Platinum mining companies in SA and Zimbabwe are facing contrasting operational challenges ranging from erratic power supplies‚ reduced working hours owing to strikes and an uncertain legislative and political framework. Ben Davis‚ an analyst at Liberum Capital‚ has however‚ said that the Mimosa mine is "operating normally and profitably under difficult circumstances".
Although some South African platinum miners are scaling down operations and shutting down other projects in some instances‚ Zimbabwean platinum miners are expanding operations‚ buoyed by relatively low operating costs. Winston Chitando‚ the MD at the Mimosa mine said platinum production would rise this year.
"We are expecting to produce 204‚000oz compared with about 202‚000oz last year‚ a slight increase due to efficiency improvements‚" said Chitando during a tour of the mine at the weekend.
However‚ the expected increase in output from Mimosa is not likely to immediately lead to a revenue surge‚ with Chitando insisting that operational costs have also been on the rise‚ driven by consumables and equipment.
"There is pressure on the cost curve worldwide and we expect a slight increase due to the pressure on various items but that cost is within industry norms."
Rising costs have hit platinum mining companies at a time when demand for the commodity from major markets - mainly in Europe - has been affected by the global economic slowdown. Worse still‚ production of the commodity is likely to run into surplus‚ with platinum prices likely to respond by not rising.
But with the worst now behind them following the foreign-owned Zimbabwe platinum mining companies' forced compliance with the indigenisation policy‚ Mimosa and Zimplats‚ Implats' Zimbabwe unit‚ have revealed plans to forge ahead with projects to expand projects.
The expansion projects will boost production beyond current levels although analysts say a favourable environment will be crucial to incentivise this. Zimbabwe has the world's second largest platinum reserves after SA.
"Zimbabwe is a relatively cheaper place to mine for platinum and the plans are there for the mines to boost their operations. But a favourable environment that does not have political fears and no concerns over arbitrary legislation will promote such plans to expand‚" said Johannes Kwangwari‚ a Harare based analyst.
Chitando said Mimosa was undertaking feasibility studies for the expansion of operations with a "team looking at the various options to go beyond the current production" level.
Mimosa processes around 7‚400 tonnes of ore per day. An official explained that only 3% of the mined ore contains platinum group metals although other minerals such as nickel are also found in the concentrate processed.
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