Mwana Africa may process Im­plats’ Zim con­cen­trate

Finweek English Edition - - INSIDE - david@min­

UK-l isted min­ing com­pany Mwana Africa is hop­ing $26m in plans to restart its nickel smelter in Zim­babwe will dove­tail with the govern­ment’s am­bi­tion to have plat­inum group metals (PGM) smelted and re­fined in the South­ern African coun­try.

The Zim­bab­wean govern­ment has been ap­ply­ing pres­sure to Im­pala Plat­inum, An­glo Amer­i­can Plat­inum and Aquar­ius Plat­inum that they no longer ex­port con­cen­trate from the coun­try to SA, pro­duc­ing the metal in Zim­babwe in­stead. The fact of the mat­ter is that smelted PGMs sell for more than the raw con­cen­trate that is cur­rently ex­ported to SA from Zim­babwe.

As a re­sult, Pres­i­dent Robert Mu­gabe’s govern­ment has been threat­en­ing a num­ber of puni­tive mea­sures aimed at dis­in­cen­tivis­ing ex­ports, but there have been con­cerns among the plat­inum pro­duc­ers that the cap­i­tal re­quired to build a smelter can­not be sup­ported by lo­cal pro­duc­tion. This is where Mwana Africa fits in.

Kalaa Mpinga, CEO of Mwana and a for­mer se­nior man­ager at An­glo Amer­i­can, said that the com­pany’s smelter, which has been in moth­balls, could be adapted to re­fine Zim­babwe PGM con­cen­trate. “The fur­nace we have is sim­i­lar to plat­inum-belt fur­naces in SA,” said Mpinga. “We do have ca­pac­ity to smelter PGMs if we had a long-term con­tract.”

So could Mwana Africa one day smelt con­cen­trate pro­duced by Im­plats? “Cer­tainly that’s one of the op­tions,” said Mpinga. He first, how­ever, must worry about rais­ing the $26m to restart the fur­nace. Nickel is a PGM by-prod­uct, so tech­ni­cally, ac­cept­ing PGMs is highly doable. Of the $26m in out­lay, how­ever, half must be debt fi­nanced which is where the prob­lem comes in.

“The sin­gle big­gest chal­lenge to op­er­at­ing in Zim­babwe is liq­uid­ity,” said Mpinga. “The pool of money is very limited. And when you do raise money it is al­ways very ex­pen­sive,” he said, al­lud­ing to in­ter­est rates of over 15%.

The prob­lem is the po­lit­i­cal risk at­tached to op­er­at­ing in Zim­babwe where reg­u­la­tions seem to change at the will of govern­ment of­fi­cials – a risk that Mpinga said had been com­pletely overblown. “When you go to a pub for a drink, there is al­ways lots of noise. But the noise doesn’t stop you from hav­ing that drink,” he says of the fact that Mwana has been op­er­at­ing in Zim­babwe for more than a decade.

Well, not quite ‘op­er­at­ing’. The com­pany re­cently posted a $100m turn­around in bot­tom line for­tunes to a $50m ful­lyear profit, but only af­ter hav­ing re­opened its Tro­jan nickel mine, held in sub­sidiary Bin­dura Nickel Com­pany where it had been in moth­balls. Freda Re­becca, its gold mine, has been a re­li­able op­er­a­tor, whereas its Klip­springer di­a­mond mine in SA has also been shut fol­low­ing f lash f loods two years ago.

Mwana Africa’s Tro­jan mine was re­cently re­opened. The mine is held in Bin­dura Nickel Com­pany, a sub­sidiary.

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