Amplats pushes for forex policy rethink
ANGLO American Platinum (Amplats) said this week it had started engaging the government of Zimbabwe to rethink a recent decision to hike the amount of foreign currency that mines and other exporters surrender to the central bank.
Amplats’ push follows the Reserve Bank of Zimbabwe’s decision last month to hike to 40% exporters retention thresholds, from 30% previously, which is says will inflict fresh blows to an industry that has already been battling to overcome a sea of headwinds.
The 40% is paid out to exporters in Zimbabwe dollars at the ruling official exchange rate.
The Johannesburg listed resources outfit controls Unki Mine in Zimbabwe, one of the country’s three operating platinum firms.
On Tuesday, Amplats said most of the mining industry’s overheads were paid in United States dollars.
To save mining firms, they would require more foreign currency flowing into their coffers, the statement said.
“With most taxes and key inputs such as electricity being payable in USD, most miners will not have enough foreign currency available to fund operational requirements,” Amplats said in its earnings report for 2020.
“Whilst it is too early to tell the full impact of the reduced retention levels, to date, Unki continues to meet its obligations to supplier and production has not yet been impacted. We continue to engage the Zimbabwean authorities on these matters,” the report said, warning the country to stick to policies that improve certainty.
This was in apparent reference to government’s attempt last month to include all minerals under an empowerment clause that restricts foreign shareholders to a maximum of 51%.
Government has since backtracked on the policy, but after sending shock waves and confusion among investors.
At Unki, platinum group metals (PGM) output for 2020 fell by 3% to 196 100 PGM ounces from 2019’s 201 700 PGM ounces due to disruptions caused by Covid-19 induced blanket lockdowns.
Unki reduced production after government announced its first lockdown on March 28 last year, although mines were then allowed to return to production in April. Amplats became the second big voice to warn Zimbabwe about the ramifications of its controversial surrender requirements.
In January, the Chamber of Mines of Zimbabwe (CoMZ) that the decision would push companies into viability problems.
Mining is one of Zimbabwe’s key industries, generating about US$2 billion per annum, with projections to increase this to US$12 billion by 2023.
The industry accounts for 70% of the country’s export receipts.
“On average, 60% of gross export proceeds are now taken by government departments and agencies, leaving inadequate forex resources for the mining firms to sustain operations,” the CoMZ said.