Zimbabwe Platinum Mines (Zimplats), the largest platinum producer in the country has invested a mouth watering US$5 billion through its various mining entities scattered across Zimbabwe over the past 14 years. This is by no measure is a humongous amount of loot. In summary they have utilised their cash in the following manner:
- US$1,958 million on procurement costs (40%);
- US$1,389 million on capital projects (29%);
- US$582 million payments to government (taxes) (12%);
- US$442 million on employment costs (9%);
- US$403 million on loans (8%);
- US$63 million on dividends (1%)
- US$34 million paid as an advance to Reserve Bank of Zimbabwe (RBZ) (less than 1%).
According to Zimplats’ financials released recently; revenue fell drastically in the quarter ending September 2016 by 24% to US$98.5 million from the previous quarter. This was due to a drop in sales volumes of platinum group metals by 30%. Profit from operations (after royalties) of US$16.2 million was realised during the quarter from US$25.6 million realised in the previous quarter.
Zimplats is listed on the Australian Securities Exchange and is primarily owned by Impala Platinum Holdings a Johannesburg listed mining giant. In terms of size amongst the platinum group metals (PGM) producers in Zimbabwe, Mimosa Mining Company and Unki Mine follow Zimplats in that order.
Government policy inconsistency
It’s saddening to note though that because of the government’s bungling and policy inconsistencies we have a scrap yard of white elephants that could play an integral role in propping up the economy. Despite this the government is involved in a battle with Zimplats to drag from underneath its feet a portion of mining lease rights it owns. One public secret is the government has never run any successful business in recent years so one wonders what the government wants to do with the claims. Even after the $20 million Brainworks Capital invoice saga; Zimplats is yet to reach common ground with the government with regards to the controversial indegenisation bill.
Another mining giant affected by government’s policy inconsistency is the Zimbabwe Iron and Steel Company (ZISCO) which is owned by government. After lengthy negotiations lasting 8 years, the government in the eleventh hour failed agree with Essar Africa Holdings on the nuts and bolts of the takeover deal leading to the collapse of the investment negotiations in ZISCO. This deal would have seen at least 1,500 locals being employed at the ailing Kwekwe giant. Other mining companies that have been affected by government policy inconsistence are ZimAlloys and ZIMASCO whose operations were immensely affected by the ban on chrome ore exports form April 2011 to June 2015. In 2016, however, they were granted permission to start exporting to earn the country the illusive greenback.