'Zim to benefit from SA strikes'

HARARE - Zimbabwe's platinum mining sector could benefit from an indefinite strike embarked upon by South Africa’s platinum mine workers through increased global platinum prices due to reduced market supply, analysts say.

“The platinum mining sector in Zimbabwe can benefit through increased prices due to reduced supply as a result of strikes in South Africa. It (the strike) is also denting the recovery of the rand which is already under pressure,” said a mining analyst who requested anonymity.

He also noted that Zimbabwean platinum mine workers have “a very remote possibility following suit.”

“Our workers are not unionised like their South African counterparts. Platinum prices will definitely pick up a bit,” he said.

This comes as about 70 000 workers at three of South Africa’s largest platinum mines failed to clock in last Thursday after negotiations between their union and the mines failed to reach an agreement, presenting a boon for Zimbabwe’s platinum producers.

The strike affected more than half of the global platinum production as South Africa accounts for 70 percent of the total 5,74 million ounces produced annually and this may trigger price increases.

The Association of Mineworkers and Construction Union (AMCU) is demanding a minimum wage of about $1 200 (R12 500) for platinum miners at Anglo American Platinum, Impala Platinum, and Lonmin, which account for the bulk of the world’s platinum production.

A Lonmin official has already indicated that they are losing 3100 ounces of platinum per day, worth nearly $4,5 million due to the strike.

Independent economist Christopher Mugaga noted that the strike will affect prospective job seekers and those already employed in South Africa’s platinum mines.

“The strike makes job prospects for Zimbabweans gloomy because the platinum mines are bound to retrench and foreigners are normally the most vulnerable,” said Mugaga.

However, he added that the tax imposed on raw platinum in Zimbabwe would make a higher opportunity cost for the country.

“Tax on unrefined platinum will reduce exports of the mineral thus making the country lose a lot of potential revenue. That potential revenue is the opportunity cost,” he said.

Despite facing escalated pressure by government to have platinum miners construct a refinery or face a ban on raw platinum exports, Zimbabwe — with the second largest known platinum reserves in the world after South Africa — has pinned its economic recovery hopes on the mining sector.

Analysts have warned government that while the move to ban export of raw platinum in order to promote the establishment of a refinery is ideal in the long run, it will currently 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.

“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 it 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,” said a local mining expert.

Recently, the Chamber of Mines of Zimbabwe 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.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.