In a bid to boost production and revenue generation in the wake of falling platinum prices on the international market, the country’s biggest platinum producer, Zimplats, will spend a whooping $100 million in re-developing Bimha Mine, which was shut down on August 23, 2014.
The giant platinum miner is 87 percent owned by South Africa’s Impala Platinum (Implats).
Bimha Mine, which is Zimplats’ biggest mine out of four other mining units in Ngezi, was shut down as a precautionary measure following the partial collapse of the mining footprint in July 2014 due to regional instability induced by the geological Mutambara Shear.
Zimplat’s latest endeavour puts to rest speculation that Bimha Mine, which used to contribute two million tonnes of platinum ore to the mine’s annual production of 6,2 million at peak periods, could be closed permanently.
Affected employees were moved to operational mines in order to increase output and compensate for the loss of Bimha Mine.
New designs for the re-development strategy are already in place. The ground monitoring system has also been enhanced to eliminate the possibility of another disaster during the mine’s re-development.
Zimplats’ head of corporate affairs, Ms Busi Chindove recently told The Sunday Mail Business that the re-development of Bimha Mine resumed in November last year and work “has progressed well”.
“The strategy entailed development along the main access level at a position 30 metres west of the old footprint and mining at 5N roadway in the north, underground ore handling and support infrastructure. In essence, a new mining footprint would be re-established on the flanks of the collapsed footprint.
The re-development project is budgeted to cost approximately US$100 million and the mine is expected to be back to full production before the end of 2018,” said s Chindove.
It is understood that the mine is now positively contributing to production since the rehabilitation works began.
Fault lines at the mine were first discovered in 2011 but the situation deteriorated despite more than $6 million being spent on addressing ground stability and employee safety.
Increasing production will help ease the burden of fluctuating platinum prices.
The platinum mine’s old open pit – the Ngezi South pit – has also been resuscitated and is now operating at full throttle.
But the life of the open pit is limited to four years, thereby making it a stop-gap measure.
There are also efforts to reduce costs and conserve cash.
Ms Chindove said the interim measures have enabled the company to get back to “its nameplate capacity of 6,2 million tonnes per annum” and to reduce operating costs per tonne.
Platinum prices have been retreating from an all-time peak of $2 300 per ounce in 2008 to US$969,10 on Wednesday.
Platinum generates an estimated $500 million – about 15 percent of national exports – for the country every year.
In 2014, Zimplats was the best exporter after exporting minerals worth $540 million of the $2,2 billion that was generated in the sector.
In the long-term, Zimplats seeks to manage the Bimha Mine ramp up project to full production and replace two aging mines with one large-scale mine that will help to manage operating costs and improve capital efficiency.
Feasibility studies on the replacement mine are already underway.
Current estimates in line with the mining development plan submitted to Government show that Zimplats’ life of mine stands at 50 years.
The mining industry is expected to play a critical role in the country’s economic revival and to contribute towards meeting targets set in the economic blueprint, Zim Asset.
The mining sector is forecasted to grow 2,4 percent this year despite depressed international prices, falling demand and limited financing on the back of planned investments.
Platinum producers in 190 million expansion drive
Meanwhile platinum producers – Zimplats, Mimosa and Unki – will embark on expansion drives worth $190 million in order to increase output to 24 tonnes by 2020.
Platinum output is expected to increase to 13,3 tonnes this year from 12,6 tonnes in 2015.
Chamber of Mines of Zimbabwe statistics show that Zimplats accounts for 54 percent of the platinum production, followed by Mimosa and Unki at 30 percent and 16 percent, respectively.
An estimated $2,8 billion is required to produce 24 tonnes annually by 2020, and the three miners have started mobilising funds for the expansion projects.
Significant global headwinds on international commodities markets could cut Zimbabwe’s cumulative platinum export earnings by more than $35 million in 2016.
Chamber of Mines chief executive officer, Mr Isaac Kwesu told The Sunday Mail Business that platinum producers have injected a considerable amount in expansion projects as part of efforts to boost throughput.
“One producer commenced an open-pit resuscitation project valued at $10 million and is expected to be commissioned in the first quarter of 2016.
“Another producer indicated that it intends to inject $82,4 million for an expansion project which is expected to be completed by July 2018, with expected national incremental output of 9 percent from the existing national capacity.
“The third producer is also planning to expand its capacity for both mining and concentrating by 50 percent, which is estimated to cost around $100 million and feasibility studies are in progress,” said Mr Kwesu.
Revenues for platinum producers are expected to drop to $346 million this year from $381 million realised a year ago.
Besides the $192 million worth of projects that are currently being pursued, there are three new investments in the platinum group metals sector that are projected to cost $600 million.
Three projects are expected to be commissioned from 2017. Their projected capacities are around 665 000 ounces.
Chamber of Mines economist, Mr Pardon Chitsuro said viability in the sector has been compromised by softening commodity prices, especially against a background of a high cost structure in the platinum sector.
“All producers in the PGMs sector indicated that their viability has been compromised by softening commodity prices against a background of a high cost structure.
“The producers reported that their earnings have fallen in 2015, compared to 2014, thus earnings from platinum, for instance, declined by 23 percent in 2015, compared to 2014.
“High operation costs, power shortages, capital constraints and subdued international prices are the main obstacles that are failing the feasibility of the platinum sector,” said Mr Chitsuro.
He said labour costs, along with the cost of supplies, were cited as the major cost drivers that lead to serious viability challenges.
The platinum sector employs more than 8 750 people.