ZIMPLATS, which is majority owned by Impala Platinum (Implats), may have to delay a major expansion project because of cash constraints.
Zimplats, which is the largest platinum miner in Zimbabwe, is busy with the $470m second phase of its mining operation to grow production to 270,000oz of platinum a year from this year’s output of 187,100oz.
"Completion date for the project is due for financial year 2015, but it could be delayed due to cash constraints and weaker base metal commodity prices," Zimplats CEO Alex Mhembere said yesterday.
Zimplats has committed $332m to the project so far of which it has spent $223m and has $109m in orders.
Sydney-listed Zimplats reported a 39% fall in profit to $122m for the year to end-June.
Its revenue fell 10% to $473m because of weak prices for the metals it produces.
"This has been a difficult year for the mining industry globally and Zimplats has not gone unaffected," Mr Mhembere said.
"We are operating in a depressed market characterised by depressed metal prices and a surplus in supply," he said.
Labour problems at SA’s platinum mines have pushed up the price of the metal, which is used to make autocatalysts and jewellery, to levels not seen since May. It was last trading at $1,518/oz.
Mines at Lonmin, the world’s third-largest producer, ground to a halt when rock drill operators embarked on an unlawful strike on August 10.
At least 44 people have been killed in violence near the Marikana mine, with 34 people killed last Thursday when police opened fire on armed protesters.
Implats, which owns 87% of Zimplats, had a six-week work stoppage in February, which cut production by 150,000oz.
Implats reports results today and the company has warned of a sharp fall in earnings.
SA is the world’s largest source of platinum, generating about 80% of supplies.
However, mines have come under pressure from low platinum prices and rapidly rising costs, which have squeezed margins, forcing shaft closures and reviews of growth projects.
The company lifted its production for the year by 3% to 187,100oz as a result of an 8% increase in mined ore.
Its cost of sales increased because of a 60% increase in power tariffs from September last year.
Zimplats is busy complying with government legislation that the business be 51% owned by black Zimbabweans.
It struck an agreement with the government in March on the structure it would adopt, including 10% ownership by a community trust, 10% by employees and 31% by a broad-based body.
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