Zim escapes SA platinum challenges

Murray tendered his resignation.
In the interim, AQPSA commercial director Jean Nel has been appointed as chief operating officer of Aquarius, while the company’s board considered a replacement for Murray.
Although reasons for his resignation were not given, Aquarius, which is the world’s fourth largest platinum producer, has been hit by soaring costs among other challenges that have affected mining firms in the country
Aquarius owns 50 percent of the Mimosa Platinum Mine in Zvishavane in a joint venture partnership with another South African platinum producer, Impala Platinum Holdings Limited.
Mr Murray is the third CEO of a platinum producer in South Africa to resign during the course of this year.
Earlier this year, Mr David Brown resigned as CEO of Impala Platinum (Implats), which is the world’s second largest platinum producer. Mr Terence Goodlace is now the CEO of Implats. Implats is the majority shareholder in Zimbabwe Platinum Holdings.
Additionally, last month Mr Neville Nicolau also left Anglo American Platinum, which is the world’s largest platinum producer. Former Kumba Iron Ore chief Chris Griffith is now heading Anglo American Platinum. These large platinum mines have been hit by soaring costs and, of late, labour unrest. This has been worsened by the fact that platinum group metals (PGM) prices have been depressed in recent months.
During the third quarter, global platinum prices have hit an all-time low of between US$1 375 and US$1 475 an ounce, with metals research firm Johnson Matthey reporting an average of US$1 400 in August.
The research group forecasts platinum prices will remain weighed down by depressed demand in the next 12 months due to the eurozone crisis that has affected the automobile industry.
However, operations in the country have remained stable. Both Zimplats and Mimosa have been key contributors to the operations of their respective groups in the last financial year, despite the depressed performance of platinum mines in South Africa due to increasing costs.
For the full year to June 30, 2012, Zimplats’ recorded an upswing in production as total ounces produced surged by 3 percent to             187 000 ounces while ore output increased by                8 percent to 4,5 million tonnes.
In terms of Mimosa’s production for the year to June 30, the mine recorded a              44 percent increase in PGM production to 210 895 ounces and a one percent growth in processed volumes to 2,3 million tonnes.
In a note earlier this week, analyst Liberum Capital analyst Ben Davis said the Zimbabwean-based Mimosa mine was “operating normally and profitably under difficult circumstances”.
On the contrary, in recent months, violent labour unrest and volatile prices have weighed heavily on Aquarius’s other mining operations, with production being severely disrupted. Although some disputes have been resolved, others were still in full swing.
Last month, Aquarius temporarily suspended operations at Kroondal for safety reasons as strikes were spreading in South Africa’s “platinum belt”.
Aquarius also placed its Everest Mine, in Mpumalanga, and its 50:50 joint venture Marikana Platinum Mine, near Rustenburg, on care and maintenance earlier this year, citing industry pressures.
Zimbabwe’s platinum mines have been generally noted to be low cost insofar as the country’s platinum deposits are typically shallow compared to the deep-level deposits in South Africa.
This means that the cost of mining platinum in this country is far cheaper than in other countries (South Africa as a case in point) were the deposits are found.
In view of these challenges facing these South African-based mines, long-term projections are that the sustained growth in Zimbabwe’s platinum production could result in the country playing a greater role in the production of the mineral.
This is further buttressed by the realisation that global demand for the mineral is expected to outstrip supply as other key platinum producers including South Africa and Russia’s production wane.
With the labour issues facing South Africa’s platinum mines seemingly unrelentlessly leading to increasing costs, in addition to anticipated low PGM prices in the outlook period, Zimbabwean producers can sustain a growth momentum.