Zim regulatory uncertainity haunts Aquarius

HARARE - South Africa-based Aquarius Platinum Limited (Aquarius) says regulatory uncertainty in Zimbabwe continues to hamper its expansion plans in the country.

The miner, holding a 50 percent stake in a joint venture with Impala Platinum Holdings, Mimosa Mining Company (Mimosa), said the country’s imposition of further taxes will have a significant negative impact on the profitability and cash flows of the entire Zimbabwean platinum sector, particularly in the current low price environment.

“The continued regulatory uncertainty in Zimbabwe is of particular concern to us as it impacts Mimosa’s ability to plan future production levels and capital allocation efficiently,” said Aquarius.

This comes as Zimbabwe’s indigenisation policy, compelling foreign-owned firms operating to cede majority shareholding to locals, has been largely attributed investor flight and subsequent collapse of industry.

Aquarius, together with Impala Platinum Holdings (Impala) and Anglo American Platinum Limited (Anglo) are under immense pressure from government to construct a platinum refinery in the country within the next two years or risk losing their licenses.

Government last year said it would, from January this year, levy a tax on unprocessed platinum, but did not give a figure.

The platinum miner, however, said it would continue discussions with relevant authorities “seeing as we share the Government of Zimbabwe’s vision for a healthy growing Zimbabwean platinum mining sector, we remain hopeful the matters could be agreed in due course”.

Meanwhile, Aquarius, the world’s fourth-largest platinum miner, reported a seven percent rise in second-quarter output attributable to the company, despite higher cash costs at its key Kroondal mine in South Africa and a continued dip in platinum prices.

The miner, operating in South Africa’s platinum belt, is prone to labour unrest, said attributable output rose to 84 528 ounces in the three months ended December 31, 2013 from 78 987 ounces a year earlier.

Production attributable to Aquarius from its main operation at Kroondal, a venture with Anglo American Platinum in the northwest province of South Africa rose to 55,152 ounces from 51,262 ounces.

However, cash costs at Kroondal rose two percent while prices of platinum group metals fall nine percent from a year earlier.

Commenting on the results, Aquarius chief executive Jean Nel said the highlight of the second quarter was undoubtedly the continued increase in production and reduction in costs at Mimosa and specifically at Kroondal which is now consistently producing at levels higher than at any point in its 10 year life.

“The improved cost performance partially offset the lower prices which prevailed during the quarter,” he said.

Nel noted that at Mimosa production was stable and costs reduced further, in line with expectations.

“Unfortunately, Mimosa does not benefit from a weakening currency and hence the lower dollar metal prices impacted its margin directly. Platinum Mile’s production for the quarter was at reduced levels following interruptions in its feed caused by industrial action at Anglo Platinum, but still managed a credible performance for the half year,” he said.

“Overall, the company’s safety, production and cost performance continued to improve and are at credible levels. The challenge is to maintain this credible performance whilst making incremental productivity and efficiency improvements, something we are absolutely committed to,” added Nel.

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