IMPALA Platinum (Implats) is seeking a meeting with Zimbabwe president Emmerson Mnangagwa to discuss foreign exchange retention rules that make it increasingly difficult for the miner to invest in the southern African country.
The Reserve Bank of Zimbabwe recently increased the amount of dollar receipts it retains which potentially increases the cost of goods and services that have to be procured in the local currency.
“We are concerned about the need for increased access to forex by the Zimbabwean government. It is something that needs to be discussed between our company and the government,” said Nico Muller, CEO of Implats.
“It is something that is on the agenda for us to have a discussion with the finance minister [Mthuli Ncube] as well as the principle [Mnangagwe]. It is not something I want to scrub under the carpet.”
Implats’ 85% owned Zimplats borrowed money in order to pay for capital goods because the cash it was receiving from the dollar receipts fell short, said Meroonisha Kerber, Implats CFO in a presentation of the firm’s interim results on Thursday.
“From an efficiency point of view it makes sense to borrow there [in Zimbabwe] as well as from a discipline perspective because, as we have said, all our operations have to fund all of their own capital,” she said.
Implats said earlier today that it was assessing its portfolio in the event poor platinum group metal prices persisted. Muller identified the firm’s Canadian mine Lac des Iles (Impala Canada) and Marula as the most vulnerable assets.
Lac des Iles would be run down as the firm had last year targeted its high margin ounces, reducing its reserve life. Regarding Marula, a decision has to be made in two years regarding a second phase expansion which would access up to 24 years of reserves. It first, however, had to become cash flow positive, said Muller.
Muller said most of the cost cuts, including job losses, had been done with little now to reduce in overall corporate overheads. “We are now at portfolio decisions,” he said. There were several shafts in the firm’s flagship Rustenburg division that were also “sailing close to the wind”, he told media earlier in the day.
Implats has invested heavily in the processing capacity of its Zimplats. Said Muller: “We have always been positive about our investment orientation with regards to Zimbabwe. We do believe the Great Dyke offers the best available resource out there.
“We have had a very constructive, healthy, long-standing relationship with the government and that has not necessarily changed.”
