Refinery poser after mine collapses

via Refinery poser after mine collapses – DailyNews Live 10 September 2014 by Roadwin Chirara

HARARE – Zimbabwe’s plans to set up a platinum metal refinery could be delayed following the indefinite closure of Zimplats’ Bimha Mine, which collapsed last month putting a dent on the country’s beneficiation plans.

Government last year gave the country’s three platinum miners Zimplats, Mimosa and Unki a two-year ultimatum to start processing platinum group metals locally, amid concerns that it could be losing millions of dollars in potential revenue by exporting unprocessed minerals.

Information gathered by the Daily News shows that a refinery requires a feeder of 500 000 ounces of platinum per annum to be viable. However, the three platinum miners produced a combined 430 000 ounces in 2013, up from 340 000 the previous year.

In its 2014 financial year, Zimplats produced 240 000 platinum ounces, while Anglo Platinum’s Unki Mine produced 63 000 ounces and Mimosa 130 000 ounces of the precious metal.

While the three top platinum producers had plans to ramp up production to surpass the 500 000 ounces, the closure of Bimha mine would see Zimplats lose as much as 70 000 platinum ounces in the year through June 2015, or 4,4 percent of output in the 2013 fiscal period.

The projected reduction in production, which is expected to cost the Australian listed miner over $100 million in revenue, will negatively impact on its plans to rump up production required to sustain a refinery.

Economist Christopher Mugaga said government should take into consideration various factors affecting the economy before issuing deadlines to companies.

“I am sure by issuing the deadline, the government was driving to push its beneficiation policy in-line with its ZimAsset blue print and there is nothing strange and wrong about it.

“However, such deadlines and policies also have to take other into consideration, such as the current harsh business environment.

“They (government) have to be balance between wishes and the ability of business to meet them,” he said, adding that ultimatums work in a thriving environment.

Mugaga noted that issues of power and water, which are in short supply, were critical for businesses to thrive.

“A refinery is a capital intensive project which requires a lot of investment and policies such as

indigenisation don’t make it easy. The solution lies in government shifting its policy, in-line with the economic outlook of the country,” he said.

As a stop-gap measure, the Ngezi-based miner has settled to refurbish an existing refinery, set up by BHP at a cost of $100 million according to Implats’ latest results.

On the other hand, London listed resources group, Mwana Africa has hinted on plans to alter its nickel smelter to cater for platinum metals, with struggling RioZim also joining the fray with its Empress Nickel refinery.

Another economist Eric Bloch said the establishment of a refinery was a good initiative which would allow the country to get maximum benefit from its primary products.

“Economically it will allow for miners to get a better price for their metals, generate employment and set an example to other industries the timber industry in Bulawayo where 80 percent of their timber is exported unprocessed,” he said.

Bloch noted that while there are challenges to do with energy “but by the time the refinery is completed in terms of equipment, the current power upgrades being initiated by government will be complete”.

Zimbabwe’s power situation, where it has a generation capacity of 1 320 megawatts against a demand of 2 200MW, poses a challenge for a smelter which requires high volumes of power.