Jul 23, 2012 (Dow Jones Commodities News via Comtex) -- Zambia's sole nickel mine, Munali Nickel Mine, will remain closed following the collapse of talks with a potential investment partner who had expressed interest in recapitalize the troubled mine, Australia-based Albidon Ltd. (ALB.AU, owners of the mine, said Monday.
Talks with an unnamed investment partner--which have been underway since December last year--collapsed last week, and the company is now considering "other third party proposals" regarding potential new investors and other restructuring options for the mine, according to Harold Ou Wang, Albidon's acting managing director.
"After months of extensive due diligence investigation...and exhaustive discussions between the parties...the transaction envisaged with the third party will not be possible." Mr. Wang said.
This is a setback for Albidon, which is facing an ultimatum from the Zambian government to quickly restart operations at the mine. In January, Zambia's mines minister said the state mining company, Zambia Consolidated Copper Mines Investments Holdings, is drawing an alternative development plan for Munali and may take it over if operations aren't resumed quickly.
Zambian officials could not be reached for an immediate comment.
Albidon closed Munali in November, citing cash-flow problems caused by lower global nickel prices and operational disruptions at Zambia's sole nickel miner. Mining operations were halted several times last year due to mine accidents and workers strikes.
Albidon, which is majority-owned by China's state-owned Jinchuan Group International Resources Co. (2362.HK), suspended trading of its securities on the Australia stock exchange last year at the height of production disruptions at Munali.
Until its closure, Munali had the capacity to produce around 60,000 metric tons of nickel concentrates per annum.
Zambia, Africa's top copper miner, is trying to diversify its mining sector by encouraging investments in more base metals as well as precious metals.