Mqondisi Dube
24 November 2008
Selebi-Phikwe — Depressed global metal prices pose a serious threat to BCL mine's continued viability as the copper and nickel producer begins to feel the effects of the slump in prices.
Plummeting metal prices, coupled with a global financial crisis have already begun impacting on the operations of Tati Nickel mine while BCL limited has warned of gloomy prospects if the situation persists.
The mine management said the plunge in nickel prices, challenges in production outputs and misappropriate cost levels have placed the economic viability of BCL at risk.
Head of public relations and communications Tiro Kganela, said BCL general Manager, Montwedi Mphathi had implored employees to improve production and control costs in order to survive the current economic climate and secure a viable future for the company.
"The plunge in nickel prices coupled with our production difficulties and disproportionate cost levels have placed the economic viability of our company at risk," Kganela said.
He said short to medium term for the metal prices look uncertain.Metal prices have continued to slump on the global markets and the mine management has called for prudence in adhering to the company's budget.
This has necessitated the continuous review of all approved 2008 capital and replacement plans with the mine saying cutbacks would be made where possible.
This, Kganela said, would be made without jeopardasing production and safety.
The mine has announced that the 2009 budget would be lean and directly linked to production plans.
The management said capital and replacement expenditure plans should be prioritised and should demonstrate direct value addition to the business.
As a result of the depressed business environment, BCL has suspended all labour recruitment indefinitely "except for special cases where the authorisation of the general manager shall be taken prior to recruiting".
Kganela said the company would control expenses and that ad hoc training has also been suspended except for special cases where Mphathi's authorisation would be sought before embarking on the training.
However, BCL remains optimistic that if prudent measures are pursued, the mine would survive the turbulence of crumbling world markets and falling metal prices.
"BCL is confident that with hardwork and the right actions, the company will survive and thrive," Kganela said.
If the volatile environment continues, analysts have warned of job losses and reduced export earnings from mining.
Tati Nickel has already been forced to review its operation costs as a result of the financial crunch and the plummeting base metal prices.
Demand for metals from the world's major buyers has gone down sharply as concerns over the recession mount.US, among the leading importers of base metal, has seen its citizens cut on monthly spending, bracing for hard times as jobs continue to disappear and credit conditions tighten.
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