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ZIMBABWE’S largest platinum producer, Zimplats, remains confident despite the global slump in Platinum Group Metals (PGMs) prices, citing past experience of navigating similar downturns in 2008 and 2014 as proof of the company’s resilience.

Plummeting by over 50 percent in some cases, the PGM metal prices are threatening the financial viability and sustainability of most mining producers in the industry, with some already having announced cost cutting measures to stay afloat.

Weak automotive demand, fuelled by the rise in electric vehicles, has sent prices of PGM-crucial for curbing emissions in combustion engines — tumbling over the past year.

Prices of palladium and platinum, fell by roughly 40 percent and 15 percent, respectively.

Global PGM producers and mining analysts predict continued sluggishness in prices in the short to medium-term. Zimplats specifically estimates this could last 12 to 18 months, while mining.com predicts price instability might prolong beyond 2027.

Zimplats said it was no exception and was facing similar challenges to those confronting other producers in the PGM industry as a result of the price slump and was “critically reviewing” its business operations to withstand the ongoing challenges.

Spokesperson, Mrs Busi Chindove, said Zimplats’ immediate focus was on improved productivity, maintaining sustainable volumes and cost reduction measures that keeps the company’s growth strategy alive including its US$1,8 billion expansion programme.

This week, Zimplats announced job cuts in response to the global price slump of PGMs although the company remained tight-lipped on the number of workers the firm wanted to offload.

Mrs Chindove acknowledged the challenging market conditions and the need for cost-cutting measures.

Mrs Chindove emphasised the importance of aligning spending with current metal prices to achieve a “strategic objective of being cash positive.”

“Zimplats is clear that the long-term fundamentals of the PGM sector remain strong and is committed to contributing to a sustainable future and competitiveness of the industry,” Mrs Chindove said.

“In response to the sharp decline in PGM pricing, Zimplats is implementing stringent cost preservation to protect the business from the enormous pressure on profitability and cash flow on our operations, safeguard the business and to preserve, as much as possible, the jobs of more than 8 000 people employed by the company, both permanent and contract.”

Mrs Chindove said low PGM prices had necessitated a strategic realignment to ensure the business remained sustainable.

This implied cost-cutting measures must be in line with current metal prices, with the ultimate goal of achieving a positive cash flow.
“Regrettably, labour optimisation initiatives must be implemented urgently to secure the business and the bulk of jobs in the company. To this end, the latest offer for voluntary retrenchment is part of that response,” said Mrs Chindove.

“Our team has sought to ensure that Zimplats retains production capacity and the integrity of our infrastructure and that we remain socially and environmentally responsible and compliant. We also seek to minimise the impact of spending cuts on our growth strategy, which includes a US$1,8 billion expansion programme. The programme comprises several projects at various stages of execution.”

Early this month, another platinum miner, Mimosa Mining Company, disclosed it was cutting costs by laying off 33 managers and shelving a major expansion project in response to falling global metal prices.

The company said platinum prices fell by at least 35 percent since April last year, hitting its cash flows and profit margins.

“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,” Mimosa said in a statement. —Business Weekly