- Zimplats has records stable quarter-on-quarter growth in third quarter of 2024 after recording its first loss in over 15 years in HY
- Mining and milled volumes increase by 9% and 7% on a year-on-year basis.
- Challenges and potential net loss pose concerns for upcoming final quarter, impacting tax contributions and the country's new currency
Harare- Zimplats Holdings Limited, the largest corporate entity in Zimbabwe, has reported stable quarter-on-quarter growth during the third quarter ended in March 2024. Mining volumes were unchanged quarter-on-quarter while miled volumes went up by 3%.
On a year-on-year basis, mining and milled volumes increased by 9% and 7% respectively. The increase in mined volumes was attributed to the ongoing pillar reclamation operations at Rukodzi Mine and the continued ramp-up of production from the under-development Mupani Mine.
These pillar reclamation activities also resulted in a 2% increase in the 6E head grade compared to the previous year. However, there was a 1% reduction in grade from the previous quarter due to a higher contribution of lower-grade Mupani Mine development ore and dilution from mining across geological structures.
The scheduled maintenance of the mills at the Selous Metallurgical Complex (SMC) was postponed until the fourth quarter of FY2024. During this period, the milling rates and running time improved due to increased ore supply.
The recoveries of concentrate remained steady compared to the previous quarter but increased by 5% compared to the same quarter last year. As a result, the volume of 6E minerals in concentrate produced saw a 2% increase compared to the previous quarter and a 14% increase compared to the same period last year.
6E metal content in the final product showed a year-on-year improvement of 12% and was 1% higher than the previous quarter.
It is important to note that despite the gradual increase in performance, particularly on a quarter-on-quarter basis, it may be challenging for Zimplats to overturn a net loss in the upcoming full year to June when the corporate concludes its fiscal year.
In the first half of the year, the company recorded a loss of US$8.8 million, its first loss in over 15 years. Given this below-average performance and the net loss of eight million in the six months accompanied by poor PGMs prices which are all down by at least 20% year-on-year, it is likely that the company will again report below-average results for the fiscal year ending in June 2024, unless there is a significant miraculous turnaround.
Zimplats is not the only company affected by these challenging conditions. Even the three largest platinum group metals (PGMs) corporations, namely Amplats, Implats (the parent company of Zimplats), and Sibanye Stillwater, have undergone restructuring processes, including staff reductions and mine closures, to weather the storms. In the country, Unki Mine and Mimosa are suffering the same fate.
However, the challenges faced by Zimplats should not be taken lightly, as it is the largest corporate contributor to the national fiscus through tax revenues. At its peak, Zimplats contributed US$258 million in 2021, which remains a record in terms of tax revenue.
In 2021, it accounted for 6% of the total revenues collected by the Zimbabwe Revenue Authority (ZIMRA). Based on its performance in the first half of 2024, Zimplats' projected full-year tax contribution would be around US$50 million, representing an 81% decrease from the peak contribution in 2021.
This is a significant blow to the country, particularly considering that Zimbabwe has just launched a new currency that needs to be backed by US dollar reserves.
Global platinum prices have declined from a peak of US$1115 per troy ounce in May 2023 to $970 per troy ounce in May 2024. The same downward trend can be seen in palladium, which is down 34% year-on-year, and rhodium, which has experienced a 42% decrease.
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