African Rainbow Minerals (ARM) says it is shutting its Nkomati Nickel mine in Mpumalanga, just as the prices and market for the stainless steel ingredient improves.
That the mine will be closed has been long anticipated, and the announcement from billionaire Patrice Motsepe’s ARM is not the surprise — it’s the timing that's surprising.
A ban on Indonesia nickel ore exports expected in 2022 was pulled forward to 2020, sending nickel prices soaring, according the news out of the leading source of nickel on Friday, which happened to be the day ARM released interim results and told the market of the Nkomati decision.
Nickel shot up to a five-year high of $17,900/tonne on Friday as the 14-million tonnes a year nickel market, which was expected to reach a supply and demand equilibrium in 2020, will now remain in a supply deficit, continuing a trend over recent years.
Nkomati has not been an easy asset for a number of years now.
It was also one of the core assets in the legal battle between Russia’s Norilsk Nickel, the half-owner of Nkomati, and Botswana’s state-owned nickel miner and refiner BCL.
That argument is rendered largely moot now. Nkomati will be mothballed in September 2020 and then closed. It is forecast to supply 14,000 tonnes of nickel in 2020.
The mine sold nickel for $12,343/tonne in its 2019 financial year to end-June, relatively flat year on year. A by-product, high-sulphur chrome concentrate, realised $66/tonne, down from $82/tonne a year earlier, putting further financial pressure on Nkomati.
ARM recorded an impairment of R1.1bn against Nkomati in the full-year results to end-June as the mine continued its unprofitable run because of high costs and its “inability to generate sufficient cash for operational requirements.”
For labour, it’s a bitter blow as global nickel prices rocket, but as a cold, hard corporate decision it’s the right one. Boards take long-term decisions and don’t react to short-term price movements.
Please be patient ... 4IR is coming to a financial services firm near you
The financial services industry is deploying fourth industrial revolution (4IR) technology at an exceptional pace and one can understand why.
Customers are finally demanding more from their banks and insurance companies, which for decades looked on as telecommunications companies and retailers tried to keep pace with US giants such as Facebook and Amazon to improve client experience.
After all, why should insurers still have automatic responses that say they will get back to you within 48 hours in this day and age?Thankfully it looks like a few of the big ones are waking up. During the presentation of its interim financial results on Monday, Old Mutual announced that it now employs over 122 bots who have saved the insurer 2.8-million minutes of processing time. That's just shy of 1,950 days and if you divide it by the eight hours that people normally work, it translates to 243 days of one person's work days.
That is impressive in terms of turnaround time and has hopefully helped create more happy customers. But does it mean that one graduate who could have been employed is now replaced by bots? Or does it simply mean bots are giving a helping hand to slow and error-prone human beings?
Old Mutual is not alone in this journey. Momentum also mentioned earlier in 2019 that it has invested in robots to perform simple tasks such as services that customers want to access immediately through digital platforms.
Discovery is also using artificial intelligence that read thousands of e-mails that its customer-care division receives everyday. These e-mails are then rerouted to the relevant departments and because it is able to read sentiment and detect mood, the insurer said it has helped it address the needs of angry customers much quicker.
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