Firming platinum prices, value for Zim mining

BY EBEN MABUNDA

PLATINUM prices on the global markets firmed about 14% over the past 12 months to date, having inched  2,3% higher in the week to close at 1,233 propped by research findings that have established that the metal can be used to create a catalyst that enables certain chemical reactions to occur more efficiently than ever before. Experts argue platinum is heavily undervalued when juxtaposed to gold and palladium.

According to the World Platinum Investment Council, Platinum demand outstripped supply by a record 932 koz in 2020, with a third consecutive annual deficit expected in 2021. Automotive platinum demand in 2021 is forecast to increase 25% accelerated by Chinese heavy-duty vehicles and propped by industrial and jewellery demand as well. Zimbabwe is the world’s third-largest platinum producer with output mounting 5% to 476 000 ounces (oz) in 2020. In the same vein, Zimbabwe holds the world’s third-largest proven Platinum Group Metal (PGM) reserves after South Africa and Russia. Platinum deposits are found alongside five other key minerals: palladium, gold, rhodium, ruthenium and iridium and are referred to as the Platinum Group Metals (6E).

Zimbabwe’s platinum output shows brighter prospects going into the future given the current solid production output, the erection of smelters by leading producers locally, and the growing investment in the sector, notwithstanding the strengthening prices of the metal. Zimbabwe’s current major platinum production is linked to Johannesburg Stock Exchange firms Anglo American Platinum (Amplats), Impala Platinum (Implats), and Sibanye Stillwater (Sibanye) which have interests in Zimbabwe through Impala Platinum’s Zimplats, Unki, a unit of Amplats and Mimosa.

Zimbabwe’s largest PGMs miner, Zimplats revenue for the half-year ended December 31, 2020 increased by 79% to US$674,9 million compared to US$377,7 million achieved in the comparative 2019 period. Its 6E output increased by 8% to 288 310 ounces from 267 366 ounces in 2019.  Zimplats is pursuing new capital projects, equipped with a smelter that has been operating at 6,5-million tonnes capacity a year from four mines and three concentrator plants.

In 2020, Sibanye-Stillwater announced the company along with chemical company BASF and Impala Platinum developed a new tri-metal catalyst that would enable partial substitution of palladium with platinum. The development would also benefit Zimplats and Mimosa, whose matte is processed in South Africa.

In 2019, Zimbabwe’s Mines ministry publicised a US$4,2 billion platinum mega-deal with Cyprus-based Karo Resources in which Karo would set up a platinum refinery plant in Zimbabwe with the capacity to produce 1,4 million ounces by 2023. However, the project is yet to live up to its billing.

Nigerian billionaire Benedict Peters’ Bravura Holdings, has $1 billion available for the development of a platinum mine in Zimbabwe at its 3 000-hectare concession in Selous close to existing platinum mines. Amplats in May 2019  opened a completed smelter at its Unki Mine in Shurugwi.

The scope of the facility is the primary smelting of Unki concentrate to produce a furnace matte which is crushed on-site and transported to the Amplats Converter process facility in Rustenburg, for further processing. The Unki Mine represents one of the largest platinum reserves in Zimbabwe having estimated reserves of 34 million ounces of platinum. The Russian-Zimbabwean platinum venture Great Dyke Investments (GDI) reached a key milestone in September to develop a vital platinum mine. GDI, 50% owned by Vi Holding and Zimbabwean investors, recently announced; African Export-Import Bank had completed a due diligence study allowing it to proceed with a $500 million funding programme for the Darwendale project’s first phase.

The $2 billion project, located about 65 km from Harare, is expected to produce 860 000 ounces of PGMs at its peak, making it the no.1 PGM mine in Zimbabwe. Rhodium and Palladium prices have sky-rocketed in recent years bolstered by growing demand for a reduction in carbon emissions with Rhodium surging 180% in 2020 The government has set a US$12 billion target for the mining sector by 2023 from US$3,2 billion in 2020.

Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — ebenm@equityaxis.