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BINDURA Nickel Corporation is bullish about prospects for profitability going forward, basing on projected firm nickel prices seen rising above the $20 000 per tonne levels. Managing director Mr Batirai Manhando last week said BNC was well positioned to continue making profits, taking aantage of decline in supplies on the global market.

“We are quite bullish about nickel price outlook because the fundamentals are such that there is going to be a deficit in terms of nickel supply,” Mr Manhando said.

The BNC boss contends that because of the situation in one of the major global nickel suppliers, Indonesia, demand was likely to outstrip supply of the commodity.

“So we are going to see (nickel) prices northwards of $20 000 per tonnes, if you look at what is happening in Indonesia they have banned the export of ore,” he said.

Mr Manhando said the ban in Indonesia cut supply of ore to the Chinese market by about 400 000 tonnes and it would take about five years before Indonesia returnedto the global market.

“Even if the Philippines have come on to the market, one it is of lower quality and two the volumes are not as high as the material from Indonesia,” Mr Manhando said.

“So, we see sustained higher nickel prices moving forward, and that is why we have projected that we should get prices northwards of $20 000t of nickel going forward,” he said.

Mr Manhando said as long as the situation remained healthy they will be “able to make the business much more viable” that it is now.

BNC continued on a profitability path in the interim to September 2014 with operating profit of $12,6 million from $3,6 million in the interim to September 2013.

Revenue came in at $48,3 million in the half year to September compared to $21,4 million in the same period last year, as the firm continues to ramp up production.

The bullish sentiments highlight the huge strides BNC has made to turn around its fortunes, with the shareholder at one point writing off the investment from the books.

Mwana Africa Plc announced in August last year that it had written off non-current assets valued at $47 million over concerns of viability problems it was facing.

But the situation changed following the review of its mining plan to include massives (rich ore bodies), which increased profitability even in the midst of low prices. Prospects of increased demand for nickel have also brightened the firm’s prospects.

Nickel consumption is expected to increase next year due to growth of Chinese stainless steel production projected at 18 percent and rest of the world seen at 12 percent.

In its financial results for the half-year period to September 2014 BNC said the cash settlement price for the period was $18 515 per tonne from $14 437 per tonne last year.

International nickel prices improved after Indonesia banned ore exports in January this year. The ban resulted in tighter nickel market after pig iron production declined in China.

However, despite the ban Indonesia’s on ore exports, the nickel pig iron sector continued production by blending high-grade Indonesian ore stockpiled before the ban.

The stockpiled Indonesian ore is projected to run out by mid next year, resulting in lower nickel pig iron production, which would have positive impact on global prices.

China’s nickel pig iron industry produced about 500 000 tonnes last year and the reduction nickel pig iron production is expected to impact the 2 million tonnes nickel market.

Source : The Herald

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