Zimbabwe to press ahead with export ban on raw platinum

2013-11-22 13:06

Zimbabwe, the world’s number three platinum producer, is determined to ban exports of raw platinum and force firms to refine locally, says the new mines minister.

“We are determined to ensure that a refinery is put up in Zimbabwe,” said minister Walter Chidakwa yesterday during a visit to Johannesburg.

“Once you put up a refinery, surely we must put a law that says we do not want our platinum to be exported as raw. We want our minerals value-added.”

Cash-strapped Zimbabwe is increasingly looking to the mining sector to help solve its liquidity shortage, which economists say has worsened since the July elections which were won by veteran leader Robert Mugabe.

The greyish mineral used in the motor industry and in jewellery production, is shipped out of the country in raw blocks for refining in South Africa, the world’s largest platinum maker.

President Mugabe last week warned that he would halt platinum exports if mining companies refused to build a refinery.

Platinum miners had been issued an ultimatum by the former power-sharing government to set up a refinery, but that deadline has already passed.

Chidakwa said platinum producers operated by South African-based Anglo-American Platinum, Impala Platinum and Aquarius Platinum, argued that they have yet to reach the minimum production threshold of 500 000 ounces that justify the creation of a refinery.

The affiliates of the three companies produced about 347 000 ounces last year and are expected to produce about 400 000 ounces in 2013.

Chidakwa shot down that argument as “academic”.

“It is something else that drives them not to go that route, but we are determined. We will be announcing measures on what we will do to ensure that a refinery is set up.”

South African mining expert Peter Major estimates that it will take about $500 million (R5 billion) to construct a refinery, suggesting it would be “a huge waste of money”.

“You could add thousands of jobs building mines with that money,” said Major.

Accounting for 6% of global output, Zimbabwe is the third-largest producer of platinum after South Africa and Russia, and has the second-largest known reserves after South Africa, according to the Chamber of Mines.

With labour unrest curbing South African production, many see an opportunity for Zimbabwe to become a bigger player. But electricity cuts, corruption and economic uncertainty remain a problem.

Chidakwa said Zimbabwe would, in the “next five to 10 years enjoy reasonable stability on the market”, and start to claim a bigger role in the global platinum market.

Chidakwa was a former investment chief who was appointed mines minister after the disputed July general elections.

Mugabe has described the mining sector, which has overtaken others like agriculture as the “centrepiece” of economic recovery. The sector’s share of GDP has nearly doubled from an average 10% in the 1990s to nearly 20%.

Last year alone, mineral exports accounted for 64% of total exports, led by platinum, followed by gold and then diamonds, according to the African Development Bank.

“We look at the mining sector as one that will resolve the liquidity crunch issues ... as one that will reintroduce short-term funding,” said Chidakwa, speaking on the sidelines of the annual general assembly of the Kimberley Process, the diamond trade regulator.

Takunda Mugaga, a researcher with think tank Econometer Global Capital, said it was a “correct perception” that liquidity has come under strain since the elections that kept 89-year-old Mugabe in power.

Imports of the staple maize meal to cover food shortages have increased the pressure on money supply, said Mugaga.

The new minister is also looking at overhauling the Mines and Minerals Act which has been used to regulate the industry for the past 52 years.

“We are taking a look at the entire piece of legislation. We want to make it current, (and to) include the issues of value addition,” said Chidakwa who plans to submit Cabinet proposals to Parliament by early next year.

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