SA platinum miners eye Zimbabwe for growth
BULAWAYO — South African platinum miners hope to ramp up output from their operations in Zimbabwe as production at home falls to 11-year lows, beset by illegal strikes, work stoppages and a growing burden of red tape.
By contrast, Zimbabwe an Finance Minister Tendai Biti said last week that the country’s mining sector had become the "anchor driver" of Zimbabwe’s economy, with the potential to generate up to $14bn a year.
Zimbabwe and South Africa hold 75% of the world’s platinum reserves, but South Africa’s industry has become bedevilled by labour unrest, high input costs, poor infrastructure and increased government intervention. Foreign investor sentiment has also taken a knock, especially with nationalisation still on the agenda.
Anglo American Platinum (Amplats), the world’s biggest producer which lost at least 170,000oz of platinum during an eight-week strike in South Africa, says it is planning a new mine in Zimbabwe, while JSE-listed Impala Platinum (Implats) recorded a surge in first-quarter platinum production from its Mimosa joint venture project with Aquarius Platinum.
Platinum miners in Zimbabwe have faced headwinds such as the forced compliance with the indigenisation policy as well as rising mine cost inflation. However, with most of the foreign mining companies largely compliant with indigenisation policies, the focus has shifted back to ramping up output. Amplats subsidiary Unki Mines’ chief financial officer Colin Chibafa said the new mine has the potential of doubling output from Zimbabwe. Unki is expected to produce about 65,000oz of platinum for the current year.
The new mine, part of the company’s plans to raise output from Zimbabwe, could cost as much as $400m, he said. Earlier this month, Amplats confirmed that the Zimbabwean government had approved its proposal to hand over 51% of its Unki mine to comply with the country’s indigenisation programme. The indigenisation ministry valued the shareholding at over $300m.
However, an economist said the value of the shares might be higher, with Zimbabwe cashing in on the low valuation as a result of the "prevailing turmoil" that has gripped South Africa’s platinum industry.
Implats said on Friday that the Mimosa mine had recorded an increase in both tons milled and grade, resulting in an improvement in platinum production in concentrate to 28,000oz.
"This remains in line with steady-state refined production of 100,000oz of platinum. Discussions are ongoing regarding Mimosa’s proposed indigenisation plan," the company said in its production report for the first quarter period to September 30.
However, its majority-owned Zimplats operation saw production fall by 11% to 40,000oz owing to a scheduled smelter shutdown in August and September.
It said the second phase of an expansion project expected to significantly boost Zimplats’ output to 270,000oz had been slowed "as a result of the recently implemented capital preservation measures". It now expects to complete the second phase in 2015.
Thousands of workers returned to work at Amplats’ mines late last week, ending two months of inactivity which cost the company R2.7bn in lost revenue.
The company has warned that earnings for the full year to end-December would be at least 20% below those for the previous year due to lost production, lower metal sales and soft prices during the year. The lost revenue figure does not include the palladium, rhodium and gold that was not produced during the strike.