Harare - A $100 million (R1.1 billion) investment by Zimplats in the refurbishment and upgrading of its base metals refinery was not enough to meet Zimbabwe’s demands for increased mineral beneficiation, a top minister said last week.
Zimplats chief executive Alex Mhembere said the Zimbabwean unit of Impala Platinum (Implats), the biggest producer of the precious metal in the country, was going ahead with the refurbishing and upgrading of its refinery. The project, due to start next month, would take two years to complete, he said.
Zimbabwe’s three major platinum mining firms are owned by South African-based companies. Unki is owned by Anglo American Platinum, Mimosa by Aquarius Platinum and Zimplats by Implats.
A top government minister told Business Report that the investment by Zimplats in its old smelter and refinery in Selous was not enough to meet government expectations for enhanced mineral beneficiation.
“We are not happy with this, they have to do much, much more and there is a feeling that this does not have the substance we are looking for on this issue,” said the minister, who did not want to be named.
Zimbabwe has also expressed unhappiness over a proposal submitted by Implats for the setting up of a platinum refinery in the country. Implats chairman Khotso Mokhele visited the country earlier this year and held discussions with government officials on the issue.
However, Zimbabwe Mines Minister Walter Chidhakwa has said the proposals by Implats to set up a platinum group metals refinery in the country did not contain any “concrete” plans on how the company intended to build it.
He said Zimbabwean officials had visited Implats in South Africa to determine the refinery’s planned capacity but were apparently not happy because the company was still carrying out feasibility studies.
“We have visited them but they are still doing feasibility studies. We have not yet seen their concrete proposal on how to set up a refinery.”
Mwana Africa-owned Bindura Nickel Corporation, which has a base metals smelter, has said it was willing to work with the platinum producers on upgrading its facility to process platinum ore.
However, the managing director, Batirai Manhando, said on Wednesday that there had been no significant progress during the negotiations.
Nearly $26m is being invested in upgrading Bindura’s smelter, but much more would be needed to enable it to refine platinum group metals.
“We’re still talking with them, the offer is still on the table, but with or without them, we’re going ahead with our plans” to expand and upgrade the plant, Manhando said.
The government is now considering a plan to build a platinum refinery with Russian investors. Government officials are preparing to visit the investor to assess its capacity.
“Our team is likely to go to Russia very soon to look at one of the companies that submitted their proposal,” Chidhakwa said.
The Platinum Producers Association in Zimbabwe said production needed to reach 500 000 ounces a year to sustain the building of a refinery, but the government has rejected this, saying it was a delaying tactic.
Current annual production is around 400 000 ounces and the companies have expansion programmes aimed at ramping up production, including sinking shafts and developing new mines.
However, some of these initiatives are being put on the back-burner as investors weigh their options. Up to now, the companies have stood by their Zimbabwe operations despite mounting operational constraints such as high taxes, uncompetitive royalties and the indigenisation policy.
“We must become a country that encourages investment and businesses making profits. It is therefore imperative for the government to improve clarity surrounding the indigenisation regulations to attract the critical foreign and domestic capital needed to develop the mining industry,” Mhembere of Zimplats said last week.
There has been disagreement over the cost of setting up a platinum group metals refinery, with mining executives saying it would cost as much as $2bn while government estimates are significantly lower.