Mimosa cancels $134 million North Hill project

As NewsDay Business can report, platinum mining group Mimosa Mining Company has put its US$134 million North Hill project on hold due to a difficult operating environment, which includes falling global prices.

The project, which was intended to replace the South Hill mine, has been put on hold until market conditions improve, said Stephen Ndiyamba, General Manager at Mimosa.

“We have seen a decline in our market price from around US$1,900 per ounce in October 2022 to the current price of just under US$1,200, which is a huge reduction,” Ndiyamba said recently at the Chamber of Mines of Zimbabwe’s annual conference in Victoria Falls.

“We have felt these effects and have taken various measures to correct the situation and stay in business. We have had to suspend major expansion projects.

“We had planned to start what we call the North Hill project, a new shaft about 6 kilometers from our current operation. The $134 million project had to be put on hold because we simply cannot afford it under the current circumstances.”

The operating environment is characterized by, among other things, falling world market prices, power outages, high electricity tariffs and inconsistent tax regulations.

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The platinum mining company also had to cut its capital expenditure by around 23 percent. Jobs were cut in order to reduce operating costs.

“As painful as this may be, we first had to undertake a rationalisation of employment relationships, which resulted in the dismissal of about 33 managers and employees and about 300 contract workers,” said Ndiyamba.

“We have had to ask our business partners and various stakeholders to share the costs and this has resulted in a production cost reduction of about 10% among our contractors and other service providers. In general, we have suspended non-critical expenses.

“We looked not only at the cost side, but also at production. We looked at production and examined initiatives that would help us increase our productivity and work more efficiently.”

He said that Mimosa has invested significant sums in optimizing its plant in 2022 and 2023, resulting in a huge reduction in consumption costs and consumption.

“We have seen a significant improvement in our recovery rates of over 3%, which has resulted in a more efficient process. But we have also strived to improve operational efficiency across the entire value chain, which can be as much as 20%,” said Ndiyamba.

“This has helped us reduce operating costs. We are now seeing the results and impact of our measures.

“We are confident that we can get back on our feet and stay in business if prices rise from their current levels. In terms of welfare, Mimosa has not been able to build its own smelter due to limited resources.”

However, he said they could take advantage of the capabilities of local processing plants if they became available.

“Zimplats is currently building a smelter that can process material from Mimosa. A contract manufacturing agreement is now in place so that we can send our materials to Zimplats once the smelter is operational,” he said.

“We see some opportunities and hope to achieve some stability in the market. We want to further improve our production efficiency by using new technologies.

“We are currently working on a project to transform our mine into a smart mine. We have just completed laying pipes underground. We are looking at various technologies that will help us become a more efficient and focused company.”

Mimosa, a joint venture between South African companies Sibanye-Stillwater and Impala Platinum, produces approximately 250,000 ounces of platinum annually at its operations near Zvishavane.

The current South Hill mine site will be depleted in 10 years. To counteract this, the company plans to develop a new area called North Hill.

The company had also planned to spend $38 million on the plant optimization project, which is designed to improve processing efficiency so that the mine can recover more from mineral ores.

The company employs over 3,500 permanent and contract workers.