Zimbabwe should extend the platinum group metals (PGM) beneficiation deadline amid revelations miners are battling to sustain critical production levels, a leading research firm has warned.
SFA (Oxford) Limited, which was engaged by the Platinum Producers Association to do an independent assessment, said platinum miners were scrambling to secure investments to maintain production profiles, meaning the mineral beneficiation costs would eat into production investments, crippling the miners.
Government has given platinum miners until January next year to set up refinery plants, saying the country is losing a lot of revenue through exporting unprocessed platinum.
Failure of which the administration will affect tax on raw platinum exports by January 2022.
Zimbabwe has three major platinum miners namely Zimplats, Mimosa and Unki.
SFA (Oxford) said the investment in sustaining a level of production above the critical mass is required for further beneficiation to be considered, with local beneficiation the natural progression once the required volumes have been achieved.
“The Zimbabwean government and producers need to find a way to work in alignment. Producers and their shareholders want to secure investment to direct towards maintaining current production profiles by constructing replacement shafts. Meanwhile, the Zimbabwean government is striving for further beneficiation within the country to increase the value it gains from current production through taxes and other indirect local benefits.
“However, this cannot be achieved without maintaining critical mass which can only be reached through investment in mining,” SFA said.
It said the expansion of mine output was being incentivised by current high prices, Zimbabwe’s low-cost base and the need for platinum-rich production in the future.
“Investment in increasing mine production could be considered more lucrative than committing to further beneficiation (with limited capital available), provided the PGM market is strong in the coming years.
“Currently, high metal prices are incentivising both brownfield expansions and greenfield projects in Zimbabwe, indicating that there is a strong case for investment in growing production which could potentially provide a greater return on investment than investment in further beneficiation,” SFA said.
SFA said the returns on beneficiation are significant and thus careful consideration must be given to investment in both.
Zimbabwe hosts the third-largest 4E PGM reserves in the world (7.1%) after South Africa and Russia, accounting for 32 moz 4E (platinum, palladium, rhodium and gold).
The Zimbabwe’s National Development Strategy 1 (NDS1) seeks to grow the economy at an average of 5% for the next five years, whilst re-introducing a beneficiation tax on unprocessed exports.
NDS1 aims to enhance investment in mining towards the exploration, beneficiation and value addition of minerals.
SFA recommended three options to expedited beneficiation which are the imposition of levies by the government on exports of incompletely beneficiated PGM products from 2022, reduced levies on exports of unbeneficiated PGMs for those in the process of constructing refineries or joint venture with the government on beneficiation plants.
SFA said the other option is that the government could construct the refineries at a fee for the platinum miners.
“Producers are required to utilise these facilities or face penalties in the form of a tax levy for exporting unbeneficiated PGMs,” the report said.
Final processing of PGM production from Zimbabwe is done in South Africa. Impala processes Mimosa and Zimplats’ output and Anglo processes Unki’s production. Both companies have sufficient smelting and refining capacity in South Africa and utilise different processing routes. Zimplats’ PGM concentrate is smelted and converted at the Selous Metallurgical Complex, with the final converter matte product is further refined at Impala Refining Services in Springs, South Africa.