After seven years of lying dormant under care and maintenance, Mabiza Resources and its London-based investor, Consolidated Nickel Mines (CNM), re-launched Munali Nickel Mine’s operations on 16 April 2019, following a $50 million refurbishment of the asset.

Mining for Zambia caught up with General Manager Matthew Banda to find out what could be in store for Munali, if the circumstances are right.

After seven years of lying dormant under care and maintenance, it was encouraging to see Munali Nickel Mine come back on line on 16 April 2019. Tell us how the operations have been going so far.

It’s been a feat, yes, to get things working again. On the mining side, I think we are settled. Just last week, we managed to deliver 12,000 tonnes of ore to the ROM Pad [where the ore is stored ahead of the Run-of-Mine Stockpiles, before being crushed.] At optimum production we should be doing 15,000 tonnes. So, we’re almost there. We need to consistently deliver 15,000 tonnes a week to give us the necessary 60,000 for the process plant per month. We hope to achieve that by July or August 2019.

CNM’s investment in Munali Nickel Mine is a very clear reminder that assets require capital in order to be productive. While the slowdown of several other mines has drawn attention to the fact that Zambia’s current fiscal regime has created a very tough business environment, this obviously hasn’t been the case with Munali. Might this relaunch send a mixed message to government about the role it needs to play in creating a favourable environment for investment?

Not necessarily, because the decision to invest in Munali Nickel Mine was made in 2015. Because of the long lead-times in mining – it takes years to get a mine operational – there is always a lag between action and consequence. Our investment was a result of a detailed feasibility study that was concluded in early 2015 by an independent party on behalf of CNM. Therefore, the decision to recommence operations was based on the parameters at that time remaining stable for the foreseeable future. Legislative changes to the business environment that have happened between 2017 and 2019 may negatively affect future investment.

We understand that Mabiza Resources hopes to secure further funding within the next two years. What is the likelihood of attracting investment in the current environment?

In our case, future investments would be used to do a lot more exploration work so that we can add life to this particular mine. Exploration is a high-risk undertaking, and a big up-front cost, although it’s a necessary part of mining. Within the parameters that prevail now – with investor confidence being eroded – it would be difficult to find investment. Unless there is stability and a certain extent of predictability about what the future holds, it would be difficult.

What is eroding investor confidence?

Mining is a long-term investment, so investment decisions are made based on the parameters within the current environment. If there are assurances that the prevailing conditions are going to be there for, let’s say, the next 10 years, then investors can know that the underlying assumptions on which they based their financial models will hold true. Stability and certainty give investors the confidence to risk their capital. Therefore, one could say it is regulatory stability that sets the stage for the necessary additional expansions and investment that keep a mine going, and see it fulfil its true potential. What regulators need to understand is that when they make changes to the regulatory framework it affects the basis upon which capital has been invested. When that shock happens, investors will not easily risk their money again, and if they do, they will build in a big risk premium. It does not provide investor confidence. Investor confidence comes in when you have consistency of policy and legislation. It is important to remember that different countries are also looking for investment from the same pot of funds. Therefore, investors may be inclined to choose less risky environments.

What can you tell us about the potential plans for expansion? The media has hinted that the asset may look at producing nickel sulphate for batteries.

What is most likely is investment in a solvent extraction electrowinning method, involving putting up a leach circuit that will facilitate value addition through electrowinning.

[Electrowinning involves extracting metals from their ores by putting them into a solution, and then plating that onto another surface.]

It is important to remember that different countries are also looking for investment from the same pot of funds.

The output of that is nickel plates. Buying certain equipment for these solvent extraction methods would also allow for the production of nickel sulphate. So it’s basically a matter of what gives you a better price. At the moment, the market for nickel sulphate looks good because nickel sulphate is what goes into batteries.

[Nickel has long been used in batteries. Vehicles like the Toyota Prius popularized nickel metal hydride (NiMH) rechargeable batteries in the 1990s. The lithium-ion batteries that power Electric Vehicles today require around as many as 63 kilograms of nickel for one car battery, with Tesla using a relatively low-cobalt combination of nickel, cobalt and aluminium.]

What are some of the other challenges that may hinder Munali’s growth, and possibly that of Zambia’s copper mines too?

When you look at the life of a mine, you need to liken it to an individual. Children under five can’t be treated like a 15-year-old in youth, or like someone who is mature in age. Mines in their different stages of life need tailored treatment. Unfortunately for us, the legislative regime is such that it’s a blanket regime. If you view mines more like individuals, you can decide what different categories of mine need.

What other policy conditions would enable the industry to thrive again?

The proposed change from Value Added Tax (VAT) to Sales Tax does not favour mining operations because the new Sales Tax is going to be non-refundable. Change may be inevitable, but the question is: Where is it going? Investors want an environment where there may be change, but it does not affect them severely. You need a stable environment at the end of the day.

These investments are basically long-term investments – most of them 10 years, 20 years, or more. So, once investors are allocating their funds, they’re looking to stay that long. With the political environment changing every five years or so, already that’s a scare to the investor. Even without changing anything in the economic environment, the political environment has a five-year cycle. So already there’s a political risk in that sense. On the other hand, when you have good transitions in government like we’ve been having in Zambia, it provides for investor confidence. The challenge comes in when you start changing the economic environment, where you start changing the rates for taxes such as VAT, the rates for mineral royalties, the rates for duties, and so on and so forth.

When you look at the life of a mine, you need to liken it to an individual. Children under five can’t be treated like a 15-year-old in youth.

How confident are you that Mabiza Resources will secure another round of investment for Munali Nickel Mine’s expansion?

At the end of the day, in order to bring in further investment, we need to prove that the asset is viable through its production. That can only happen if we are able to be productive enough, and generate revenues. I hope that within two years, there will be confidence in making this investment. The life of the mine is seven years, so within two years, we should be able to say that we need additional investment for exploration, for expansions, and so on.

Will the mine’s lifespan extend beyond seven years if you get the capital to do more exploration?

Yes. The immediate goal is to achieve a lifespan of ten to fifteen years. We have already identified potential areas, which we just need to test. We have indicators.

As a young mine, like a newly-born infant, you could say that we’ve been in “intensive care”. We really need a little bit of special care now – from all players, but especially the Government. If we can reach maturity, then we could also reach old age at some point. But unless we do further exploration work, we won’t.


“Intensive care” is a very apt description for Munali Nickel Mine’s troubled past. Given how much hard work and investment has gone into reviving the mine, “premature death” – to use Banda’s metaphor – would be a great shame for Munali’s stakeholders and investors. But it would also be an enormous loss for Zambia, which stands to have an exciting new chapter in nickel in its future.

See also: Will Zambian copper be part of the coming green revolution?