Tati Nickel management is reportedly struggling to contain panic as rumours abound that Russian mining giant, Norilsk Nickel, which owns 85% of Tati, is contemplating terminating its investments in Africa.
In an article titled “Norilsk edges to Africa adieu,” business websites miningmx.com and Fin 24.co.za wrote Tuesday, “Norilsk Nickel is considering terminating its $6.8bn investment in Africa, a move that could be preceded by the departure of Ralph Havenstein as the head of its international operations.” It further reports that Havenstein would neither deny nor confirm the rumours that he would quit his position within the next six months. If closed or sold, Norilsk’s African investments would leave precious little for Havenstein to manage, hence speculation about his impending departure.
Rumours of Havenstein’s departure follow speculation that Norilsk is looking to terminate its involvement in Africa, where it has nickel projects in Botswana and South Africa. Norilsk made a big bang entrance into Africa when it beat out Xstrata in a $6.8bn purchase in July 2007 of LionOre, which owned 85% of Tati Nickel in Botswana and 50% of Nkomati Nickel in South Africa.
The websites also quote the Moscow Times reporting on February 20 that Norilsk “may review” its African unit, which had production costs of $10 000/tonne and was operating at “virtually zero profitability.”
“If the price falls further, we’ll analyze the possible solutions,” Moscow Times quoted Deputy CE Oleg Pivovarchuk as saying about the African operations, which produced 23 410t of nickel in 2008.
The Tuesday reports follow last week Friday’s announcement by Tati nickel management urging employees to opt for voluntary exit packages ahead of a full-fledged retrenchment exercise by March 31.
“We have asked interested employees to opt for voluntary separation. Like everybody else, we have been affected and are trying to manage the challenges posed by the global economic crisis,” Tati nickel Managing Director Seb Sebetlela said on Friday.
The global economic crisis saw base metal prices falling by as much as 70%, forcing corporations like Tati to streamline their operations and look for avenues through which they can cut costs.
One of the reasons why Norilsk invested in Africa was the Activox technology refinery project, situated at the now defunct Botswana Metal Refineries plant near Tati mine. Some mining industry commentators have always maintained that Africa lost its allure to Norilsk after the collapse of the much-touted BMR Activox plant. Yet more contend that the only reason Norilsk invested in Africa, especially Botswana, was that they wanted to grab the Activox technology.
The Tati nickel plant was reportedly thick with tension last week as employees started demanding answers as to the truthfulness of the reports. Management was also reportedly huffing and puffing trying to reassure employees that all is still well. By Friday, many of the employees had resigned themselves to fate, and indications are that if such reports persist, Tati Nickel’s voluntary separation exercise will be a resounding success.
A senior Officer in Tati Nickel’s public relations unit said on Friday that management was forced to release a memo reassuring employees that all was well. “Currently management is not aware of any information to the effect that Norilsk is intending to disinvest in Africa. If we do get any such information we will immediately relay it to our employees,” he said.
He also revealed that they have regular consultations with their employees through which they relay any new developments.