Civil Construction at Ngezi Supplied

Harare - Impala Platinum’s unit in Zimbabwe, in which it still controls about 87 percent despite signing an earlier deal to cede majority control, on Wednesday reported a 9 percent increase in revenue and posted an operating profit of $36 million (R379m) for the quarter to March.

Zimplats has now paid about $10m to a community share ownership scheme under Zimbabwe’s indigenisation laws, although the deal signed with the government last year is being revised.

The government, although recently hinting at a climbdown from its previous confrontational approach, wants to rule out monetary compensation for shares ceded by mining firms.

Independent economist Moses Moyo said the “government should finalise the empowerment policy to speed up investment inflows”.

The mining sector has been identified as key in reviving the struggling economy.

Zimplats said on Wednesday that third-quarter revenue jumped 9 percent to $137.8m. Operating profit soared 76 percent from the previous quarter to $36m.

Taxes and other payments to the government during the same period declined by 29 percent to $20m “due to the full settlement of prior years’ tax liabilities in the previous quarter”.

Zimplats operated against the backdrop of a minimal increase in operating costs, with quarterly production costs for the period rising 1 percent. This marginal increase has been attributed to “the impact of an interim wage increase for National Employment Council graded employees”.

Other costs related to the repair of a furnace that blew in December contributed to the cash costs increase. Local expenditure, excluding government payments, declined 16 percent to $51m.

Its Ngezi Phase 2 expansion project continued to make progress.

The platinum company mined 1.4 million tons of ore during the period under review, a 17 percent increase on the previous contrasting period.

It operated at a platinum group metal recovery rate of 81 percent while metal in concentrate for the period amounted to 121 148 ounces.

It said tons milled and metal in concentrate were below the previous quarter’s performance because of an ore shortage “arising from the mismatch between mining and milling at a time when the business was operating with minimal run of mine stocks”.

President Robert Mugabe and senior government ministers have insisted that foreign companies in the extractive resources sector give community share ownership schemes money for social projects. Most companies have paid a portion of this donation, with Zimplats being the first foreign-owned company to complete payment of this obligation.

Although most investors have been rattled by the indigenisation policy, South African mining companies are sticking it out in Zimbabwe.

The stronger performance by Zimplats comes when times are difficult in the global economy and commodity prices are only starting to show signs of firming.