Platinum Producers Struggling Amid Declining Prices
Zimbabwe’s platinum industry is facing significant challenges due to a sharp decline in prices, leading to widespread retrenchments among major producers.
According to reports from the Zimbabwe Independent, plummeting prices have pushed companies to take drastic measures to stay afloat.
Forecasts from the World Platinum Investment Council (WIPC) indicate a drop in output for Zimbabwe, the world’s third-largest producer, from 507,000 ounces (oz) in 2023 to 502,000 oz this year.
Industry experts have raised concerns about the government’s policy encouraging platinum miners to invest in refineries to create jobs, as this initiative is now at risk due to the weakening prices. They have warned that without a review of costs such as power and fiscal charges, mine closures could be on the horizon.
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The ongoing decline in prices for Platinum Group of Metals (PGMs) is expected to persist in the medium term, leading to workforce reductions globally, according to the WIPC.
In response to the challenging market conditions, two of Zimbabwe’s major producers, Mimosa and Zimplats, have announced plans to downsize their workforces. Mimosa, in particular, is focusing on retrenching managerial and supervisory staff to cut operational costs amidst the industry downturn.
Mimosa experienced a 15% increase in costs last year, primarily attributed to extended power outages.
Similarly, Unki Mine is facing challenges due to lower prices, painting a bleak picture for the industry’s future.
Unki Mine’s general manager, Walter Nemasase, expressed grave concerns about the industry’s current state, describing it as being in “serious trouble.”
Despite these challenges, Nemasase emphasized that Unki Mine would not resort to workforce layoffs like other companies. Instead, the mining firm plans to implement cost-cutting measures throughout its operational processes to mitigate the financial impact.
“The platinum industry is in serious trouble, not only in Zimbabwe. We are seeing it even in South Africa and our exposure to South Africa is also affecting the local industry,” he said.
“In the case of Unki, we are not going to retrench. We will allow the natural course of attrition to take its course as part of cutting costs. At this stage, you cannot be talking about building a refinery when the industry is going through this crisis.”
Across the border in South Africa, Unki’s parent company, Anglo American Platinum, recently disclosed that its restructuring efforts aimed at cost containment might lead to the elimination of 3,700 positions. Meanwhile, Zimbabwe’s largest platinum miner, Zimplats, has commenced a voluntary layoff program to ensure the company’s financial stability and enable the smooth execution of expansion projects valued at US$1.8 billion.
Zimplats is under the ownership of the South African-based Impala Group.
“In response to the sharp decline in PGM pricing, Zimplats is implementing stringent cost preservation to: protect the business from the enormous pressure on profitability and cash flow on our operations; safeguard the business and to preserve, as much as possible, the jobs of more than 8 000 people employed by the company (both permanent and contract),” Zimplats head of corporate affairs Busi Chindove said in a statement.
“We also seek to minimise the impact of spending cuts on our growth strategy, which includes a US$1,8 billion expansion programme. The programme comprises several projects at various stages of execution.”
