Harare - South African platinum producers are finding value in Zimbabwe, with companies such as Aquarius Platinum seeing it as the best value bet with low prices and waning demand for precious metals.
Apart from the problems with indigenisation, a placid regulatory framework, mounting uncertainty and a worsening economy, the country offers cheaper operations and a safe mining environment.
For mining houses such as Aquarius and Impala Platinum (Implats), Zimbabwe is a valuable proposition.
Low costs
This explains why South African producers are sticking to their operations there and even considering expansions.
Aquarius said this week that its joint venture partnership with Implats in Zimbabwe, Mimosa, had reduced costs in difficult operating conditions.
This is in stark contrast to elsewhere across the globe, with resource companies such as Rio Tinto and Anglo Platinum selling properties and implementing cost-cutting plans such as retrenching workers.
“Mimosa again improved safety, delivered all-time fourth-quarter production records and reduced costs, in what remains a challenging operating environment,” Aquarius chief executive Jean Nel said this week.
Mimosa’s revenue for the quarter to June had slipped by 2 percent to $62 million (R789m), underlining continued softer commodity prices on global markets.
Experts have projected that softer commodity prices will persist, painting a difficult outlook for mining groups that are now exploring cheaper ways to extract resources. A weaker global economy has also cut demand for platinum.
Implats is also showing commitment to its Zimbabwe operation, Zimplats, as well as to its interests in Mimosa.
“We support government initiatives to transform the industry but our ability to do so is impacted by the financial and regulatory constraints under which we operate; metal prices, our ability to raise the required finance, secure power and attain the necessary regulatory and fiscal certainty,” Implats group executive Johan Theron said.