Home » Industry » Implats Stops Mimosa Expansion Over 15 Percent Levy

IMPALA Platinum Holdings, the world’s second-largest producer, said it shelved a US$70 million expansion of its Mimosa venture with Aquarius Platinum after Zimbabwe imposed a 15 percent levy on exports.

The duty, which came into effect on Jan. 1, “is going to hit us extremely hard,” Impala Chief Executive Officer Terence Goodlace told reporters on Thursday. With prices of platinum near a 5 12-year low, “the whole business could be at risk,” he said.

Mimosa produced 59,100 platinum ounces in the six months through December, Johannesburg-based Impala said in a statement.

Its Zimplats unit, which is Zimbabwe’s largest producer of the metal, won’t be affected by the levy as it doesn’t export unprocessed ore, the company said.

Over the past year, President Robert Mugabe’s administration has raised or imposed taxes on everything from mines to water in a bid to increase revenue to pay government workers.

Their salaries account for about 88 percent of state spending. Zimbabwe has the world’s largest known platinum reserves after South Africa.

The expansion would have increased Mimosa’s output by 30 percent even though the operation’s current lifespan of at least 10 years would be reduced, Goodlace said.

“The strategy for this asset is to maintain operations and shelve all potential expansions, which would have enhanced production, profitability and job creation possibilities,” Impala said in a separate statement.

Impala will raise output at Zimplats to 260,000 platinum ounces as it redevelops the Bimha mine that closed last year after an underground collapse. The unit produced 102,400 ounces platinum in matte, which still contains other metals, in the six months ended December, Impala said.

“The sustainability of operations at these levels is contingent upon platinum group metal market prices, power supply and regulatory certainty,” the company said.

Platinum for immediate delivery fell to $1,155.50 an ounce on Feb. 24, the lowest since July 2009. Impala expects prices to remain close to this level until the middle of 2016, Goodlace said.

Source : New Zimbabwe