'Platinum exports ban disastrous

HARARE - President Robert Mugabe’s threat to ban export of raw platinum is disastrous to Zimbabwe’s battered economy, analysts say.

They warned that while the move is ideal in the long run, currently it will ravage the country’s investment-starved economy — still struggling to take off from a decade-long recession — as it risks losing millions of dollars in revenue.

Last week, Mugabe hinted that government was seriously considering imposing a ban on all exports of raw platinum until companies in the sector build a refinery to ensure Zimbabwe gets maximum returns from its resources.

“Let us close our doors immediately and say no raw platinum will go to South Africa (SA). The former minister gave them two years and we must see them now arranging to build a refinery,” the 89-year-old leader was quoted as saying.

He added: “If they have not started, after that warning, building a refinery then when the time comes for us to demand that all refining has to be done here, they should not blame us.”

Zimbabwe does most of its platinum processing in neighbouring SA.

This comes as the country — with the second largest known platinum reserves in the world after South Africa — has pinned its economic recovery hopes on the mining sector, with platinum accounting for $424 million of the $1, 4 billion mineral exports in the nine months to September 2013.

“The move is catastrophic considering that platinum is our cash cow as a country not diamonds,” said a mining expert who preferred anonymity, adding that its takes at least five years to plan and build a refinery.

“The problem is about capacity, the amount being produced lacks the critical mass. Unless production is ramped up it is not going to be cost effective to do that,” the expert said.

Takunda Mugaga, an independent economist, also said that “the nation will lose out on proceeds from mining whilst ironically the sector is currently one of the largest contributors to Gross Domestic Product.”

“The risk is what if constructing a refinery will require funding which can be secured in not less than five years. What will be the opportunity cost to Zimbabwe of rising platinum prices on the international market,” he said.

He noted that, in fact, Zimbabwe needed to extract more platinum from the ground which will create forward linkages, including construction of refineries.

“It is capital intensive to build a refinery and who will want to inject funding?” queried Mugaga.

Recently, the Chamber of Mines of Zimbabwe (CoMZ) said platinum group metals producers — Impala Platinum Holdings (Impala), Anglo American Platinum Limited (Anglo) and Aquarius Platinum (Aquarius) — had to increase their total output to 500 000 ounces per annum from the current 365 000 ounces to justify a refinery.

Impala, through its local unit Zimbabwe Platinum Mines Limited (Zimplats), operates the Ngezi mine while it also runs Mimosa, a joint venture with Aquarius.

Anglo owns the Shurugwi-based Unki Mine.

The chamber said, to increase production to the targeted 500 000 ounces per annum — required for the operation of the refinery — there is need for investment of approximately $2,8 billion in mines, $2 billion in processing plants and between $200 and $500 million to ensure adequate power supply.

Comments (17)

The President is right its high time we create manufacturing companies in Zimbabwe rather than miners oan exporters of raw material we tend to loose out as a nation. Platinum companies stay guided this is Zimbabwew we do things our own way. Clap hands for the president.

president - 13 November 2013

The President is correct. If ever you get a chance to visit Zimplats you will shed tears. We are being ripped off by these guys. They take our platinum as raw and after processing it in SA, we never get the full value as they add it to their SA platinum. We need a smelter here. We have lost for far too long. The same should apply to diamonds and gold. We have already done the same for chrome.

Tendayi - 13 November 2013

Why would a Zimbabwean newspaper write an article like this. There are challenges but the article should be one that builds not divides. This is an important national issue and beneficiation is a must!

commenter - 13 November 2013

I absolutely agree with President Mugabe. We are already at an economic disadvantage with these mining companies exporting raw platinum (Jobs, revenue). If they dont see the need to build a refinery to create jobs and contribute meaningfully and in a long term manner then they should not benefit from our resources. This decision is one that even the daily news should support. If you as a paper dont do your printing in SA why should refining be done in SA? Its about time that Zimbabweans see the bigger picture in terms of economic development not just senseless criticism of policies that are actually sensible.

Dominic Mukondo - 13 November 2013

I don't like Mugabe s style of governance but for once here is a man who has put some thought into his declaration. Firstly, is it proper to just give the S. Africans our platinum with all the group metals which they don't reimburse us ,for free and does it make economic prudence to get crumbs for our resources simply because its too costly to construct a refinery? If Zimbabwe has the second largest reserves of the mineral and investors have committed themselves to starting mining operations here, is that not ample evidence that the mineral we have is critical to the world hence investing in the refinery should be a show of commitment to equitable distribution of wealth with a people whose land you are pillaging ? I am amazed by these so called analysts, who seem to believe that Zimbabwe should just have no opinion as to what should be done in their own country. Gentlemen lets start to differentiate between zanu hate and national importance. Always remember that every ounce of mineral extracted from our soil does not re grow, its gone for good and has to do us justice. Lets grapple with the whereabouts of our proceeds from Obert Mpofu and company than from the white boers down south. I think we should not just criticise for the sake of it.

top heavy - 13 November 2013

capacity utilization is currently 180,000 ounces per year, it will require billions in investment to reach 500,000 ounces to warranty building a refinery. a new refinery also requires nearly $3 billion. As right as u may be mr president...u just dont wish it true or rigg it like elections unless u can get NIKUV to rigg the mining industry and wake up with a refinery. yo party spent $150m on election cheating but cant put $24m on the table to buy 150,000 mt of maize from Zambia to feed a nation. pathetic and stupid, stupid, stupid n stupid.

tru - 13 November 2013

The President talks too much...action first...he's talked for 33 years. Why not build the refinery instead of buying mercs and prados every year for your over fed and over sexxed cabinet? You can't have your cake and eat it sir, we also must invest....don't pass on the responsibility to the MNC's because they will always act in their best interests.

mukwerekwere - 14 November 2013

Why is Mugabe and his rich friends not invest in a processing plant? They have stolen enough and it would be nice to give back. With Mugabe's management style Zimbabwe is doomed. Whoever said former terrorists could run an economy got it all wrong, fighting a guerrilla war and running an economy in a modern world is way different from shouting at Tony Blair and George Bush at every opportunity. Tell us Mr President, exactly how much has the ordinary Zimbabwean benefited from your shouting escapades?

Bingo Wajakata - 14 November 2013

This is ironic. Government appointed a Consultant Dr. Paul Jordan to develop a Mineral Development Policy(MDP). In that policy the consultant ( a white South African economist.) suggested that companies that bring in FDI must be allowed to export semi-processed minerals for further processing at their assets in neigbhouring countries to benefit from economies of scale(Obviously with special reference to Angloplats and Implats). He also suggested that the government must sell 25 yr mining leases but indiginisation must be phased with full indiginisation only attained at 25 years (the life of the mine) effectively saying there shall be no indiginisation in the mining industry and upholding the current state of affairs(exporting semi-processed minerals). Does it require president to pick these issues all the time? The platinum industry is probably encouraged by the new policy which perpertuates their machinations. The MDP is available on the ministry's website.

Timothy Thorton - 14 November 2013

#Bingo Wajakata. You are way offline. Really! Referring to those who liberated Zimbabwe as former terrorists? Who really do you think you are...............

Kadira - 14 November 2013

The idea is very noble as a long term projection. Certainly having our own refinery is undoubtedly as enterprising since it will drastically reduce the losses that we incur in transportation and platinum processing in neighboring South Africa. Meanwhile, is it not noble for us as a nation to put precautionary measures that should cushion us against unforeseeable eventualities such as unemployment whose statistics is likely to soar during the transitional period lest we plunge into a serious economic catastrophe.

big solo - 14 November 2013

There is a refinery at makwiro built by BHP why cant they resuscitate that one please please research your articles before publication

ptg - 16 November 2013

The furnace at SMC( Makwiro) is operational and Zimplats are using it to produce a matte but cannot separate the various minerals which is being done in SA. Mimosa and Unki are producing and exporting a concentrate(madhaka).

Timothy Thorton - 17 November 2013

In my opinion, the President is visionary when it comes to the intention to ban platinum exports and encourages the construction of platinum refineries in zim. basically by exporting raw platinum for refining in south africa we are also exporting employment. The President is saying this in tandem with what ZANU PF promised people in its manifesto during elections campaigns.

leo - 18 November 2013

He should encourage not threaten. BHP left us with all this equipment but we still called in Zimplats why? We are failures guys and use of force inoitwa kuma elections not ku industry, we talking money unonyengera, mukadzi ukadaro inonzi rape case.

Maita Manyuka - 19 November 2013

He should encourage not threaten. BHP left us with all this equipment but we still called in Zimplats why? We are failures guys and use of force inoitwa kuma elections not ku industry, we talking money unonyengera, mukadzi ukadaro inonzi rape case.

Maita Manyuka - 19 November 2013

Some people are ignorant in term of the economy. Platinum Group of Metals) PGM we have five minerals extracted from platinum when the refinery is done in SA who knows the percentage of Gold, Rhodium, Nickel, Platinum, Cobalt, Ruthenium, Iridium and Palladium(PGM) do you know of this things. We are losing more than we should be benefiting. Car manufacturers would be coming here to set up plants for car manufacturing. Kupusa nokuti ndiVaMugabe vataura saka zvavanotaura zvinokanganisa economy tarisa zvakanaka usati waona zvakaipa. Ignorance kupusa. Do not judge for the sake of it. Is it accountable how much we are getting from platinum, where is the money going? Where is it? We are having a liquidity crunch but we are selling our minerals. This white owners are Anglo-American why when ZDERA stipulates no american should deal with the government of but here there mining. Government should do something lets monitor our resources

hardlife - 4 December 2013

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