Zimplats revenue plummets 32%

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PHILLIMON MHLANGA

Zimbabwe’s largest platinum producer, the Zimbabwe Platinum Mines Limited (Zimplats), is in a precarious position after its platinum revenue plummeted by 32 percent on declining prices on the international market.

The resources concern’s platinum revenue plunged to $46,6 million during the quarter to December 2018 from $68,6 million reported in the corresponding period in 2017, representing a 32 percent drop, according to Zimplats’ latest report released this week.

Platinum revenue in the third quarter to end of September 2018, stood at $49,1 million.

The price of platinum is declining, resulting in revenues from the metal declining significantly, and high operational costs increase the threats of retrenchments at the company which operates three underground mines, with the fourth one under development.

This week, platinum price at the international market was about $800 per ounce from $1 100 in January last year. At its peak, the price reached $2 252 per ounce in 2008.

Zimplats trades white matte, which is a concentrate of metals such as platinum, palladium, rhodium, gold and nickel.

During the reviewed period, palladium also marginally fell by one percent to $66,9 million compared to $67,7 million in the same period in prior year.

Gold went down 16 percent to $9 million from $10,7 million in the corresponding period in prior year while rhodium revenues surged six percent to $13,7 million from $12,9 million recorded in the same period in the previous year.

During the quarter under review, gross revenue per 4 elements (4E)— platinum, palladium, gold and rhodium—increased by 10 percent to $152,9 million from $138,9 million recorded in the previous quarter.

But, this was a 17 percent tumble compared to $184,1 million recorded in the last quarter of 2017.

“The 4 elements [4E] metal production in the final product decreased by five percent from the previous quarter in line with the decrease in the volume of concentrate smelted,” Zimplats said.

“The 4E metal sales for the quarter at 130 432 ounces were seven percent lower than the previous quarter, mainly due to the decrease in metal production and some negative adjustments to sales in the pipeline.” The crux of the dilemma has resulted in Zimplats making grand plans to sustain the business operations.

Last week, Zimplats’ head of corporate affairs, Busi Chindove, told Business Times that most metals the company mines, especially platinum and nickel, have been severely affected by low prices at the international markets.

Consequently, Zimplats has put survival strategies, including “stringent cost management”.

Market watchers said the recovery of the platinum industry will be long due to the slowdown in China’s economic growth, which has led to a slowdown in consumption by the Asian country, the world’s second largest economy. This has caused chaos in the sector.

China’s slowdown, coupled by weak economic recovery in Europe and sluggish growth in the United States of America, severely undermined demand for commodities and affected prices.

Because of this, it is expected that platinum revenue will continue to be in decline for at least the second quarter and possibly the rest of the year.

Zimbabwe has the world’s second largest proven platinum resources after South Africa, estimated at 2,8 billion tonnes of platinum group metals (PGMs)ore.

Apart from Zimplats, Mimosa Mining Company and Unki Platinum are producers of PGMs. During the quarter to December 2018, Zimplats, splurged about $51 million on the development of a new mine called Mupani Mine, which will replace Ngwarati and Rukodzi Mines. The company is targeting ore contact by August this year and full production in 2025.

Zimplats said the redevelopment of Bimha Mine is on course. Bimha is Zimplats’ largest underground mine which collapsed in 2014.

The mining concern has so far spent about $76 million on the project. It will commission an underground crusher and ore conveyancing equipment in August this year.