Is 75% Of This Leading Nation’s Platinum Supply About To Close?

The South African mining industry got more bad news this week. With sources saying major platinum producer Lonmin has been threatened with a possible shutdown of its mines, after being cited by regulators for non-compliance in its local social programs. 

But elsewhere, the news for platinum producers was even worse. With one of the world’s largest miners saying it may be forced to close a world-leading mining operation. 

That’s Zimbabwean miner Zimplats. Which said this week that government policies in the troubled nation are threatening to make the Mimosa mine — the country’s largest producer — uneconomic. 

Representatives from Zimpats told reporters the main issue is a new export tax imposed by Zimbabwe officials. Who are planning to charge a 15% duty on outgoing shipments of unprocessed platinum concentrates.

That would apply to all of Zimplats’ current platinum production — with the company still in the study phases of building an in-country platinum upgrading plant.

And company officials say the extra tax will drive the mine into unprofitability. Forcing them to make a tough choice: shut down operations completely.

As Zimplats executives put it, “It is crunch time as we would rather park the resource than post losses.” With sources noting that such a drastic path has been agreed upon by Zimplats co-owners Impala Platinum and Sibanye-Stillwater in the event the export tax does go ahead.

A shutdown at Mimosa would be a major blow to global platinum supply. With the mine having produced over 555,000 ounces of PGMs in 2016. 

That equates to 75% of Zimbabwe’s platinum and palladium production — and 5% of worldwide output. Which could be lost nearly overnight if Zimplats pulls the plug for economic reasons. 

The deadline for such a decision is fast approaching, with the export tax scheduled to go into effect at the beginning of 2018. Watch for any moves from Zimbabwe officials to back down — and announcements from Zimplats management on potential next moves if no changes are made.

Here’s to a tense standoff,

Dave Forest

Add a Comment

Your email address will not be published. Required fields are marked *