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Rand Drop Curbs Zimbabwe Platinum Competitiveness, Minister Says

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Feb. 18 (Bloomberg) -- The rand’s decline against the dollar is raising costs for South African platinum companies operating in Zimbabwe, including Anglo American Platinum Ltd., making the ventures uncompetitive, the mining minister said.

“Simply by the depreciation of the rand, all of a sudden, if you compare Zimbabwe’s platinum mining costs and South African mining costs, despite the depth in South Africa and other things there is a way in which now we are moving towards being relatively uncompetitive,” Walter Chidakwa told reporters in the capital, Harare.

Anglo Platinum and Impala Platinum Holdings Ltd., which are the world’s no. 1 and 2 producers of the metal and both based in Johannesburg, have units in Zimbabwe. The companies report earnings in rand, which has lost 22 percent against the dollar, which Zimbabwe uses, since the start of 2013. The decline has pushed up mining costs in Zimbabwe because companies there buy most explosives and equipment from South Africa.

Zimbabwe has the world’s biggest platinum reserves after South Africa. While it produces about 430,000 onces of the metal annually, it’s refined in the neighboring country, which has the largest economy on the continent.

Chidakwa said four companies he didn’t identify have platinum claims they’re “holding for speculative purposes.”

“We are very unhappy about that,” he said. “We are going to ensure that those holding our claims for speculative purposes do not have a place in Zimbabwe.”

Platinum-mining companies are also contending with Zimbabwe’s imposition since Jan. 1 of a 15 percent tax on ore exports, in addition to a 10 percent royalty already levied on their revenue.

To contact the reporters on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net; Brian Latham in Harare at blatham@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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