ZIMPLATS, the largest platinum producer in Zimbabwe, expects to conclude the first tranche of an empowerment or indigenisation transaction that has hung over the company in recent years.
Zimplats, 87% owned by the world’s second-largest platinum producer, SA’s Impala Platinum, expected closing a deal to transfer 10% ownership of its assets to employees by March, CEO Alex Mhembere said on Thursday.
“We’re almost done with the employee share ownership trust. It’s in the final stages of approval from the Reserve Bank of Zimbabwe. It’s been approved by the government,” he said.
Zimplats is providing the funding for the scheme.
A second Zimplats-funded transaction to transfer a further 10% ownership to the community neighbouring the mining complex, 150km southwest of Harare, was under way, he said.
“We’ll focus on these two first and put them to bed,” he said.
He declined to comment on the final 31% the Zimbabwean government wants in black hands to meet its indigenisation policies for foreign-owned companies operating in the country.
The process has been complicated by a quick succession of indigenisation ministers since Saviour Kasukuwere signed an in-principle agreement on the transfer of 51% ownership in Zimplats in March 2012.
The 31% was to be sold to the state-run National Indigenisation and Economic Empowerment Fund. The transaction was said at the time to be worth about $500m, but President Robert Mugabe rejected the deal, saying the government would not pay for minerals belonging to its people.
The matter has been further complicated by Zimplats handing unmined minerals to the government in exchange for empowerment credits. No such credits were forthcoming, nor was any payment, which some analysts have valued at $150m.
Commenting on the overall empowerment talks, Mr Mhembere said: “We’ve had a lot of full discussions with the government but we’ve not been too public this time around.”
Uncertainty over the outcome of the empowerment transactions and concern about political stability coupled with a weak global platinum market have curtailed Zimplats’ expansion plans.
The government wants companies to process the platinum group metals they produce in Zimbabwe instead of sending a smelted product to refineries in SA. To partially meet these demands, Zimplats is undertaking a $100m construction of a base metals refinery at its Selous complex to handle all the base metals it produces. The plant would be in production by July next year, Mr Mhembere said.
There is an option to expand the plant in the future to toll-treat and refine the base metals, mainly nickel and copper, of other producers like Mimosa, which is shared between Implats and Aquarius Platinum, and Anglo American Platinum’s Unki mine.
The refinery would draw power from a 150MW supply coming from Cahora Bassa in Mozambique as a dedicated feed to the platinum industry in Zimbabwe, Mr Mhembere said. That contract expires in 2017 and talks will start next year to extend it.
Zimplats was also in talks with Empress Nickel Refining and Bindura Nickel about further processing of its nickel, Mr Mhembere said. Bindura, unlike Empress, is not yet refining metal and has still to raise funds to bring a refinery into production.
Zimplats is exploring an improved and safer mining method at its 90,000oz-a-year Bimha mine, which was closed last year after a collapse in its working areas in July, with no fatalities.
It will take 42 months and $140m to develop mining around the fault in a pincer movement, leaving behind large pillars that should prevent such a large collapse again. The cost of the development, which is on the reef, would be offset by production of platinum group metals during the work, Mr Mhembere said.
A board meeting in May will decide on the development of Portal Five next to Bimha, creating a new mine to replace two old portals that will be mined out in 2019 and 2025. The new mine will generate 90,000oz in total over two equal phases as each of the old mines closes, replacing 45,000oz from each operation.
The feasibility work for that is being extensively revisited to ensure there will be no collapses like the one at Bimha, which will result in a loss of about 25,000oz. The lost output has been offset by sending Bimha crews to other mines to step up group output.