daniel chigunwe
Martin Kadzere
Zimbabwean platinum firms are lobbying for a reduction in electricity tariffs and for royalties to be linked to global prices of platinum group metals (PGMs) to ensure their continued viability.
According to Collin Chibafa, the chief financial officer of Unki Mines, Zimbabwe’s average electricity costs for smelting a tonne of concentrates are 51 percent higher than the average costs in South Africa, another major producer of PGMs.
Chibafa said this while participating in a panel discussion at the Chamber of Mines’ Annual Congress in Victoria Falls on Wednesday.
He specifically pointed out that Unki’s electricity cost for smelting a tonne of concentrate is US$293, significantly higher than the average of US$171 in South Africa.
Unki is a unit of Anglo America and the country’s third largest platinum producer in the country.
“PGM smelters need (the) same tariff as chrome shelters,” Chibafa argued, referencing a lower electricity tariff for local chrome processors.
Zimbabwe boasts the world’s second-largest platinum deposit, making its platinum sector a critical player in the global market.
The industry contributes significantly to the country’s economy through job creation, foreign currency generation, and Government revenue. However, high production costs and low international prices threaten the continued viability of Zimbabwean platinum companies.
Last year, electricity tariff increased by 18 percent to US14,21 cents per kWh and have significantly impacted production costs, considerably higher than the South African average.
South Africa’s power utility, Eskom charges US$7,5 cents per kWh in summer and US$12,73 cents per kWh in winter, resulting in an annual blended tariff of US$8,82 cents per kWh.
On the issue of royalties, Chibafa argued that linking royalties to the current price of PGMs was crucial for the industry’s viability.
This comes after a period of declining PGM prices, which forced major producers worldwide to implement harsh cost-cutting measures, including layoffs and reduced investment in new projects.
In January, platinum royalties increased by 180 percent to 7 percent from 2,5 percent.
Chibafa said this “is impacting negatively on the viability of PGM projects”.
The global market for PGMs has been in turmoil, with prices plummeting by over 50 percent in some cases.
The dramatic decline threatened the financial viability of many mining producers, including those in Zimbabwe.
A key factor driving this downturn is weak automotive demand, fuelled by the rise of electric vehicles.
PGMs like palladium and platinum are crucial for reducing emissions in traditional combustion engines, but with fewer cars needing them, prices have tumbled.
Palladium and platinum specifically have seen roughly 40 percent and 15 percent declines, respectively during the first quarter of the year.
Industry experts predict the sluggishness to continue until the second quarter of 2025.
Chibafa also urged the Government to expedite legislation deferring the planned beneficiation tax on concentrate exports to remove “uncertainty.”
The tax is intended to incentivise the development of domestic processing facilities PGMs within Zimbabwe.
Impala Platinum’s subsidiary, Zimplats, is reportedly on track to complete the refurbishment of its base metal refinery and other smelters by 2025, potentially aligning with the desired timeline for beneficiation.
Bongani Ndlovu