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Munali Nickel Mine suppliers complain over non-payments

ZAMBIAN suppliers to Mabiza Resources Limited have complained of harsh conditions and non-payment for the services rendered to the mine.

But chief executive officer Anton Mauve says the mine has so far done its best to address the matter.

Mabiza Resources Limited was established to manage operations under care and maintenance at Munali Nickel Mine in Mazabuka, which was commissioned on April 16, 2019.

In a detailed letter to The Mast titled, Disgruntled Suppliers of Mabiza Resources Limited, the suppliers outlined harsh situations they have gone through.

“This letter is submitted to your office for the primarily intention of bringing to the attention of the relevant organisations and relevant bodies the harsh and inhuman treatment that Zambian suppliers have had to suffer at the hands of the owners (through the management) of the Mabiza Resources Limited operated Munali Nickel Mine since its commencement of operations in April 2019,” reads the letter dated August 6, 2020.

The letter states that Mabiza Resources Limited started to engage suppliers to support the mine with outsourced goods and services for its production.

“The standard terms of purchase for items supplied to the mine was thirty days from date of invoice submission. This can be substantiated by orders and contracts that we, the suppliers, have signed with the mine. At no point of engagement did the mine make any indication of potential payment delays, however, this [is] an experience that every supplier was bound to endure,” the letter reads further. “It is impossible that the mine was not aware of its cash flow standing, making it obvious that the mine deliberately concealed this information. It was only after experiencing repeated payment defaults that suppliers gradually became aware of the reality of the misrepresented terms of purchase. At this point the mine still did not make any communication and continued to obtain more goods and services on the same terms. More directly, the management of the mine took advantage of the supplier’s hope for a mutually beneficial relationship.”

The letter states that as a result, the mine found itself rapidly accumulating debt with suppliers.

“The reverse effect was that suppliers, having no privy information committed more resources to the projects, thus accumulating debt with their principal suppliers and employees creating pressure on their cash flows and adversity with their principal suppliers. This has, to a great extent crippled the suppliers,” they stated. “After much pressure from the suppliers, in November 2019 the CEO of the mine, Mr Anton Mauve, made an official communication to all suppliers. His communication indicated the following; 1) confirmation that the mine had accumulated debt with its suppliers, 2) that the mine was repeatedly not meeting its production targets and 3) major changes were to be made in the company’s management structure to deal with this situation. This communication categorically stated that it was due to the mismanagement of the mine’s resources by the initial management team that the mine had accumulated debt with its suppliers to such extents that it was not able to promptly pay off the accumulated amounts. Also, the communication attributed the claimed poor production performance to management incompetence.”

The suppliers were informed that as part of remedial action, the mine engaged a foreign debt management consultant, Benedict Mackenzie, to develop a supplier payment plan which was intended to be a guide for the approach to settle supplier debt.

The letter states that the payment plan was non-negotiable, giving the supplier no option but to adhere to what was proposed.

The letter states that suppliers have attempted litigation as a solution but the courts have not been helpful as well by not signing the default judgments.

They state that even President Edgar Lungu has not responded to their request for help.

“As a consortium, we hand delivered a letter on 29th July 2020 to the President of the Republic of Zambia. The letter requested the intervention of the Head of State into the matter to compel the mine to pay the amounts owed to suppliers. We have to date, not received any form of feedback nor have we any evidence of action of assistance towards our request,” they stated.

The suppliers have since vowed to get their money using any means.

“Our position is very straight forward; WE WILL OBTAIN OUR FUNDS BY FORMAL AND/OR INFORMAL MEANS. WE WILL FIRST GIVE THE FORMAL APPROACHES SUFFICIENT OPPORTUNITY. AFTER EXHAUSTING ALL KNOWN FORMAL APPROACHES WE ARE COMMITTED TO TAKING MATTERS INTO OUR OWN HANDS,” the letter reads. “The affected businesses have employees who also have families. With the economic difficulties, we cannot afford to allow another to take away our resources and investment. We are committed to getting our dues by whatever way possible. We have provided the mine with sufficient time at our own cost and we cannot go on further than this, it’s just impossible.”

And in an undated response letter, Mabiza Resources Limited, management blamed, among others, their predecessors.

“What is clear from this time, and as we have confirmed before is that: The former management team did not act in the best interests of the Company or its suppliers, there was systemic fraud in all areas of the mine including in the procurement process, the operation was over staffed and financially burdensome to operate, production was not efficiently managed to the extent that the Mine did not achieve the anywhere

near expected deliveries, there was no control over budgets and spending at the mine leading to excessive losses,” stated Mabiza Resources Limited. “The original payment plan was made with the full intention of meeting Mabiza’s obligations and as a result of consistent issues faced by the business has been unable to fully implement these payments. We have communicated these issues on a number of occasions. There has been no intention simply to increase the debt and not pay for the amounts due.”

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