Message Mar 5 Juin 2018 07:16

Ndola Lime in doldrums, not gloom

NDOLA Lime Limited was once a force to reckon with among the Copperbelt-based industries, but today, the company has numerous liquidity problems.
Obsolete machinery adds to operational challenges of the Ndola-based company, now operating below its capacity.
The question that the workers are asking is When will the once vibrant Ndola Lime get back on its feet?
My one-day tour of the plant enabled me to appreciate the challenges the company is going through, and of course the plight of the workers.
However, management says it is not an all gloom and doom situation because there is potential for things to change for the better.
So far, 147 employees out of over 200 that were sent on industrial break last December have been recalled and operations have since resumed.
Only about 53 unionised workers were left to man the plant.
Expert information suggests that Ndola Lime Limited has potential for a rebound because it is seated on the best limestone in the region, according to research by KHD Humboldt Wedag Gmbh of Germany in 2014.
However, the lime company is failing to make a financial breakthrough, and the workers hope that a recapitalisation of the firm could perhaps help to revamp its operations.
Ndola Lime general manager Moses Chilambe says the company has consistently been making losses since 2012. In the financial year ending March 2018, the company registered a loss in excess of US$ 20 million.
“The major problems include the unsustainable debt of over US$72 million against monthly revenues averaging US$ 0.5 million, including an obsolete plant and machinery,’’ Mr Chilambe said.
He said the company has managed to raise funds in the short term and has resumed production but continues to face liquidity challenges that threaten its survival.
In order for the company to continue operating, and meet product demands by its customers, management has put in place short-term remedial interventions.
One of these measures is the company’s decision to obtain an approval from the Energy Regulation Board (ERB) to procure heavy fuel oil for its operations directly from Tazama Pipelines Limited. This has proved a good cost-saving measure.
And in terms of maintenance of infrastructure at the plant, the company has undertaken partial repair works on the vertical kiln one (VK1) and the crushing plant (for limestone).
Apart from that, the company has structured financing arrangements with key customers, which among other things allow suppliers to freeze the debt of Ndola Lime, while they continue making supplies of the required inputs to the company on negotiated terms.
The company has since managed to procure a number of inputs and heavy fuel oils used in the processing of limestone.
This is what has enabled them to resume production in the short-term and recall workers that were sent on forced leave.
Mr Chilambe said they resumed production with the VK1 on April 26 this year and the company is now able to supply 300 to 350 tonnes of quicklime per day to its key customers.
One concern for management, however, is that the refurbished VK1 can only run for three months, thereafter will need to undergone repair works for a month. This means that the plant will need to shut down for a month to allow for the replacement of refractory bricks in the kiln.
However, Mr Chilambe said the routine one-month shut-down will not inconvenience customers because the company will produce enough lime and stock it in silos for continued supply of clients.
The kiln will continue to run for three months and thereafter shut down for a month until Ndola Limes generates enough funds for a complete overhaul of the VK1. In the meantime, management is in the process of negotiating soft debt repayment terms with its creditors.
In the medium and long term, Ndola Lime needs recapitalisation to enable it to run smoothly, procure critical spare parts and liquidate its debt.
The outlook for the supply of limestone products such as quicklime and hydrated lime, mainly for the export market, for the next 12 months looks attractive, according to the firm’s management.
“Since resuming production, the company is actively supplying products to clients in the Democratic Republic of Congo (DRC), Malawi, Zimbabwe and the local market,’’ Mr Chilambe said.
The company hopes to bounce back to its former glory days within three years if it is adequately financed and well managed.
Mr Chilambe said the company needs solid working capital to overhaul the old plant, procure enough production inputs and also meet the demand of its clients on the local and international markets.
Equipment at the plant has not been adequately serviced for 10 years, resulting in avoidable breakdowns of operational tools.
The company needs a capital injection of about US$14.7 million to recoup – US$ 7.5 million to refurbish the old plant and US$ 7.2 million to modify the new vertical kiln.
On December 15 last year, Ndola Lime Limited management shut down the plant and suspended operations of the VK1 due to lack of working capital.
The company has a debt stock of US$72 million and the workers fear that the firm may be liquidated if nothing is done to get it out of its financial doldrums.
Despite all its liquidity problems, there is apparently hope for Ndola Lime – the company can afford to operate at 60 percent capacity, producing 300 to 350 tonnes of quicklime per day, instead of 500 tonnes it was churning out at full capacity.
Minister of Labour and Social Security Joyce Simukoko says she is in talks with ZCCM-IH on the plight of the lime- producing company, but was careful not to commit herself to anything yet.
“Although I have an idea of what is happening, I feel we have to be taken through what is really happening there,’’ Ms Simukoko said.
She said Government will only act on recommendations of ZCCM-IH.
However, the minister said Government is concerned with what is obtaining at Ndola Lime and hopes that a lasting solution will be found once the root- cause of the problem is known.