PLATINUM output from Zimbabwe’s mines will decline to 502 000 ounces (oz) this year, from 507 000oz in 2023 as depressed demand affects prices, the World Platinum Investment Council (WPIC) said Wednesday, as one of the country’s biggest miners moved to cut costs by dismissing workers.
Mimosa said it was retrenching managerial and supervisory staff to lower operational costs after its parent company, Sibanye Stillwater, reported a US$2 billion loss for 2023, due to falling platinum prices.
Sibanye, which co-owns Mimosa along with Implats, is cutting back on expansion projects, including at the Zvishavane based miner.
Costs at Mimosa rose by 15% last year mainly due to power.
“Metal prices have been on a downward trend since April 2023 and remain depressed to date,” the firm said in a statement.
“The metal prices have decreased by up to 35% during this period and this has had a negative impact on cash flow and profitability. The outlook is that the prices will remain depressed in the medium term.
“In view of this, we have had to implement several measures to ensure that our business remains viable in the low-price metal environment.
These measures include capital expenditure curtailment, cost reduction and cash conservation initiatives.
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“It has also been necessary to review our staffing structures to optimise these considering the prevailing environment. This has resulted in a staff rationalisation exercise which has affected thirty-three managerial and supervisory employees.”
It added: “A voluntary separation package was offered to 24 of these employees while nine opted for early retirement. No further rationalisation of the permanent staff complement is planned at this stage.”
However, sources suggested that further retrenchments could continue before mid-year.
Contractors are likely to be the hardest hit, with some reportedly set to wean off at least 50% of their workforce by June this year.
In a report analysing 2023 sector trends, the WPIC said while Zimbabwe’ mines defied hurdles posed by a sharp slowdown in prices during the period, breaching 500 000oz the first time, factors like geopolitical tensions were likely to undermine production this year.
“Zimbabwe’s production continued its steady increase, surpassing the 500 koz milestone for the first time,” WPIC said Wednesday.
“The country benefits from operational stability, mechanised mining methods, resulting in fewer safety stoppages, and stable workplace relations. The realisation of volumes from the commissioning of the third concentrator at Zimplats and the Unki concentrator debottlenecking project contributed to the record production.
Zimbabwe’s production is anticipated to maintain its long-term stability, with minimal changes expected on a year-on-year basis,” the report noted.
WPIC projected that the platinum market will remain in deficit in 2024.
“Slower economic growth and elevated geopolitical tensions will all weigh on economic growth in 2024, which is forecast to be flat on 2023,” the WPIC said.
“Against this backdrop, we expect the platinum market to remain in a deficit of 418 koz, but much reduced on 2023 due to weaker industrial demand and lower investment. Based on current automotive production forecasts, 2023 was likely the post-Covid-19 peak for production of vehicles that need an auto catalyst, and as such we forecast just 1% year-on-year growth for platinum demand in the automotive sector,” the report read.
