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Harare – World number two platinum producer Impala Platinum (Implats) [JSE:IMP] has adopted a longer-term view of Zimbabwe, with its board approving a new mine in the country despite facing uncertainty and threats from the government’s announced land grab bid and higher power tariffs.
Implats, which runs the Zimplats operation, is the biggest mining investor in Zimbabwe. The new Mupani mine will have a 25-year life of mine period and will produce 2.2 million tons of ore per year on full design capacity in 2025.
The boards of Implats and Zimplats have approved the new mine after a bankable feasibility study earlier this year, amid indications that shareholders had argued over the new mine's merits.
However, following intense discussions and considerations around the prospects of the new investment, the boards of Implats and the Zimbabwean subsidiary have given the green light to the new mine.
“The Implats and Zimplats Boards of Directors have given their respective approvals to proceed with the development of the $264 million Mupani Mine (Portal 6) at Zimplats. The new underground mining complex will replace production from Rukodzi Mine and Ngwarati Mine once they are mined out and closed,” Implats said on Wednesday.
Zimplats will stick to its room and pillar mining method for the underground mine, which will be financed from Zimplats’ "internal resources" and increase its mineral reserves to about 9 million ounces of platinum.
The miner is facing increased pressure from the government to give up nearly 28 000 hectares of land, but is contesting this in the Administrative Court in Harare. Miners in Zimbabwe are also pushing for a reduction in royalties and power tariffs to manage their cost base.
The new investment explains why Implats has sought to invest in beneficiation inside Zimbabwe, with ore produced from the new mine set to be beneficiated at the Selous processing facility. Implats has invested into a refurbishment exercise at the Selous Metallurgical Complex.
“Approval to construct Mupani Mine… will ensure we can deliver on our target to mine 6.2 metric tons per annum and maintain production of 260 000 ounces of platinum and 220 000 ounces of palladium per annum,” said Alex Mhembere, chief executive officer of Zimplats.
He however conceded that Zimbabwe is undergoing “extremely difficult times” and added that the new mine will employ about 1 000 people at full production. He also said investment has been committed at a time when platinum prices are depressed and most mining companies are shedding operations or putting fresh capital investment on the back burner.
“While this project was commissioned against the backdrop of depressed metal prices, the estimated capital investment of some US$264 million will be deployed over the next nine years with much of the underground development work being done on-reef and the required capital expenditure financed through Zimplats’ own internal resources,” said Mhembere.
