OVER 200 Zambian companies are on the verge of bankruptcy after Munali Nickel Mine operating as Mabiza Resources Limited proposed a three-year payment plan for goods and service supplied to the mine this year threatening thousands of jobs.
And suppliers and contractors have called for the dismissal of mines minister Richard Musukwa for neglecting their interests against mining companies.
According to a letter dated November 19 to suppliers, company chief executive officer Anton Mauve stated that the company is highly indebted due to underperformance and is seeking ways to turn around the company’s fortunes and dismantle the chocking debt.
“I know that you are aware of difficulties that the Munali Mine has experienced over the last 12 months as it has re-commenced operations and looked to achieve a stable performance. Over this period, the operation has significantly underperformed against plan, putting immense strain on yourselves as critical suppliers and myself as an investor. As a result, Mabiza has not been able to meet its previous proposed payment plans and has been forced to operate in a hand-to-mouth manner. Simply put, it has not been able to service its outstanding debt, which has necessitated a further emergency injection of funds from my investors to meet the repayment schedule discussed below,” Mauve stated.
The company has also informed suppliers that it has engaged a company to restructure it in order to achieve operational excellence.
“Due to poor performance and current high-debt situation, the principal investors in the project (CE Mining) have taken operational control of the holding company CNM, with direct involvement from myself as CEO in the operation. We have put a revised, realistic plan in place to recover production and are restructuring management to ensure this plan is executed. The plan stabilises the operation at between 8 and10 tonnes of nickel production per day in a premium (10%+) concentrate and requires the mine to produce between 1500 and 2000t of ore daily (which the team has achieved since implementation). We expect to meet or exceed the plan over the next two months, creating the revenue required to meet new supply and outstanding payments…in addition, we have been working with Benedict Mackenzie to provide a credible schedule that ensures the operation can meet the repayment of outstanding debt in a realistic manner. The details of this schedule that are specific to the amount that Mabiza owes your company will be sent to you before close of business on Tuesday (November 26), and we will ensure that the company begins to regain its integrity through this process. Benedict Mackenzie are specialists in business restructuring and have been engaged by CNM to assist in this process (under Carrie James at the Munali site).”
The letter further says production at the mine has not achieved anticipated levels despite significant support and investment by the holding company CNM.
It indicated that the operation of Munali Nickel mine was not self-reliant.
But it is the payment plan that has left many suppliers worried, fearing for their companies.
The payments are proposed to be made on a quarterly basis with an increasing percentage being made available when production stabilises.
According to Mauve, the minimum amount available to all suppliers is not less than US$562,853, which would be paid in March 2020.
According to the plan, depending on how much each contractor or supplier owes, the company would start making payments of five per cent up to 50 per cent of the amount owed from December 2019 with the last payments expected to be made in September 2022.
“This is an acceptable, some companies borrowed money from lending institutions to finance our operations bearing in mind that we will be paid as per agreement of 30 days upon issuing an invoice. The contracts were signed and the completion certificates for our various services and works rendered to the mine issued, then today we are being told that monies will be paid in bits and pieces until 2022. This is an insult, we will be rendered bankrupt, some people will lose property they advanced as collateral to the banks and our workers will be on the streets,” said a supplier who asked to remain anonymous.
Another added: “The problem we have is the mines minister, he just watches as mining investors do whatever they want. If this was a black mountain, you will see the minister on TV making announcements on top of the mountain, a project that doesn’t benefit majority Zambians, but look at how many mines have mistreated Zambian suppliers and look at the minister’s response? Musukwa must be fired; he has no interest of Zambians in the mining industry. Check what has happened in Kitwe, Chingola, Solwezi and all mining towns; where is government voice?”