THE world’s second-largest platinum company, Impala Platinum, can be “very instrumental” in any economic reconstruction of Zimbabwe, where the company touches the lives of 50 000 people and where it is currently investing an additional R2,3-billion, says Implats CEO David Brown.

He says that the company is prepared to engage with all parties in Zimbabwe to ensure that they understand the role that Implats is playing in the country.

Implats saw its sales revenue grow by 19% in the 12 months to June 30, 2008, to a record R37,6-billion, primarily on the back of higher dollar prices for platinum-group metals. As a result, gross profit increased by 23% to R17,7-billion and gross margins improved to 47%. The company returned a record R8,9-billion to shareholders.

Implats executive director: finance Dawn Earp reports that Implats’ board has approved a capital expenditure of R2,3-billion for the expansion of its Zimplats and Mimosa operations on Zimbabwe’s Great Dyke.

“Quite clearly, we are very distressed about the socioeconomic situation in Zimbabwe. “We have been operating there now for nearly seven years – we are not what they call a new investor,” Brown tells Mining Weekly in an exclusive interview.

Brown says that the company is in the process of working with its work- force to ensure that their needs are catered for as best as the company possibly can.

“We see that as probably our primary role in terms of our investment in Zimbabwe. We have close on 5 000 people working for us now in Zimbabwe and, with the multiplier effect of ten-to-one, you could say that almost 50 000 people are dependent on our operations up in Zimbabwe.

“That is quite a moral obligation that we have to those people. We are obviously very conscious of the fact that we are operating in a country that does have some difficulties from a political standpoint and we would hope for a swift resolution to the current discussions,” he says.

Political resolution will, he adds, provide Implats with greater investment certainty going forward.

“W are also very happy to engage with all parties in Zimbabwe to ensure that they understand the role that we are actually playing in Zimbabwe, as well as the fact that, as a company, through Implats, Zimplats and Mimosa, we can be very instrumental in any economic reconstruction of that country,” Brown says.

The company sees the potential to prod-uce a million ounces of lower-cost platinum on Zimbabwe’s Great Dyke, ten times more than its current modest attributable 100 000 oz/y from Zimplats and Mimosa.

Zimbabwean Alex Mhembere heads its Zimplats operations as CEO.

The tons milled by Zimplats, in which Implats has a controlling interest, rose by 3% in the year to June 30, 2008, to a record 2,2-million tons and Mimosa’s by 2%, with 1,7-million tons milled.

Only Implats’ Zimbabwean operations managed to record an increase in tons milled, with the Impala mine, in Rusten-burg, down 3% and Marula flat.

However, escalating input costs – compounded by an unfavourable exchange rate and higher labour costs relating to skills retention – sent units costs soaring by 30% at the Zimbabwean operations.

Despite that, both operations remain “extremely competitive”, says Brown.

The margin of profit at Mimosa, for instance, is 69%, higher than any other margin of profit in the Implats group, which averages 47%. While Zimplats’ margin is more modest, it is, at 53%, still above the group average.

While higher costs impacted on both Zimplats and Mimosa, higher platinum sales mitigated Mimosa’s units cost rise.

Brown says for Implats to invest in “another phase” in Zimbabwe, an “economic revival of some sort” must first take place in the country.

“Effectively, we would be looking for a turnaround of the economic and social position there because it does have an impact on infrastructure as well and we would be looking for some certainty that future infrastructure would be available. We would also need an investment climate that is more certain,” he says.

The Indigenisation Bill remains unresolved and he would like to see the resolution of those aspects before Implats looks at significant greater investment in Zimbabwe.

Another vexing issue Implats is facing is the skills flight, which Zimbabwe’s dire socioeconomic conditions are generating, Brown adds.--mw