Australia Stock Exchange-listed platinum producer, Zimplats, has vowed to remain in Zimbabwe despite threats by President Robert Mugabe’s government to seize more than half of the company’s land.
This comes as other international mining giants such as Rio Tinto bowed out of the mineral-rich country due to government’s controversial policies.
The shutting down of operations by Rio Tinto in 2015 after a 60-year presence in the country was described by experts as a vote-of-no-confidence in Zimbabwe, which is currently dogged by political instability and uncertainty, policy inconsistences and a hostile business environment.
However, Zimplats – with a market capitalisation of nearly $2 billion – said it has so far spent close to $40 million on revamping and developing both old and new mines, showing its commitment to continue operations.
“The redevelopment of Bimha Mine remains on schedule to reach full production in April 2018,” the miner said in a market update.
“A total of $32 million had been spent on the project as at March 31, 2017 against an approved total project budget of $92 million,” Zimplats said.
Zimbabwe’s largest platinum producer also indicated that the development of Mupani Mine was on schedule targeting to reach the ore contact by May 2020 and full production in August 2025.
“A total of $8 million had been spent on the project as at March 31, 2017 against an approved total project budget of $264 million,” the company said.
Early this year, the company received a notice from government over the proposed land seizure.
This was the third time since February 2012 that the government has issued a notice to seize 27 948 hectares of mining ground from Zimplats which objects to the acquisition.
Zimplats, which is 87 percent owned by South Africa’s Impala Platinum, owns a total of 48 535 hectares in mining claims in Zimbabwe.
Mugabe’s government has previously defended the decision to seize Zimplats land, saying the miner had an excessive amount of land and it wanted to distribute the claims to new companies.
Meanwhile, the Ngezi-based miner more than doubled its third-quarter profit to $42 million by selling Treasury Bills it received from the central bank for a long standing debt.
At the height of an economic meltdown in 2008, the Reserve Bank of Zimbabwe (RBZ) raided the foreign currency accounts of exporters, including mining companies such as Zimplats.
Short of foreign currency, the RBZ last year agreed to repay the mining companies in the government-backed paper.
Zimplats received $34 million in Treasury Bills from the RBZ during the January-March quarter and sold them for a discounted $21 million.
Lower operating costs also helped to boost profit, the company said, while revenue fell by
six percent to $131 million after sales of platinum group metals declined by 22 percent.
source: Daily News
