HARARE – Zimbabwe must have adequate power supply in order to fully realise the benefits of a platinum refinery, the Platinum Producers Association of Zimbabwe (PPAZ) says.
This comes on the back of escalated efforts by government to have platinum processed locally with President Robert Mugabe recently threatening to ban exports of the metal in raw form.
But the country is currently facing a crippling power shortage, generating around 1 100 Megawatts (MW) against a peak and growing demand of approximately 2 200 MW.
Imports are not adequate to cover the deficit.
Herbert Mashanyare, PPAZ’s chairperson, recently said that the critical requirement to spur establishment and operation of the platinum refinery — estimated to cost at least a billion dollars — is electricity.
“We are confident … but this is all dependent on the availability of power,” said Mashanyare, adding that “our projections are that we will only have additional power within four to five years.”
Zimbabwe — with the second largest known platinum reserves in the world after South Africa — has pinned its economic recovery hopes on the mining sector, with platinum accounting for $424 million of the $1,4 billion mineral exports in the nine months to September 2013.
Most of its platinum is processed in neighbouring South Africa.
Last week, Mines minister Walter Chidhakwa said government was in talks with private investors to build a $1 billion platinum refinery, but accused local platinum group metals (PGMs) producers of “deliberately” delaying construction.
“There has been a process of deliberately delaying things and nothing has happened to date. As soon as the refinery is set up we will make sure that no platinum is exported out of Zimbabwe without being processed first,” he was quoted as saying, adding that the measure to ban platinum exports would only be taken once a refinery is operational.
Meanwhile, analysts say the threat to ban export of raw platinum could be disastrous to Zimbabwe’s struggling economy.
They warned that while the move is ideal in the long run, currently it will ravage the country’s investment-starved economy — still struggling to take off from a decade-long recession — as it risks losing millions of dollars in revenue.
“The move is catastrophic considering that platinum is our cash cow as a country not diamonds,” said a mining expert who preferred anonymity, adding that it takes at least five years to plan and build a refinery. “The problem is about capacity, the amount being produced lacks the critical mass.
“Unless production is ramped up it is not going to be cost effective to do that,” the expert said.
Impala Platinum Holdings Limited (Impala), Aquarius Platinum Limited (Aquarius) and Anglo American Plc (Anglo)’s platinum units are studying building a $3 billion platinum and base-metal refining complex in Zimbabwe.
The companies say Zimbabwe does not produce the 100 megawatts of electricity the refinery would need.
According to the PGMs producers, the country needs investment to the tune of $5,3 billion and stable mining policies if it is to boost platinum output and viably operate the refinery.
Impala, through its Zimbabwe Platinum Mines, operates the Ngezi Mine itself and runs the Mimosa operation in a joint venture with Aquarius.
Anglo American Platinum, known as Amplats, owns Unki Mine.
Together the mines are forecast to produce about 365 000 ounces of platinum this year.