Platinum producers fail to maximise benefits

ZIMBABWE’S platinum producers are unable to draw maximum benefit from an anticipated 400 000 ounces global supply deficit of the white metal as they are already operating at capacity, experts say.

Report by Taurai Mangudhla

Leading platinum researcher Johnson Matthey last week said the global platinum market would move from a surplus of 430 000 ounces in 2011 to a deficit of 400 000 ounces in 2012, as supplies are expected to drop by 10% to 5,84 million ounces owing to labour disruptions and mine closures in the world’s largest producer, South Africa, and lower recycling of platinum as a result of a decrease in platinum-group metals prices in general.

Matthey said the deficit was expected to persist in 2013 while gross demand was expected to remain firm at 8,07 million ounces for 2012.
The operational challenges in the sector also resulted in a higher platinum price forecast of between US$1 400 and US$1 800 per ounce for the next six months.

Chamber of Mines Zimbabwe chief economist Isaac Kwesu said while Zimbabwean platinum miners would benefit from the expected price increase as a result of short supply, the country would not be able to take advantage of the supply gap to increase its share of global platinum production from the current 5%.

“I am confident the three miners are operating at 100% capacity and I don’t see them increasing capacity in the next four years,” he said.

“Increasing capacity is a function of many things, including access to adequate capital and a conducive policy framework.”

Platinum Producers Association chairman Hebert Mashanyare said the country’s three platinum producers — Zimbabwe Platinum Mines (Zimplats), Unki Platinum Mine (Unki) and Mimosa Platinum Mines (Mimosa) — required additional capacity to take advantage of the supply gap.

“Definitely at the moment Zimplats and Mimosa, the two major producers currently, are at full capacity. There could be debate about Unki, but to increase capacity we need adequate power,” Mashanyare said.

“Even if there is a market, any expansion and growth is hindered by lack  of power.”

Zimbabwe is currently reeling from an 800 megawatts (MW) power deficit. Zesa is generating an average of 1 400 MW compared to a rising national demand of 2 200MW at peak.

The country requires more than US$1,2 billion to add  a combined 920MW to the national grid from the planned expansion of its Kariba South Hydro Power Station and Hwange Thermal Power Plant.

Apart from power challenges, Mashanyare said Zimbabwe needed  a conducive investment climate to attract meaningful investment.
In October, Mimosa CEO Winston Chitando said the mine planned to lift annual platinum production to 204 000 ounces at the end of 2013, from 202 000 ounces at the end of 2012.

He said 100 000 ounces of the projected production in the current financial year was expected to be platinum.

During a mine tour, Mimosa officials said 7 400 tonnes of ore were processed daily on a 24-hour shift.

In the full year to June, Mimosa recorded a 44% increase in Platinum Group Metals production to 210 895 ounces and a 1% growth in processed volumes to 2,3 million tonnes.

Zimplats recently said it had invested US$955 million over the last decade, increasing annual platinum production by almost tenfold to 187 000 ounces from 20 000 ounces.

The platinum miner is currently targeting an annualised production of 270 000 ounces.

Unki attained nameplate milling capacity of 120 000 tonnes per month during the third quarter of 2011 to exceed its planned ramp-up profile, producing 51 600 refined platinum ounces.

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