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Zim forecast to produce lower platinum in F17 as total mineral revenue remains flat in Q3

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Zim forecast to produce lower platinum in F17 as total mineral revenue remains flat in Q3

HARARE – Global refined platinum production is forecast to rise by two percent in 2017 with all regions except Zimbabwe expected to sustain or increase production levels, according to the World Platinum Council third quarter report.

“With the exception of Zimbabwe, all regions are expected to sustain or increase production levels next year. The processing of a one-off concentrate backlog for Zimbabwe earlier this year, following a smelter outage in 2015, will result in lower refined supply in 2017 (-6 percent to 445 koz),” said WPC chief executive Paul Wilson in the report.

Global refined platinum supply is forecast to decline by three percent to 5,970koz in 2016 while total global supply of platinum group metals is forecast to decline by two percent to 7,7 million ounces in 2017 from 7,8 million ounces in 2016.

“This is mainly as a result of a decline in secondary supply as jewellery recycling in China returns to a more typical level after retailer destocking raised it in 2016.

“Total mining supply is still expected to exceed 6,000 koz for the year, despite refined inventory restocking in the second half,” said Wilson.

South African platinum production is estimated to be five percent lower at 4,235 koz owing to shaft closures in 2015 while output from Russia is forecast to decrease by five percent owing to a planned refinery closure.

North American platinum supply for the period was down five percent quarter on quarter but 11 percent higher year-on-year owing to plant maintenance in the prior year period.

Zimbabwe maintained a production level of 115 000 ounces of platinum both quarter on quarter and year on year in the third quarter of 2016. The country’s refined output for the first nine months of 2016 increased 26 percent year on year owing to a release of concentrate in the first quarter that had built up during the 2015 smelter outages. Processing of stockpiled concentrate and increasing production rates in Zimbabwe should see growth of 17 percent year on year to 475 000 ounces.

However actual production in the nine months according to the Chamber of Mines Zimbabwe rose 20 percent to 10 831kg while earnings were 4 percent higher at $298.54 million. Overall, Zimbabwe’s mining sector generated $1.38 billion in revenue in the nine-month period compared to $1.34 billion in the same period in 2015 as depressed international prices hit on earnings.

Chief executive Isaac Kwesu told a press conference that the mining industry recorded mixed mineral output performance for the nine months with key minerals such as gold, platinum and nickel recording significant output growth while diamond, chrome and coal recorded significant output contraction for the period.

“The general price trend for the minerals has been depressed in 2016 compared to 2015 except for gold which recorded a 6.8 percent increase in price,” he said. Nearly half of the revenues were generated through gold, which earned $648.6 million during the period up from $532.5 million in 2015. Production was 13 percent higher at 16 139kg.

The rest of the major minerals however recorded declines in earnings, with diamonds, at minus 43 percent registering the biggest fall to $73 million after production dipped 37 percent to 1.66 million carats.

Depressed international prices took their toll on minerals such as palladium which saw earnings declining five percent while overall production had surged 21 percent to 8 760kg.

Rhodium and ruthenium which recorded a 17 percent and 18 percent increase in output respectively, also saw revenues going down 25 percent and eight percent.

“The industry remains fragile notwithstanding the growth,” Kwesu said.
Obstacles impacting on viability of the sector remained unchanged and included high costs structures as well as high mining fees.

Kwesu said current foreign currency shortages were also adding on to the challenges the sector, which requires about $1 billion annually to import inputs and other consumables, is facing.

A State of the Mining Industry report is set to be released next week.

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