SA woes create opportunity for Zim's platinum mines – Imara

Challenges within South Africa's platinum industry present Zimbabwe with an unprecedented opportunity, but a policy change in Harare may be necessary to get one up on the problem-afflicted industry south of the Limpopo.

The assessment comes for pan-African financial services group Imara and Bruce Williamson, manager of the Imara African Resources Fund.

He points out that many platinum miners in South Africa confront challenges of heat, rock pressure and long travelling times. Those who raced to bring new projects on stream have found progress slower than expected.

In the coming years, the rising cost of water may also create potential difficulties.

What's more, he said, "safety-related work stoppages enforced by government are severely impacting production while sporadic mine violence further impacts production".

South Africa is the world's major platinum-producing region, added Williamson, but confidence was being eroded, creating a window of opportunity for Zimbabwe.   

He explained: "If the Zimbabwean authorities were wise to the opportunity, they could adjust indigenisation policy and immediately accept a 10% free-carry equity shareholding in Zimplats, Mimosa, Unke and other mining companies.

"This would allow Zimbabwean miners to expand while South African miners focused on platinum group metals (PGMs) are battling."

In Williamson's view, the global market would then gain confidence in Zimbabwean equity and spot the huge growth potential and low cost of production, resulting in significant equity uplift over the next few years.

He added: "The end-result of this scenario is that the Zimbabwean government's 10% shareholding under an investor-friendly environment would probably be worth the 50% they are demanding under an unfriendly investor environment.

"But they need to do this now while South African PGM players are in disarray."