Zim rains on plat­inum

Any­thing could hap­pen for Im­pala Plat­inum

Finweek English Edition - - Companies & markets - DAVID MCKAY

SOUTH AFRICAN PLAT­INUM pro­duc­ers say they’ll take a prag­matic approach to con­tin­u­ing prob­lems in Zim­babwe, even though bil­lions of rand have been pledged for in­vest­ment there. “Zim is a place you take one month at a time, one quar­ter at a time,” says Stu­art Murray, Aquar­ius Plat­inum CEO. “There’s no point in sce­nario plan­ning.”

What’s quite ex­tra­or­di­nary is that the dearth of plat­inum sup­plies has forced Im­pala, An­glo Plat­inum and Aquar­ius Plat­inum to in­vest in Zim­babwe, whereas sim­i­lar in­vest­ments else­where – such as the Demo­cratic Repub­lic of Congo, which is now emerg­ing from a pe­riod of civil strife – would be deemed fool­hardy.

Aquar­ius has a 50% stake in Mi­mosa, a small, highly prof­itable plat­inum com­pany in Zim­babwe. About US$23m will be spent be­tween Aquar­ius and its part­ner, Im­pala, ex­pand­ing the mine.

But Im­pala’s far greater Zim­bab­wean ex­po­sure is through its 86,9% held Zim­plats. It’s to in­vest $258m de­vel­op­ing two un­der­ground mines at Ngezi in Zim­babwe. The de­ci­sion to build the mines came af­ter Im­pala signed an em­pow­er­ment deal with the Zim­bab­wean gov­ern­ment. In essence, Im­pala sold a third of its re­sources for around 30% em­pow­er­ment cred­its.

The bomb­shell is that the Zim­bab­wean gov­ern­ment is ask­ing for 51% em­pow­er­ment and wants for­eign inves- tors to al­low it to nom­i­nate suit­able part­ners. The sit­u­a­tion is po­ten­tially night­mar­ish but could change if spec­u­la­tion con­cern­ing Pres­i­dent Robert Mu­gabe’s pos­si­ble demise is to be be­lieved.

A re­port in Lon­don’s Sun­day Times (18 March) said Zim­babwe’s for­mer army chief Solomon Mu­juru was threat­en­ing to oust Mu­gabe. The In­ter­na­tional Mone­tary Fund has also turned up the heat on Mu­gabe, say­ing that the coun­try’s par­lous eco­nomic state must be solved or in­fla­tion could reach 5 000% by year-end.

Where that puts the in­di­geni­sa­tion plan is any­one’s guess. David Brown, CEO of Im­pala Plat­inum, says agree­ments have to be hon­oured but Aquar­ius is largely un­com­mit­ted on its em­pow­er­ment plans in Zim­babwe. “We don’t think the pow­ers are at one on in­di­geni­sa­tion,” Brown says. “And in the ab­sence of proper leg­is­la­tion you’re just shoot­ing in the dark. Ob­vi­ously, we’ll com­ply with any laws en­acted by a sov­er­eign state.”

Mean­while, Brown is pre­par­ing to “spring” em­ploy­ees from Zim­babwe if the coun­try be­comes more dan­ger­ous. “Quite clearly, the sit­u­a­tion is volatile. Our fo­cus will be on the safety of our em­ploy­ees. Our other con­cerns are quite stan­dard: we want to en­sure we can sup­ply wa­ter, food, elec­tric­ity… those kind of el­e­ments.”

Tak­ing it one month at a time. Stu­art Murray

Pre­par­ing to “spring” em­ploy­ees. David Brown

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