JOHANNESBURG Albidon Ltd. has formally put its Munali nickel mine in Zambia on care and maintenance indefinitely, laying off most of its workers amid tough market conditions.
The move comes after operations at Munali were suspended in November 2011. Now the company has made formal arrangements with Zambias ministry of mines to continue the suspension of operations under an official care-and-maintenance program.
The care and maintenance is essential to maintain the mine infrastructure at Munali and to keep it ready for any future operations, the Australian-listed company said in a stock exchange statement Dec. 19.
The company gave 30 days notice of redundancy to most of its Zambia employees on Dec. 14.
Albidon said the companys financial future remained uncertain, despite support from majority shareholder Jinchuan Group, which has provided funding for the companys restructuring. Trading of Albidons securities remained suspended.
The stainless steel and machine tool markets are depressed, John Meyer, research analyst at SP Angel, told AMM sister publication Metal Bulletin.
At the same time, weve seen a lot of cost inflation, particularly in places like Zambia, he said. That doesnt help, even if the nickel price is not too bad at the moment.
Meyer said he thinks Munali has good potential to reopen in future, but for nickel producers overall, cost control would be the name of the game for 2013.
This year will sort out the winners from the losers, he added.
A version of this story was first published on AMM sister publication Metal Bulletin.