Mwana Africa may process Implats’ Zim concentrate
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.