Zimbabwe: Forex Woes Cripple Mimosa

Zvishavane-based platinum miner, Mimosa Mining Company (Mimosa) says the foreign currency retention threshold for miners is not ideal as the business requires more money to acquire imported raw materials.

The retention thresholds gazetted by the Reserve Bank of Zimbabwe (RBZ) on June 24 were placed at 55% for the producers.

Miners are advocating for 100% retention in order to cover production costs.

"It is certainly not the most ideal because we really need foreign currency for our business," said Mimosa MD Fungai Makoni in an interview with standardbusiness..

"The business largely depends on the inputs imported like machines, equipment, spares amongst others.

"We are already engaging the central bank through the Ministry of Mines, where we feel there could be better retention to support the mining industry."

The central bank early this year set up the interbank market to facilitate forex trading, but the system has not solved the currency shortages.

Makoni said the platinum mine requires at most US$40million per year for its operations and imports.

"At hand our capital expenditure is in the range of US$30 million to $40 million per year so we need more in terms of retention to be able to support that level of business," he added.

Mimosa exports non-refined ore (concentrate), a product of the floatation circuit.

"The next stage after the floatation circuit will be smelting where you send that concentrate through a heat process and then you have a mat coming out of that," Makoni said.

"That mat is what we put in the special metal refinery funnels where we then get the final product. We are not doing that at this point in time."

Makoni said when prices are low the ability to invest in capital projects and to run the business effectively becomes difficult.

According to the Market Insider, global platinum prices fell from US$1 090 per troy ounce (oz)in 2018 to US$836,32/oz in July 2019 and as of Thursday last week, they went up slightly to US$929/oz.

Zimbabwe is targeting a fourfold increase in revenue from minerals by 2023 according to an ambitious plan unveiled last month.

Platinum exports are projected to grow to $3 billion and gold exports are expected to grow to $4 billion through "value addition, enhanced investment within the sector, increased productivity and employment creation and increased exports and foreign-currency generation."

Makoni said for the mining industry to make profits, in the current economic situation it needs the ability to manage costs and capital efficiently.

Mimosa is jointly owned by South Africa based multinational Mining Corporation Impala Platinum and Sibanye, who have a 50% stake apiece.

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