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 percent 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 which could force the company to shut down production 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. Related: Mexico’s 2018 Election Could Derail Its Oil Boom
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 percent of Zimbabwe’s platinum and palladium production — and 5 percent 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.
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By Dave Forest
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