PPA to forge ahead with refinery plans

PPA to forge ahead with refinery plans

Source: PPA to forge ahead with refinery plans – Sunday News Jun 11, 2017

Dumisani Nsingo, Senior Business Reporter
PLATINUM producers have said they will go ahead with plans to construct platinum refineries in the country although the Government has indicated that it has secured an independent Australian partner to build a $300 million refinery under a joint venture with the Zimbabwe Mining Development Corporation.

In an interview last week, Zimbabwe Platinum Producers Association chairman who is also Mimosa executive chairman Mr Winston Chitando said Anglo American Platinum’s Unki Mine was in the process of constructing its smelter while Mimosa was also exploring prospects of doing the same. The country’s biggest platinum miner, Zimplats already has a smelter and a base metal refinery at its Selous Metallurgical Complex.

“Unki are in the process of constructing a smelter, they have already cleared the ground and Mimosa are finalising a bankable feasibility study on that. We are actually tabling to the board a bankable feasibility study in July, so we are at different stages,” said Mr Chitando.

He said at the moment, the companies were concentrating on smelting with projections of setting up platinum refineries in the near future. However, Mimosa were once quoted as having said its operation was too small to sustain its own refining facility but would work with other mines over time to put one in place. Local miners had said they would only establish a refinery after reaching 500 000 tonnes (14,1 tonnes) ore output annually. Their other precondition for a refinery was uninterrupted electricity supplies which the local power utility, Zesa, has made considerable efforts to address.

Even after meeting all the preconditions, it has taken more time than anticipated to see progress on the platinum refinery despite commitment from producers to ensure local beneficiation of their ore. Zimbabwe has the second-largest platinum reserves in the world after South Africa. The metal is the third largest foreign currency earner for Zimbabwe after tobacco and gold, but it is still being exported in a semi-processed state to South Africa for refining.
As a result, the Government ordered platinum miners to come up with plans to construct a platinum refinery as part of requirements under the value addition and beneficiation cluster in the country’s economic blueprint, Zim Asset.

In 2013 the Government proposed a tax on raw platinum exports to compel mining companies to invest in smelting and refining capacity in Zimbabwe. The tax was supposed to come into effect in January 2015 but was pushed to 2018 to allow the miners time to set up the facilities.

Last month Mines and Mining Development Minister Walter Chidhakwa said the country plans to construct a
300 000 tonne platinum refining plant in a joint venture with Australia-based firm Kelltech at an estimated cost of US$200 million. State-owned Zimbabwe Mining Development Company (ZMDC) will have a 30 percent stake in the joint venture while Kelltech will control 49 percent, with the remaining 21 percent under a local partner only identified as Golden Sparrow. Construction of the refinery is expected to start next year and would take between 18 and 24 months.

Zimbabwe’s three platinum producers have been producing approximately 13 tonnes
(485 564 ounces) of platinum per year, a figure which could reach 20 tonnes (705 479 ounces) by 2020 if producers invest more in production.

Of the current output figures, Zimplats is producing an average of 240 000 ounces (6,8 tonnes) while Mimosa and Unki produce about 185 000 ounces (5,2 tonnes) and 19 000 ounces (0,5 tonnes) respectively.

Mr Chitando said the fall in the platinum price on the international market had impacted negatively on the producers’ balance sheets.

“The price is very bad, it’s ranging around $940 to $950 per ounce and three weeks ago it even went below $900 which is a disaster. All companies have had a curtail of capital expenditure and all the companies had to deduct salaries, which was done late last year to sail through that bad patch,” he said.

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