BHP Exits Zim's Largest Platinum Project Amid Financial Struggles
Harare, Zimbabwe – In a significant shake-up within the mining sector, BHP has announced its withdrawal from Zimbabwe's largest platinum group metals (PGM) mining project, citing ongoing financial losses. This decision leaves the venture, previously a joint effort with ZIMPLATS, in a precarious position as it faces a substantial funding shortfall.
The departure of BHP, a global mining giant, marks the end of a tumultuous chapter that began in 1998 when American Paul Anderson took over as CEO. At that time, BHP was grappling with internal challenges, including a talent exodus, declining earnings, and plummeting stock prices. Several recent projects had also failed, pushing the company to the brink of collapse.
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In a bid to stabilize the company, Anderson and his management team identified underperforming projects, leading to the sale of BHP's platinum assets in Zimbabwe at a loss to their partner, Zimplats. By 1999, ZIMPLATS had acquired BHP's interests in the Hartley and Mhondoro platinum joint ventures, which included a concentrator and smelter.
The Hartley Platinum project, however, was soon halted and placed on care and maintenance. This phase, common in the mining industry, involves stopping production while ensuring the site remains safe and stable for potential future operations. ZIMPLATS then shifted its focus to the Ngezi project, which feasibility studies in 2001 indicated had better prospects with limited upfront resources.
BHP Exits Zim's Largest Platinum Project Amid Financial Struggles
Despite being cash-strapped, ZIMPLATS pursued the Ngezi project, securing crucial funding from Impala Platinum Holdings (Implats) and ABSA. This financial support enabled the development of the Ngezi open pit mine, with a capacity to produce over 2 million tonnes per annum (mtpa), and the construction of an 80-kilometre tarred road linking Ngezi to the Selous Metallurgical Complex (SMC). The Ngezi project effectively replaced the failed Hartley mine, reviving the SMC from the original BHP-DG project.
Currently, efforts are concentrated on revamping the Base Metal Refinery (BMR) at SMC, which separates minerals like copper from PGMs, thereby boosting revenue generation. ZIMPLATS has also entered into an agreement with Impala Refining Services Limited (IRS), an Implats subsidiary that refines and markets PGMs and base metals.
In 2005, Implats secured an 87% stake in ZIMPLATS by purchasing shares from ABSA and minority shareholders. ZIMPLATS then embarked on expansion projects, increasing its mining and concentrator capacity. However, in 2019, ZIMPLATS' special mining lease expired and was replaced by two new leases, prompting the development of the Mupani Mine to replace the soon-to-close Rukodzi and Ngwarati Mines.
A critical lesson for investors: the importance of seeking expert advice. Jerry Ellis, the former CEO of BHP, championed the Hartley project but ignored advice from experienced South African platinum miners, resulting in massive losses for BHP.
