IMPALA Platinum (Implats), which saw first-half costs at its Zimbabwe mines rise as much as 63% in rands, faced further increases as inflation outpaced depreciation of the Zimbabwean dollar, Citigroup Smith Barney said yesterday.
Zimbabwe’s annual inflation at the end of January was 134%, after peaking at 623% the year earlier.
In the year to January, the fixed exchange rate of Zimbabwe’s currency, known as the diaspora rate, fell 17% against the US dollar, Citigroup said in a February 28 note to clients.
Implats plans to spend about US$750 million on expansion in Zimbabwe as its options in South Africa, where the world’s biggest deposits of platinum lie, are limited by the hold bigger rival Anglo Platinum has over mineral concessions.
Zimbabwe wants foreign miners to sell stakes to black Zimbabweans and the central bank plans to monitor platinum miners’ foreign currency accounts.
“We see some very dark clouds lingering over the whole Zimbabwe investment,” Citigroup’s Johannesburg office said. “The cost base for many exporters will continue to worsen in coming months.”
Implats, the world’s second-largest platinum producer, controls the Mimosa and Makwiro platinum mines in Zimbabwe through a joint venture with Aquarius Platinum and its 84,5% stake in Zimbabwe Platinum Mines.
Under rules imposed by the central bank last year, exporters can convert US dollar earnings at the diaspora rate, originally implemented to allow Zimbabweans living abroad to send money home, or at the rate set at bi-weekly foreign currency auctions. — Business Report.