The price of platinum group metals (PGMs) has been on a downward trend over the past 2 years, putting pressure on mining companies such as Zimplats and Mimosa and even those in development phase such as Karo Resources.

It is expected that the prices will remain under pressure but stability is also on the horizon in the current year. Will this glimmer of light, breathe life into the much anticipated and one of the largest PGMs project in Zimbabwe in over 2 decades.

Karo Resources is a Zimbabwe mining company focused on the exploration and development of minerals including platinum group metals. Its US$50 million bond is listed on the VFEX while its parent company Tharisa is listed on the JSE.

The mine development comprise the development of four open pits sequentially. The first pit to be developed is KPSE, with a strike length of 7.6 km and to an ultimate pit depth of 99 m. The first pit has a LOM of 6 years. Thereafter KPSW and KPE will be developed, and finally KPE will be developed.

Karo developed a concentrator plant with a throughput of 205 ktpm and a phase 1 annualised output of 190 thousand ounces.

A slowdown in the global economy, delays in obtaining necessary permits, approvals for the company’s mining operations and the political, economic challenges in Zimbabwe have militated to slow down the project.

The decline in PGM prices has been a significant challenge for Karo, as it impacted the company's ability to-raise capital and finance its operations, particularly from parent Tharisa.

As of 2023, the PGM industry faced several global factors that affected market dynamics, fluctuating demand from major consumer industries, geopolitical tensions impacting supply chains, and the emergence of alternative technologies all contributed to significant shifts in PGM prices and market conditions.

In the preceding year, PGM prices experienced volatility due to various factors, including geopolitical tensions impacting supply from major producing regions, such as South Africa and Russia. 

The ongoing global transition towards electric vehicles and renewable energy technologies also affected the demand for PGMs, with a particular emphasis on palladium which is essential for catalytic converters,these market dynamics had a direct impact on companies like Karo, influencing their prospects for growth and profitability.

The local environment has not made it any better as volatility remains at an escalated scale. The resultant delays in production will likely push upwards the initial proposed USD$391m for starting the mine.

Processing of PGMs in Zimbabwe is equally subjected to stringent regulations and lengthy permit processes, which hampers the pace of investment in primary production.

The rise of lithium as a viable alternative in battery technology, coupled with China's shift from platinum to lithium, may present challenges for Karo in terms of market demand for PGMs.

Looking ahead to 2024, a redress in external challenges such as PGM prices will be crucial for Karo to start scaled production at sustainable level.