Improve platinum sector competitiveness

Hazel Marimbiza
While the platinum mining sector has helped build Zimbabwe’s economy, experts say it still has much more potential as there are tonnes of platinum that are still to be exploited.

Zimbabwe has the world’s second-largest reserve of Platinum Group Metals (PGMs) in the Great Dyke after South Africa’s Bushveld Complex.

Also, Zimbabwe is the world’s third-largest platinum producer with output mounting five percent to 476 000 ounces (oz) in 2020.

The platinum sector has the greatest potential to expand, judging by its geological prospective, the several expansion programmes by the current three dominant players (Zimplats, Mimosa and Unki), and the influx of other entrants into the sector such as the Great Dyke Investments (GDI), Karo Resources and several other projects which are at various stages of planning and evaluation.

It is no wonder that the Ministry of Mines and Mining Development targets the industry to achieve a quarter of the US$12 billion mining industry target by 2023.

According to Minister Winston Chitando, projects for platinum group metals (PGMs) at various stages of development will help to realise the estimated 2023 target.

“All three dominant producers (Zimplats, Mimosa and Unki) are in expansion mode while we will have new production from GDI and Karo Resources, which will result in platinum contributing US$3,5 billion (by 2023),” he said.

While efforts by dominant producers to expand are applaudable there are a lot of challenges hindering the growth of PGMs in Zimbabwe and if these challenges are not looked into, they can thwart the US$12 billion-dollar target by 2023.

The chairman of the Institute of Mining Research at the University of Zimbabwe, Lyman Mlambo, said one of the challenges that had affected the platinum sector were perennial power shortages.

“In general, a mine requires on average at least 16 hours of uninterrupted power supply every day to ensure that production levels are maintained and that machines run optimally but frequent power outages affect machines therefore, power shortages affect production,” said Mr Mlambo.

He also highlighted that access to finance was the greatest obstacle to doing business in Zimbabwe due to limited opportunities for offshore lines of credit coupled with inadequate local funding at very high interest rates.

“Much of the forex is on the parallel market where rates are much higher than the interbank market rates. This has resulted in mines failing to secure inputs in time, and in local inputs being very expensive. Generally, the sector is plagued by high costs of all sorts including electricity tariffs, fuel, funding, labour, consumables, and other materials and high fiscal and administered charges,” he said.

Furthermore, he highlighted that Zimbabwe had lost mining skills (geologists, engineers, technicians, and managers) to the region and to the broader international community due to a protracted general economic recession in the country.

“Zimbabwe’s capacity to develop more skills in the sector has suffered due to a decline in the capacity of the country’s training institutions. Funding and modern skills challenges have adversely affected the capacity of the Zimbabwe Geological Survey to generate new information including geological maps,” he said.

In order to grow the sector, he said there needed to be improvement in the attractiveness of Zimbabwe as an investment destination, improvement in infrastructure development framework in the country, promotion of beneficiation and value addition in the platinum sector; general linkage promotion in the sector; and attracting and retaining capital in the platinum industry.

In his International Journal of Scientific and Research Publications, Oswell Binha said profits would be realised if mining contributes to broad infrastructure development.

“PGMs are a finite resource. Ensuring that the proceeds accruing from exploitation of this resource directly contributes to creation of dedicated energy and power, water bodies, roads and rail among other critical infrastructure needs is strategically important,” he said.

Additionally, research indicates that if the platinum sector is to improve there is a need to create value for the investors because investors are motivated to increase investment capacity if the return on the investment is attractive.

A combination of progressive public policy mix and recruitment of globally reputable mining operators leads to development of mining towns nationwide.

Recently the Chamber of Mines Zimbabwe (CoMZ) head Elizabeth Nerwande said over the past two years, the chamber had worked with the Government, which saw improvement in some areas, but she pointed out that a number of areas still required improvement to enhance competitiveness.

“There is a need for significant improvement in ensuring that the policy environment is stable and competitive. We appeal to the Government to enable fiscal policies to allow exporters in the industry to have sufficient resources to grow and sustain the business,” she said.

Generally, it’s important for policies to attract investors because where policies are conduits to erode investor value, discourage honest work, reward corruption and theft and create institutionalised economic inefficiencies, the result is investor flight.

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