[miningmx.com] — IMPALA Platinum (Implats) CEO David Brown remained confident a workable solution regarding the indigenisation equity requirements for Zimplats would be found.
That’s despite the rising level of rhetoric over the last month from various Zimbabwean politicians which culminated in the rejection on August 17 of Zimplats’ empowerment proposals.
Zimplats was instructed by Zimbabwe’s Indigenisation and Economic Empowerment Minister – Saviour Kasukuwere – to submit a revised plan within 14 days.
Kasukuwere is demanding a 51% indigenisation equity stake in Zimplats but Implats believes that equity stake should be around 26%.
The Implats proposed stake is calculated after taking into account previously agreed benefits from the return of mining ground to the State and investments by Implats in the country’s infrastructure.
“We have no objection to the principle of equity ownership as we have already demonstrated in our compliance with the South African mining charter,” said Brown.
“Our preferred route regarding equity ownership is the involvement of our staff and the communities we operate in.”
Interviewed after the presentation of Implats results for the year to end-June in Johannesburg on Thursday, Brown told Miningmx “this is political rhetoric intended to put pressure on Zimplats.
“I understand that – it’s part of the rules of engagement – but from my perspective I must make sure that whatever deal we do is sustainable and takes into account the balance required between risk and return.
“I have the impression that the Zimbabwe government does not want to retard investment in the country nor the growth of the country’s mining sector.
“We do have previous agreements struck with the Zimbabwe government and those agreements should be honoured to preserve Zimbabwe’s reputation as an investment destination.”
Zimplats returned to the government portions of mining ground previously allocated to it in order to secure the title to its present mining lease area.
That ground was re-allocated by the Zimbabwean government to Russian and Chinese investors who have, so far, carried out minimal development on it over the past five years.
During question time at the presentation Brown rejected the suggestion from one analyst that the Zimbabwe government was unhappy with this deal because the ground returned was not good mining ground.
“We have heard those rumours and they are coming from people intent on making mischief,” Brown told Miningmx. “I also deny the rumour that the Zimbabwean government has offered this ground back to Zimplats.
“That ground can be mined through open pit methods. If the Zimbabwe government wants us to help mine that property through a joint venture agreement we are open to having that conversation.
“I would not be prepared to do that if I thought the ground was worthless. The point is that it takes significant capital and long lead times to establish a platinum mine.
“You cannot just get in there with a bucket and shovel and start mining over a weekend. I would hope the Zimbabwe government realises that we have been serious deliverers to the country.
“We have ploughed money into the development of the Zimplats operation and into Zimbabwe. Zimplats’ shareholders have not had a dividend payment in 10 years.’
FULL PRODUCTION RATE
Brown said the investment in Zimplats held huge potential benefits for Implats if things worked out and Zimplats could build up to its potential full production rate of one million ounces of platinum annually from the current level of 180,000oz/year.
“That expansion would be both cost-effective and highly profitable given the lower operating costs in Zimbabwe,” he said. “It would put Implats in very strong contention for the number one slot in the platinum industry.”
Asked what would happen if the Zimbabwe government actually carried out its threats and nationalised Zimplats, Brown replied, “I don’t think we are going to get there.
“My experience over the past ten years of operating in Zimbabwe has been highly positive. This is a country that is well worth investing in and has a wonderful workforce.”
– The writer owns shares in Impala Platinum
