Impala must improve on 2006 Zim deal


[] — IMPALA Platinum is in negotiations with the Zimbabwean government about how to top up an agreement signed in 2006 in which the South African firm released 36% of some 140.8 million ounces in reserves, a condition it captured in the Release of Ground agreement.

David Brown, CEO of Impala, confirmed negotiations were underway. “The intention was always to improve on the Release of Ground agreement. We hadn’t put any equity in,’ he said of the original agreement. He declined to provide details of the talks. “Obviously, they are very sensitive,’ he said.

Impala announced earlier on Thursday that the Zimbabwean government had not cancelled its mining permit, but that it had receipt of a letter from government informing it its indigenisation plans were not compliant with legislation.

In terms of the Release of Ground Agreement, signed with Robert Mugabe’s government when David Brown was Impala’s financial director and Keith Rumble its CEO, Impala would through its subsidiary, Zimplats, release some 51 million ounces of platinum or 99 million ounces of 4E [platinum, palladium, rhodium and gold].

Impala said in an announcement to the JSE at the time that the release of those mineral reserves was outside the group’s long-term expansion programme which was then of some 1 million platinum ounces over a fifty year life of mine.

In return, Zimplats was to be awarded an empowerment and cash credit of $153m for release of the mineral bearing ground. It will be interesting to see if the Zimbabwean government makes good on this contracted pledge.

The agreement also provided for all remaining claims retained for the long term expansion to be incorporated into the special mining lease regime that applied to Zimplats’ current operations.

Impala said in subsequent public announcements that it hoped to make up the balance of the Zimbabwean government’s indigenisation plan – which even then was for 51% – with other actions earning empowerment credits, such as socio-economic improvements.

In an interview with Bloomberg News today, Zimplats deputy chairman Muchadeyi Masunda said he held “constructive’ talks with Empowerment and Indigenisation minister Saviour Kasukuwere.

“We agree that it’s not possible and not in anyone’s interests to stop operations at Zimplats,’ Masunda told Bloomberg. “We have never said we are opposed to empowerment, but what we need is clarity on a given policy and predictability on the policy,’ he said.

Platinum deficit

Any interruptions in production at Zimplats would, at least, have one unintended positive spinoff in helping to lessen the chance of an oversupply of platinum group metals. This is in the face of a global recession which would lower demand for platinum, especially in the automotive sector. Fears regarding the impact of a recession has seen South African platinum stocks hit hard in recent weeks.

Bloomberg News, citing Walter de Wet, head of commodity research at Standard Bank, reported: “Lost supply from Zimplats could be the difference between a platinum market remaining in deficit next year and a possible surplus’.

De Wet forecast a 75,000 ounce shortage of platinum in 2012 but the bank recognises “real risk’ of excess supply if the US and European economies go into recession, Bloomberg News reported.