• Profit After Tax Drops 96%: Zimplats' earnings fall to US$8.2 million from US$205.5 million
• Revenue Takes a Hit:  20% decline in revenue to US$767.1 million from US$962.3 million Foreign
• Exchange Losses Surge: Increased to US$35.8 million from US$17.2 million

Harare- Zimbabwe's largest corporate entity, Zimbabwe Platinum (Zimplats), has reported a significant decline in earnings for the financial year ended 30 June 2023 attributed to a confluence of factors, including depressed global metal prices and a domestic tax environment perceived as unfavorable to mining interests.

Despite achieving a 5% increase in mined ore to 7.9 million tonnes (FY2023: 7.6 million tonnes) due to increased production volumes from replacement mines, a 6% increase in ore milled to 7.9 million tonnes (FY2023: 7.5 million tonnes), and a 6% uptick in 6E production to 646,000 ounces (from 611,000 ounces in the prior year), Zimplats experienced a substantial 20% decline in revenue, falling to US$767.1 million from US$962.3 million in the previous year.

This decline was directly attributed to softening global metal prices, which impacted the gross revenue per 6E ounce sold, dropping to US$1,196 from US$1,595 in the previous year.

Consequently, profit after tax decreased by 96% to US$8.2 million from US$205.5 million. This represents the largest dip since 2021, when a record US$563.1 million was recorded.

Zimplats, as the largest corporate entity in Zimbabwe, is a significant contributor to the country's economy. In 2021, the company contributed a record US$404.6 million to the government through taxes and royalties, representing a 95.2% increase from 2020's US$164 million.

However, these contributions declined to US$342.9 million in 2022, and with the decline in both revenue and after-tax profits during FY2023, they are expected to decline sharply, further straining Zimbabwe's foreign currency coffers.

Adding to the pressure on Zimplats' bottom line is the unfavorable taxation system in Zimbabwe.

Despite global metal prices more than halving since 2022 and dipping by 34% in FY2023, the country's tax policy on platinum miners has been retrogressive. Amidst tumbling global platinum prices, the government has imposed a 5% tax on platinum concentrates and increased royalties, more than doubling them from 2.5% to 7%.

This policy decision, coupled with 25% surrender portions amid a decaying Zimbabwe local currency and the country's ongoing electricity crisis, further exacerbated the challenges faced by Zimplats and the broader mining sector.

Foreign exchange losses increased to US$35.8 million (FY2023: US$17.2 million) driven by depreciation of the Zimbabwean Dollar (ZWL) against the US$ from ZWL5 769 on 30 June 2023 to ZWL33 904 on 5 April 2024 with the ZiG suffering the same fate.

The decision to increase taxes amidst declining metal prices, decaying currency raises concerns about the government's commitment to supporting the mining sector, which is crucial to Zimbabwe's economic growth.

Zimplats' depressed earnings serve as a stark reminder of the need for a more favorable tax environment and a stable global market to ensure the long-term viability of the company and the broader mining sector in Zimbabwe.

While Zimplats remains committed to its operations in Zimbabwe, as evidenced by the declaration of a final dividend of US$100 million (equating to 92.90 US cents per share) for the year ended 30 June 2023, the company's future efficacy hinges on a more favorable global market environment and a reassessment of domestic policy decisions that impact profitability.

Capital Projects

Despite the earnings plunge, Zimplats is actively pursuing a series of strategic projects aimed at ensuring the long-term sustainability of its operations. These projects encompass mine replacement, expansion, and modernization initiatives, reflecting the company's commitment to maintaining its position as a leading platinum producer in Zimbabwe.

Capital project spending increased significantly by 45% to US$440 million in the current financial year, compared to US$304 million in the previous year.

One key project is the development of the Mupani Mine, which is progressing on schedule. This mine is crucial for replacing the depleted Rukodzi and Ngwarati mines, ensuring a continued supply of platinum. Total cumulative expenditure on the Mupani Mine project has reached US$325 million. The mine is expected to achieve production of 2.2Mtpa in FY2025, fully replacing the depleted mines, with a planned design capacity of 3.6Mtpa by FY2029.

Another significant project is the Bimha Mine upgrade, which was completed during the year. This upgrade increased the mine's design capacity to 3.1Mtpa from 2.0Mtpa, with a total of US$82 million invested. The Bimha Mine will partially replace the tonnage from the Mupfuti Mine, which is projected to deplete in FY2028.

Zimplats is also investing heavily in expanding its smelting capacity and implementing environmental sustainability measures. US$387 million has been spent on the smelter expansion and SO2 abatement plant project, against a total budget of US$544 million.

The expanded smelter, incorporating a new 38MW furnace, will increase smelting capacity to over one million ounces of 6E in converter matte per annum. Commissioning of the expanded smelter is scheduled for the first half of FY2025.

The company is advancing its commitment to renewable energy by implementing a 35MW solar power plant project. US$36 million has been spent on this project, against a budget of US$37 million. The plant is expected to be commissioned in the first quarter of FY2025.

Finally, Zimplats is investing in refurbishing the mothballed base metal refinery at Selous, with US$28 million spent to date against a budgeted US$190 million. This project demonstrates the company's commitment to diversifying its operations and exploring new opportunities.

These strategic investments highlight Zimplats' commitment to long-term growth and sustainability. The company's focus on mine replacement, expansion, and modernization, coupled with its investment in renewable energy and environmental sustainability, positions Zimplats for continued success in the global platinum market.

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