Zimbabwe’s Platinum Industry Sees Hope After Record Tough Year
Sun June 02 2024
Following the toughest year on record for Zimbabwe’s platinum producers, Alex Mhembere, CEO of Zimplats, sought to lift spirits at the Chamber of Mines annual meeting on Wednesday.
“We are in winter,” Mhembere said, referring to the difficult period the industry has faced. “Summer,” he added, is approaching for the sector. “Being in winter is what is necessary to complete a season.”
Last year, according to NewZwire, a sharp drop in platinum prices forced Zimbabwe’s miners to stall expansion projects. For Zimplats, this meant delaying key initiatives within a $1.8 billion investment plan and reducing some jobs. Karo Platinum postponed the construction of a new $391 million mine, and Mimosa also put its plans on hold. However, Mhembere, who heads the platinum producers association, now believes the worst is over. Although prices remain low, they have stabilized. For producers, this is a glimmer of hope.
“We can say that the sector has survived. We have implemented stringent cost controls. At the moment, we are witnessing a floor at the bottom in terms of prices. We are not excited, but they (prices) are no longer falling,” Mhembere stated.
Despite a slightly improved global outlook, local pressures remain. As prices fell, Zimbabwe’s platinum miners faced increased costs at home; royalty fees rose from 2.5% to 7% and power tariffs jumped from 9.86 cents per kWh to 14.21 cents per kWh.
“What worsened the situation is that, at the same time that metal prices were falling, the sector faced changes in terms of regulatory fees. This further compressed the margins for the PGM sub-sector,” Mhembere explained.
The industry’s fortunes are closely tied to the national economy. Platinum miners employ around 10,000 people and contribute nearly 40% of Zimbabwe’s foreign exchange earnings. New investments boosted platinum earnings from $475 million in 2008 to $2.2 billion in 2022. Mhembere is optimistic that, if prices remain stable, stalled projects might resume.
“From being three producers, in a very short time, there will be more than eight producers. That augurs well for the industry,” he said.
The government is urging the industry to establish a refinery for local beneficiation. A Base Metal Refinery is part of Zimplats’ $1.8 billion investment plan but was delayed by weak prices. Despite the challenges, Mhembere said an industry roadmap for a refinery, first submitted at the Chamber of Mines two years ago, “is moving ahead, despite the headwinds.”
A key trend over the past year has been a push for technology that reduces costs and increases output. “At Zimplats, we are deploying high-tech mining technologies, such as remote mining. This offers higher productivity and better chances of attracting new skills when they start mining from their offices instead of going underground,” Mhembere noted.
Source: https://www.thezimbabwemail.com