNC acquisition extends Tagwirei’s influence in the resources and commodities business, where he already holds interests in Africa Chrome Fields and has been tied to a bid for ferrochrome producer Zimbabwe Alloys. He has also been one of the key suppliers to Command Agriculture, the controversial government farm subsidy programme.

BNC made a post-tax profit of US$6.6 million in the half year to September, an increase of 136% year-on-year, according to results released on Thursday.

Right time to buy?

Tagwirei took control of BNC just as nickel prices hit five-year highs above US$18 000 per tonne due to supply concerns after Indonesia, the world’s largest producer, announced it would ban raw ore exports from January. However, prices of the metal, used for stainless steel, have since eased due to weaker than expected demand from electric vehicles market.

The company needs at least US$500 million to ramp up production, chairman Much Masunda has said. A project to revive the company’s smelter was halted at 83% due to low metal prices. For the smelter to make sense, BNC says it needs a nickel price of US$16,200 per tonne.

In its latest financial results, BNC said the average nickel price for the half-year to September was US$9052 per tonne, just 1% above the price at the same time last year. This price translated to a turnover for the half-year of US$28.3 million, against US$26.2 million for the same period in 2018. The cost of sales of US$16.3 million was 10% lower than the comparative figure of US$18 million in the prior year.

BNC output

Ore mined during the six months was 215 338 tonnes, while ore milled was 215 728 tonnes. Head grade was 1.34% which was lower than the year-end figure of 1.64%. Recovery was 86.1%, compared to 86.3% achieved as at 31 March 2019.

Nickel production was 2 943 tonnes, lower than last year’s output of 3 076 tonnes. The decline was in line with the lower ore grade achieved, year on year. The all-in sustaining cost of producing nickel in concentrate decreased from U$6 900 per tonne to US$6 574 per tonne.

“The decrease was a reflection of the ongoing efforts to contain operational costs,” BNC said.

In the six months, BNC spent US$3 million on capital expenditure, including on the shaft deepening project, into which US$1.2 million was sunk.

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