Financial Gazette (Harare)
Shame Makoshori
27 September 2008
Harare — PLATINUM producer Zimplats Holdings has said it will increase output at its Zimbabwean operations despite concerns over lack of acknowledgement of the company's commitment to the country's economy.
Chairman Mike Houston said despite the escalating economic crisis in the country, output was set to increase by 90 percent next year.
Zimplats is a member of South Africa's Impala Group of Companies and holds approximately two thirds of the Hartley Complex, which is the largest of the platinum hosting centres in Zimbabwe's mineral rich Great Dyke region.
Zimplats reported an attributable profit of US$124 million last year.
"Zimplats will achieve a major milestone in the last quarter of financial year 2009 with production increasing by 90 percent," Houston said in the company's annual report 2008 published last week.
"The company will then have the capacity to produce 180 000 oz of platinum on an annual basis. The US$340 million capital cost of this expansion has been internally supported by a US$80 million loan."
Houston said processing operations had a satisfactory production year.
Tonnes milled hit the 2,2 million mark, 3 percent above financial year 2007.
However, this increased throughput was offset by a disappointing drop in the mill grade, he said. Houston added: "Shareholders have forfeited dividends since the commencement of operations in support of this longer term growth strategy.
"I mention the above because it is a clear reflection of Zimplats proven track record in meeting its investment commitments in Zimbabwe and it is of concern to your board that despite these efforts the company is not given the credit it deserves by certain sectors in government".
He did not mention which government arms had undermined the group's operations.
However, in the past the mining house clashed with government over withholding tax, and corporate tax payments.
The latest clash came after an audit by Alex Stewart International, which unearthed various irregularities in corporate tax computations.
Zimplats has refuted the report.
But despite the perennial resentment, major expansion projects have been lined up.
These include the Ngezi Phase 1 expansion that Houston reported "remains generally on schedule and within the approved cost budget...despite the very difficult environment prevailing in Zimbabwe".
"The fluidity of the situation in Zimbabwe and the daily uncertainties faced should not be underestimated and the possibility of material cost increases cannot be ruled out," he told shareholders in the report.
"Your management team will be severely tested in achieving the results one would normally expect in the current market".
He said in line with the company's mining strategy, Zimplats it had continued to expand its lower cost underground operations, which will eventually replace the opencast production.
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