Farai Mabeza, Senior Staff Writer 
A METAL prices slump following a spike that was triggered by the Ukraine war has continued to hit miners, with Tharisa announcing this week that its Karo platinum project would be delayed by a year.
This also comes as the Chamber of Mines of Zimbabwe (CoMZ) has called on the government to intervene, warning that softening mineral prices were weighing down the viability of mining projects.
Describing its project delay as “prudent and strategic”, Tharisa said the project could still be accelerated if the markets were to become more favourable.
“Given the current PGM basket price weakness and uncertain global economic outlook, we have taken the measured decision to extend the Karo Platinum timeline out to commissioning by June 2025.
“The Karo Platinum Project has progressed well, and the revised timeline is aligned to funding availability and provides flexibility to navigate volatile market conditions,”
“The Karo Platinum Project has progressed well, and the revised timeline is aligned to funding availability and provides flexibility to navigate volatile market conditions,” Tharisa said in an update.
The government will at the end of this year evaluate the performance of the sector with regard to the attainment of the US$12 billion target which had been set for this year.
“Over the past 12 months, the mining industry has witnessed softening of prices for most key minerals, with rhodium, lithium, palladium, diamond and nickel the most affected.
“The prices are coming down at a time the cost structure for the mining industry has increased, propped up by high electricity tariffs, which went up by more than 40 percent in the last 11 months,” the chamber said.
CoMZ says the situation has been compounded by recent increases in royalty for platinum and lithium. Also in the past 11 months, royalty for platinum was increased by 180 percent from 2,5 percent to five percent while that for lithium was increased by 150 percent, from two percent to five percent.
“The above challenges have severely weighed down on the viability of mining projects, with affected mining companies reporting that their overall cost has increased by more than 10 percent.
“While mining companies have tried to reduce their costs through various strategies including cutting back on capital expenditure and optimising their businesses, the viability gap is so huge that only with government intervention in the form of electricity tariff and royalty reduction can that viability be restored,” the chamber said.
The Reserve Bank of Zimbabwe has also reported a decline in the country’s foreign currency inflows during the first half of 2023, attributable to the fall in commodity prices.
In his mid-term monetary policy statement for this year released in August, the central bank’s governor, John Mangudya, reported “a transitory decline in foreign currency receipts on account of declining export commodity prices such as the PGMs”.
The country’s exports declined by 8,2 percent during the period to US$3,19 billion, “mainly weighed down by the subdued performance in mineral exports”.
Minerals, which account for the largest share of the country’s exports, declined by 12,5 percent to US$2,58 billion during the period.
“The decline in exports followed the continued softening of key commodity prices,” Mangudya added.
Meanwhile, major miners operating in the country have also suffered due to lower commodity prices.
Impala Platinum expects to report a drop of more than 20 percent in annual earnings as a result of weaker metal prices, among other throttleholds.
And Anglo-American Platinum reported a 75 percent slump in half-year profit.
Still, the reserve bank expects Zimbabwe’s current account surplus to narrow to US$274,5 million in 2023, from US$305 million in 2022.
Exports are seen closing the year at US$7,12 billion, a 1,7 percent increase from US$7 billion in 2022.
According to Mangudya, this will be supported by surging gold, lithium, diamond, and tobacco exports “notwithstanding subdued PGMs exports as their prices remain depressed”.
