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NewsDay

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Zimplats in talks for uninterrupted power supplies

Business
ZIMPLATS will soon begin discussions with power utility, Zesa Holdings, for uninterrupted power supplies for the next five years starting 2017.

ZIMPLATS will soon begin discussions with power utility, Zesa Holdings, for uninterrupted power supplies for the next five years starting 2017.

BY VICTORIA MTOMBA

Zimplats chief executive Alex Mhembere said the company sourced power from HCB of Mozambique through a prepayment of $25 million for uninterrupted power supplies until 2017 so that its operations would not be affected by the power cuts.

“We will be starting our discussions with Zesa to extend the negotiations from 2017 to the next five years.We have not had power disruptions as we had paid $25 million in advance,”he said.

zimplats-(2)

According to the State of the Mining Industry Survey published last month, four major cost drivers in the industry were wages, stores and supplies, power and royalty. Stores and consumables at 36 % of the total costs constituted the biggest chunk of the total costs, followed by wages (32%), power (15%) and royalty (5%).

Most respondents cited power outages and high tariffs as weighing down the production and viability of the mining industry. 45% of the respondents said between $1 million to $5 million was lost annually due to power outages.

Last year, Energy and Power Development minister Samuel Undenge said companies should import their power or build smaller power stations as a solution to the power cuts gripping the country.

Mhembere told analysts that falling metal prices on the international market have affected the company’s capital projects.

He said the company would continue to work on projects such as the Phase 2 project and its furnace expansion structures that have commenced. He said the re-development at Bimha Mine was continuing and $7 million has been spent so far against a budget of $92 million.

Bimha Mine was closed in August 2014 as a precautionary measure to safeguard employees and assets following the continued deterioration of ground conditions in a section of the mine.

In its half year ended December 31 2015, Zimplats saw its turnover decreasing by 12% to $204,4 million from $233,5 million in the comparable period in 2014 due to the decline in metal prices despite increase in sales volumes. During the six months period platinum sales increased to 128 431 ounces from 103 092 ounces previously.

Gross revenue per platinum ounce was 30% lower at $1 591 for the half year from $2 265 in 2014.

Cost of sales at $185,7 million was 14% higher than $162,4 million realised in the same period in 2014 due to the increase in sales volumes

Profit before income tax for the period amounted to $0,6 million, 88% lower than $4,7 million achieved in the same period last year, largely due to the drop in metal prices.