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Zimplats to become cash generative in the next financial year, CEO says

Zimplats CEO Alexander Mhembere

Zimplats CEO Alexander Mhembere

12th April 2024

By: Darren Parker

Creamer Media Contributing Editor Online

     

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Platinum group metals (PGMs) miner Zimplats CEO Alexander Mhembere is confident about the company’s ability to become cash-generative in the next financial year, which starts in July, despite the tough political and economic landscape of Zimbabwe and general PGM market challenges brought on by low prices.

Addressing attendees at the PGMs Industry Day, in Johannesburg, this week, he noted that, even amid the current downturn in PGM prices, the company would be striving to maintain the bulk of its workforce and would not be hasty in “pulling the lever” on downsizing initiatives.

"The lever of reducing people is not the only lever that can sustain the business. We still want to produce the same number of ounces. So we do not change the production profile, but we do play the levers along the value chain.

“We focus on cost management. We focus on labour rationalisation. We focus on productivity improvement more than anything else, and that gives us the leverage,” he stated.

He admitted, however, that some rightsizing would be necessary, although it would be strictly limited. However, he noted that the company had been resizing its workforce before the market became so challenging.

"We have been systematically reducing our headcount before we actually got to the strong headwinds of now, and through the current headwinds, we are only going to reduce our people by 1% of our total labour complement of about 8 000 people,” he pointed out.

Mhembere also acknowledged the dual nature of being a prominent player in the industry.

"Being big always attracts more attention, which you don't need. But being big also allows you an ability to be heard sometimes, which you need. So you have to balance the threats and opportunities. It is what it is,” he said.

He rejected the notion that Zimbabwe was more challenging than other jurisdictions.

"Every environment is challenging. It's just different what is challenging. So we see Zimbabwe is no different. What may be challenging in Zimbabwe may not be challenging [in South Africa], but what is also challenging [about South Africa may not be] challenging in Zimbabwe,” he said.

Specifically, Mhembere highlighted the issue of power supply, asserting that “… although power supply is a challenge, we are more in control of our power supply than some of the operators in South Africa.”

He admitted, however, that infrastructure was a challenge, noting the need for substantial investments in this area.

"Infrastructure is obviously a challenge, and we do have to invest to get our infrastructure," he stated, noting the contrast with more established infrastructure in some regions. However, he emphasised that directly investing in infrastructure meant that the company had more control over that infrastructure.

Currency was also not a major concern for the platinum mining company.

"Access to foreign currency is a challenge, particularly if you don't generate your own foreign currency. But in our case, we do generate our foreign currency so we are in control,” Mhembere said.

However, despite the upsides, he cautioned against underestimating the risk profile of Zimbabwe, acknowledging its impact on investors.

"Don't underestimate the risk profile of Zimbabwe. We live in it, we manage it, but that doesn't mean that risk profile does not exist. It does exist. And it does impact on investors, particularly when there are talks of sanctions. Outside investors who read and understand Zimbabwe through newspapers will be very concerned.

“However, those who actually visit and see how business is done will think differently and see how we manoeuvre the businesses and create value out of that environment,” Mhembere said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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