THE Zimbabwean cabinet has today agreed to a proposal by South Africa’s Pallinghurst Resources and the Industrial Development Corporation (IDC) that will lead to $500m in beneficiation investment which, at a single stroke, resolves more than a decade of regulatory uncertainty for foreign platinum miners operating in the country.
Arné Frandsen, CEO of Pallinghurst Resources, said Zimbabwe would in the next five years promulgate new legislation that would oblige platinum miners, including Anglo American Platinum (Amplats) and Impala Platinum (Implats), to provide up to 1.2 million ounces of platinum concentrate to a company jointly owned by Zimbabwe, Pallinghurst and the IDC.
Zimbabwe would own 51% of the joint venture through its Zimbabwe Mineral Development Company (ZMDC), while Pallinghurst and the IDC would own 49% through a subsidiary, Kelltech.
As Zimbabwe controls the joint venture, platinum miners would fulfil their indigenisation requirements by supplying concentrate to the facilities. In terms of indigenisation, foreign miners operating in Zimbabwe are required to ‘sell’ 51% of their assets to local Zimbabweans, and community organisations.
In selling concentrate to Kell refineries, foreign platinum miners would also avoid a proposed 15% duty on the export of unrefined platinum which is due to be enforced by the Zimbabwean government in 2018. This is separate legislation to indigenisation aimed at increasing mineral beneficiation in the country.
Zimbabwe’s indigenisation policies have been the source of frustration for South African platinum miners for more than a decade as the Mugabe administration has shifted feet on whether it would compensate companies for parting with control of their mines.
Amplats is invested in the Unki mine while Sibanye Gold and Implats are jointly invested in Mimosa Platinum. Implats also owns about half of Zimplats.
Kelltech, meanwhile, would have the right to market the refined platinum which enables it to fund the investment through offtake agreements as well as direct equity investment from Pallinghurst and the IDC. “Offtakers are keen on this because they get quick, guaranteeed access to the metal,” said Frandsen.
The agreement represents at least five years of work by Pallinghurst as well as enabling the IDC to piece together a major investment in Zimbabwe, said Frandsen.
Keith Liddell, a director of Sedibelo Platinum Mines in which Pallinghurst has a stake, and who was directly involved in developing the Kell technology, said that between four to five plants would be constructed in Zimbabwe at a cost of between $90m to $100m per module, each refinery producing up to 250,000 oz of refined platinum group metals (4E).
“One of the benefits of the technology is that it uses a fifth of electricity required of a conventional platinum group metal refinery,” said Liddell. “This means a more efficient use of Zimbabwean electricity which is not abundant at the moment,” he added. The modular nature of the technology also means refineries can be built closer to mining premises and at a tenth of the cost of a refinery which Frandsen estimated were often “north of $1bn”.
Amplats is currently in the process of building its own 15MW refinery in Zimbabwe in order to meet the country’s impending legislation on exporting unrefined precious metals. It’s uncertain what will become of its proposed investment.
Asked whether Pallinghurst had made progress on talks with Amplats, Liddell said: “We have had talks with Amplats but haven’t got terribly far as yet”.
Kell technology, which has been tested in pilot plants using concentrate from Pallinghurst’s Sedibelo Platinum Mines, differs from traditional refining technology in that it is a chemically-based leach process.
“Following the construction and running of two pilot plants, in Perth Australia, which has been rigorously tested with concentrate from our Sedibelo mine and other Southern African mines, the Kell technology has been proven and show that there are no fatal flaws in the process,” Frandsen told Miningmx in April.
He said at the time that there were plans to roll out the technology in South Africa on a toll basis although potential third party customers can also make equity investments in the construction of modules. Preliminary discussions had been held with a number of junior and new entrant mining companies in South Africa.
“The concept has been discussed with other mining companies and their concentrate have successfully been tested in our pilot plants,” said Frandsen.
“However, we are not ready to discuss terms yet,” he added. Frandsen said the founding partners will continue to hold significant stakes in future Kell plants.