Platinum producers secure special deals with Zesa

ZIMBABWE’S platinum miners have entered into a special arrangement with Zesa where the mines prepay the power utility’s offshore creditors in exchange for guaranteed and uninterrupted electricity supply to boost the mineral’s output.

Currently, the country has three operational platinum mines namely, Zimplats in Mashonaland West as well as Mimosa and Unki, both in the Midlands province.

Last week, the power utility said it was embarking on various initiatives to boost power supply in the country in line with the projected 3 500MW national demand by 2025 needed to support economic development projects.

Zimbabwe’s national demand presently stands at 1 700MW but Zesa through its subsidiary, the Zimbabwe Electricity Transmission Company is supplying below current demand.

As a result, the country is also importing power from regional utilities to cover the deficit.

Responding to written questions, the Chamber of Mines of Zimbabwe (CoMZ) chief executive officer, Mr Isaac Kwesu, said the local Platinum Group Metals (PGMs) sector has over the past years, enjoyed full capacity utilisation on the back of huge capital outlay injected into operations by shareholders.

“The producers are also relatively big in size and continue to enjoy economies of scale that have positive spin-off on capacity utilisation.

“The PGMs producers have also managed to secure special arrangements with Zesa wherein they prepay Zesa offshore creditors in lieu of guaranteed and uninterrupted power supply.

“This has further stabilised power supply to the platinum producers and minimised production stoppages and output losses,” he said.

Zimbabwe’s largest platinum producer, Zimplats, is owned by South Africa’s Impala Platinum Holdings Limited while Mimosa Mining Company is jointly-owned by Impala Platinum and Sibanye-Stillwater.

Unki Mine is owned by Anglo American Platinum Ltd.
“All the current operators have managed to mobilise capital for both operations and expansion projects from their parent offshore shareholders who continue to adequately fund their requirements.

“Platinum production was 3 823 kilogrammes in the first quarter of 2022, 13 percent up from 3,369kg in the same period last year,” said Mr Kwesu.

“Palladium production was 3 192kg in the first quarter of 2022 compared to 2 824kg in previous year.”
Under the US$12 billion mining industry Government targets by next year, the platinum sector is projected to contribute US$3 billion while gold, which is Zimbabwe’s largest foreign currency earner, would contribute US$4 billion.

Diamond is expected to contribute US$1 billion, coal (US$1 billion), chrome, ferrochrome and carbon steel (US$1 billion), lithium (US$500 million) while other minerals are projected to contribute US$1,5 billion.

The US$12 billion milestone dovetails with Government’s vision of transforming the country into an upper-middle-income economy status by 2030 where the Gross Domestic Product per capita is envisaged at US$3,500 from US$1,720 in 2018.

At the just-ended CoMZ conference in Victoria Falls, President Mnangagwa said the value of the mining sector was projected to reach US$8 billion this year having jumped from US$2,2billion in 2018 to above US$6 billion presently.

Last year, the country’s mining sector export proceeds clocked above US$5 billion out of a total US$6,3 billion in export earnings.

The CoMZ chief executive officer said Zimbabwe’s platinum producers have not been spared from some of the systematic mining industry challenges.

“Specifically, inadequate foreign currency allocations while the fragile power situation continues to pose risk to the PGM sector outlook.

“We appeal for adequate foreign exchange allocations aligned to the PGM industry operational and expansion requirements.

“We further appeal for continued support for the guaranteed adequate power supply to ensure uninterrupted smooth run of operations,” he said.-The Herald