- Category: Stories
- Published on Wednesday, 22 December 2010 10:23
- Written by Charles Rukuni
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Policy inconsistencies by the government are bogging down companies which are increasingly finding it difficult to operate.
Controls on foreign currency accounts in the last two months of last year severely impacted on the revenue of exporting companies with Bindura Nickel Corporation losing $4.1 billion.
The government increased the amount of foreign currency that must be submitted to the central bank from 40 to 50 percent and introduced stringent measures on the remaining half.
Though it rectified this under the National Economic Revival Programme in February by announcing a new commercial exchange rate, Bindura says the new tariff structure announced by the Zimbabwe Electricity Supply Authority, if implemented in its present form, would reverse the gains introduced under NERP.
It said this would not only jeopardise the viability of its current operations but of new projects as well.
The Anglo-American owned mining company says although demand for nickel was strong throughout the year with the average price increasing from US$2.70 a pound in 2001 to US$3.06 per pound last year, the expected growth in the economies of the western world are not likely to materialise because of potential international conflict.
On the home front, the company is facing logistical problems because of the inability by the National Railways of Zimbabwe to provide enough wagons.
The company is also facing persistent shortages of fuel, coal, cement and other supplies. It still, however, managed to increase sales from $7.3 billion to $16.8 billion but operating profit was down from $874.7 million to $119.1 million with net profit ending at $403.1 million down from $458.6 million. This was because of a tax credit of $408.4 million.
Nickel sales for the year were slightly up from 6 676.7 tonnes to 6 745.8 tonnes. Nickel consumption in the west went up by 7 percent while that in Japan increased by 18 percent due to growth in stainless steel production.
Production at the mines was unchanged despite the loss at Shangani of the Far West Orebody. Gross nickel production was down by 13 percent due to the shortage of feed stock.
Toll production was down by 19 percent because of reduced deliveries from BCL.
The company says the contract to treat toll from Nkomati ended in December. This will further reduce output by 21 percent this year.
The company says its safety record was shattered by two deaths at Shangani.