Platinum exports row a 'storm in a teacup'?

The threat by Zimbabwe president Robert Mugabe to ban exports of raw platinum to South Africa has platinum producers and exporters scrambling to deal with the consequences. There are concerns that the threat – made at an ‘informal’ Zanu-PF meeting – could compromise international trade relations, cause job losses and lead to a general lack optimism about Zimbabwe’s global investment future. Zimbabwean economist, John Robertson, was quoted by AllAfrica.com as saying that the threat would serve only to further discourage investment in Zimbabwe while placing current investors on high alert. But how realistic is this threat? Those FTW spoke to – mostly off the record due to sensitivities around the issue – seem to believe that a mere sound byte by the president, spoken at an informal meeting has caused controversy and panic when the smelter refinery Mugabe is allegedly trying to force producers to create by this threat is a long way off. In his controversial statement, Mugabe allegedly gave a deadline of two years for the establishment of a refinery. FTW has learnt that the Platinum Producers Committee – a sub-committee of the Chamber of Mines in Zimbabwe – has been conducting a feasibility study on the further processing of raw platinum for “some time now” and is engaging with relevant government departments in Zimbabwe. A spokesperson for the Chamber says this study is “still very much in progress and under discussion with relevant stakeholders.” Stakeholders include Anglo American Platinum, Impala Platinum Holdings and Aquarius Platinum, according to the Chamber. MiningMx reports that it will cost US$2 billion to build a platinum refinery in Zimbabwe but a platinum producer FTW spoke to says the figure would be closer to US$5 billion as it would require increased power and other supporting infrastructure such as a road network to make it feasible. At least U$200-$500m in funding is needed just to ensure adequate power supply, the Harare-based Chamber of Mines said in a report obtained by Bloomberg News last month. “And how realistic is it that Zimbabwe will get the funding for this when there are so many other more pressing needs?” asked one exporter. He added that raw mining materials, including platinum, could be processed very “costeffectively” almost anywhere in the world, including South Africa. “So, can the exorbitant investment that is needed be justified?” he asked. Statistics on the Chamber of Mines website indicated that in 2012, Zimbabwe produced 350 000 ounces of unrefined platinum – 6% of the world’s total production. “The minimum requirement to justify the creation of a refinery is 500 000 ounces,” a Chamber report states. Though the Chamber of Mines says Zimbabwe has the largest platinum reserves in the world, after South Africa, another producer told FTW that while platinum production volumes might increase within the two-year deadline, the demands of the country’s indigenisation policy has held production back for two main platinum producers in the country in the past. “With this policy hanging over our heads, it is harder to raise the money to fund increased production.” A transport operator who specialises in crossborder mining and mineral transport and has an office in Zimbabwe told FTW that there seemed to be overall government commitment to getting the economy growing in the country. “It’s therefore a pity that the remark made by the president has received such widespread global coverage as the threat may never come to fruition but the damage has been done.” INSERT & CAPTION Let us close our doors immediately and no raw platinum will go to South Africa. – President Robert Mugabe