CONSTRUCTION of Bindura Nickel Corporation’s smelter, which was planned for completion during the current financial year has hit turbulence owing largely to cash flow challenges and management chaos that rocked Asa Resource Plc (formerly Mwana Africa).
Asa Resource Plc company secretary Ian Barry Dearing recently confirmed that the mining group was in a financial mess following alleged misappropriation of up to $5 million by the management led by former chief executive, Yat Hoi Ning. Asa recently volunteered to go into administration.
Restarting the BNC’s Trojan smelter was one of the key deliverables targeted by the AIM listed group on takeover of Asa by China international Mining Group Corporation (CIMGC), which is fronted by Ning. It was believed the Trojan Mine smelter would help significantly lower BNC’s costs through export of matte, which is less bulky.
BNC managing director Batirai Manhando told Business Weekly that the smelter restart project was in limbo, but indicated that efforts were underway to push the project through to conclusion.
“There has been some slowdown with regards to our smelter restart and this stemmed out of the fact that in the first place, we agreed that the money raised through the ($20 million) bond was not going to be enough and had to be supported by our internal cash flows.
“However, due to low global nickel prices and the general economic environment, we have experienced a slowdown with regards to construction (resuscitation) of the (Trojan) smelter. We are facing challenges, but the project will proceed,” said Manhando.
The Trojan smelter restart project was primed to enhance profitability and growth for both the integrated nickel mining company and mining sector.Market watchers have expressed concern over the future of the multi-resources group in the wake of a series of events that have done more harm than good to the company.
While CIMGC’s investment into Asa was initially seen as the panacea to the company’s financial and operational woes, it has since turned out that this created avenues for it to access Chinese capital and markets.
However, instead of helping boost the company’s operations Asa’s local units, the investment by CIMGC is now threatening to tear the mining firm apart, with employees already fretting over security of their jobs.
Asa chairman David Murangari became emotional when contacted by Business Weekly this week, saying: “I have no comment about the state of affairs at the company and who is that person concerned about the company because from my understanding, everything is in order.”
This comes at a time when Murangari was recently appointed board chairman outside of an extraordinary general meeting, which analysts say was an assault on the ethos of good corporate governance.