BINDURA Nickel Corporation (BNC) could lose a lucrative mining contract for the refinery of nickel mined at Botswana’s Tati Nickel Mining Company. <
The establishment of a refinery in Botswana means that Tati will not need to send its Nickel to BNC for processing.
The construction of the Botswana Mining Refinery (BMR) means that BNC would lose a significant potion of its revenue.
The refinery was built by LionOre Activox, a hydrometallurgical processing company owned by LionOre Mining International.
LionOre which is listed in London, Australian and Botswana invested US$620 million into the project.
The construction of the refinery is expected to ensure an Internal Rate of Return (IRR) for Tati Nickel of 17% and is expected to double nickel production at Tati’s Phoenix Mine to 22 000 tonnes. The new refinery will now allow Botswana to become a fully vertically integrated nickel producer and competitor to BNC’s current refinery services offered to regional nickel miners.
BNC currently operates a smelter and nickel refinery at which nickel mining countries in the region, including South Africa, were sending their ore for refining.
Toll material from Botswana has averaged almost half of the nickel produced at the refinery with figures ranging from between 3 500 and 4 400 tonnes of output annually.
Production at the BNC smelter and refinery has been declining over the past few years.
In 2001 BNC also lost a contract to refine nickel from South Africa’s Nkomati Nickel Mine in South Africa.
Nkomati had approximately 1 740 tonnes of nickel metal refined at BNC in 2001 before canceling the contract citing increasing political risk in the country. Businessdigest understands that BNC chief executive, David Murangari went to Botswana to try and save the contract.
It was not immediately clear whether he succeeded. Repeated efforts to get a comment from Murangari over the past two weeks proved fruitless with his office saying he was busy and he would return the call.
Tati Nickel Mining Company operates two mines, Selkirk and Phoenix, whose production has been on the increase in recent years.
LionOre owns 85% of Tati Nickel.
The company has set its targets at producing 320 000 tonnes of nickel concentrate annually with a 5,5% grading translating into about 17600 tonnes of refined nickel.