Platinum miners hit hard times
PLATINUM prices on the international market have hit new lows, falling below US$1 000 per ounce for the first time since 2009.
This has left Zimbabwe’s platinum miners in a fix, especially in the face of soaring costs.
At the London Metal Exchange, the bearish outlook has caused sellers to lose faith in the metal, resulting in prices falling to a low of US$968 per ounce.
Zimbabwe has the world’s second largest platinum resources estimated at 2,8 billion tonnes of platinum group metals (PGMs) ore.
Three mines are engaged in the production of PGMs and associated metals from the Great Dyke namely the Zimbabwe Platinum Mines (Zimplats), Mimosa and Unki Mine.
Zimplats, a subsidiary of Impala Holdings Limited, is the largest platinum producer owning three underground mines with a fourth under development, two contractors at Ngezi as well as a concentrator and smelter, located at Selous, approximately 70 kilometres south of Harare.
It sells white matte (a concentrate of metals), which primarily consists of platinum, palladium, rhodium, gold and nickel.
Analysts say the fall in prices was a result of the resumption of production of the metal in South Africa, where miners had stopped production following an unprecedented strike last year, which kept the Rustenburg platinum mines closed for a very long period.
Other analysts say Chinese jewellery consumption has softened while others point to the slowdown in the global car industry, which uses the metal in catalytic converters.
At its peak, platinum, reached its highest price early 2012 at US$145 but after the collapse of the Lehman Brothers — once United States’ fourth largest bank, in 2008 and the start of the global crisis, there was panic over the industrial outlook of metals such as platinum.
A fortnight ago, the Financial Gazette reported that export earnings for Zimbabwe’s mining sector plummeted by 17 percent in the first quarter of this first year due to falling prices on international markets.
This comes at a time when government, in its economic blueprint called the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, has identified mining as the pillar of economic revival.
Mines and Mining Development deputy minister, Fred Moyo, indicated that falling commodity prices were beginning to be felt locally, saying PGMs were the most affected.
His sentiments were backed by Hanre Rossouw, a fund manager with Investec of South Africa, who said platinum prices were likely to fall further.
At the time of the interview, platinum prices were at US$1 200 an ounce.
“If platinum slides to below US$1 000 an ounce, which is likely, nearly two thirds of the industry could be under water,” said Rossouw.
The outlook could be bleaker for the mining industry which is strategic to the Zimbabwean economy.
Despite this, mining remains the highest foreign currency earner, accounting for about 45 percent of the country’s export earnings.
It contributes more than US$3 billion to the gross domestic product.
Precious metals such as gold, has also hit an eight months low and palladium is also at its lowest since 2012.
Over the last few weeks, gold prices have steadily fallen from above US$1 200 per ounce to below US$1 160 per ounce.