‘Winter is almost gone’: Zimplats CEO believes the worst may be over for crisis-hit platinum miners

File pic: Workers return from a shift at Zimplats (Reuters)

After the toughest year on record for Zimbabwe’s platinum producers, Alex Mhembere worked overtime to lift the mood at the Chamber of Mines annual meeting on Wednesday.

“We are in winter,” said Mhembere, CEO of Zimplats, the country’s biggest platinum producer. Summer, he says, is now upon the industry. “Being in winter is what is necessary to complete a season.”

Platinum prices fell sharply last year, forcing miners in Zimbabwe to stall expansion projects. For Zimplats, this meant delaying key projects under a US$1.8 billion investment plan and shedding some jobs. Karo Platinum pushed back the construction of a new US$391 million mine, while Mimosa also put its own plans on ice. Mhembere, who heads the platinum producers association, now believes the worst is over. Prices are still low, but are no longer falling as they were last year. For producers, that’s a reason to hope.

“We can say that the sector has survived. We have implemented stringent cost controls. At the moment, we are now witnessing a floor at the bottom in terms of prices. We are not excited, but they (prices) are not going down any more,” says Mhembere.

However, while the global outlook may be looking slightly brighter than it did months ago, there are still local pressures to deal with. As prices fell, platinum miners were already facing high costs at home; royalty fees had gone up from 2.5% to 7% and power tariffs were increased from 9.86 cents per kWh to 14.21 cents per kWh.

Says Mhembere: “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.”

The industry’s fortunes are tied to those of the economy. Platinum miners employ around 10,000 people, Mhembere points out. The sub-sector accounts for almost 40% of the country’s forex earnings. New investments pushed platinum earnings from US$475 million in 2008 to US$2.2 billion in 2022. Mhembere believes that, if prices hold, the stalled projects may begin to move ahead again.

“From being three producers, in a very short time, there will be more than eight producers. That augurs well for the industry,” he says.

Government is pushing the industry to build a refinery to beneficiate more locally. A Base Metal Refinery is part of Zimplats’ US$1.8 billion investment plan, but it was one of the projects delayed by weak prices. Mhembere says an industry roadmap to a refinery, first submitted at the Chamber of Mines two years ago, “is moving ahead, despite the headwinds”.

One of the trends of the past year has been a bigger push for technology that cuts costs and boosts 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.”