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Platinum producer, Zimplats has said it is targeting a 47 percent increase in production next year at 280, 000 ounces from 190,027 ounces achieved in the year ended June 30, 2015.

Chief executive officer Alex Mhembere told an analyst briefing last Wednesday that production in 2015, at 190,027 ounces, was 21 percent down on prior year output of 239,660 ounces. The decline was as a result of loss of production at Bimha mine.

“Bimha mine contributes about 30 percent to total production and when it went offline during the financial year, it impacted on overall output. This was made worse the interruptions at the furnace in the same period.

“So our target output for this year is 280,000 ounces, 22,000 ounces of which is carry-over from the previous year,” he said. Mhembere said the platinum sector is currently an industry in crisis due to lower metal prices, and rising costs.

He said at current prices and costs, only four companies in the world will survive in the next five years as such companies need to aggressively lower costs to optimum levels.

“Platinum mining companies have no choice but to react to this crisis if we are to have any chances of surviving,” he said. Mhembere said Zimplats has rationalised its overheads and is looking at other initiatives to lower the cost of production.

He said the devaluation of the Chinese Yuan has affected the industry as the Chinese economy is a huge market for platinum, palladium and copper.

Zimplats recorded a $74.3 million loss after tax, a 177 percent drop from the previous year’s profit $97,1 million. This was after the company took a 314 percent hit in tax amounting to $130,5 million due to the impact of two court judgments.

Chief Financial Officer Stewart Mangoma said revenue at $408 million was 29 percent down on lower sales volume and metal prices.

He said due to a 20 percent reduction in four elements (platinum, palladium, rhodium and gold) (4E) sales volumes declined from 477,905 ounces to 381,849 ounces. A 12 percent fall in gross revenue per platinum ounce from $2,457 to $2,167 arising from declining metal prices also negatively impacted the company.

Mangoma said profit before income tax for the year amounted to $56.1 million, 56 percent lower than prior year’s $129 million.

He said taxation for the year was at $130.5 million; 314 percent higher than the previous year mainly due to the impact of the two court judgments which resulted in loss after tax for the year of $74.3 million compared to $97.1 million profit recorded in the previous year.

Mhembere said the group was close to concluding its indigenisation transaction as the engagements with government are almost complete. He said the 10 percent share ownership trust is still applicable at Zimplats valuation of $1.2 billion.

On the Base Metal Refinery project, Mhembere said the company secured an uninterrupted power supply agreement with Mozambique’s Hydro Cahora Bassa (HCB) in light of power shortages in Zimbabwe.

The BMR will produce a platinum group metals (PGM) cake, copper cathode and nickel sulphate in line with the government’s thrust of beneficiation. — Wires