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Unfortunately when it comes to understanding what is going on in Zimbabwe, discerning what is fact is always challenging. We have therefore sought the correct story from Zimasco and feel that it is necessary to share this with our clients so as to better understand the market situation.

As part of its strategy to sweat its idle assets, Zimasco leased its 3 West plant furnaces to Portnex International, a South African company. The deal is for 5 years effective 10 December 2015 and terminating on 9 December 2020 with the following salient features;

 

Portnex are currently running 2 furnaces, although they are yet to achieve optimum production on these two units. They intend to run a 3rd furnace as soon as it has been refurbished. All the costs incurred by Portnex to refurbish the furnace will be recovered by Portnex from Zimasco.

Portnex is currently getting some of their chrome ore from Tributors (mining contractors) working on Zimasco claims. The balance of their chrome ore they are sourcing from other small scale suppliers and claim holders.

Portnex is developing its own ore supply channels as Zimasco is at an advanced stage to resume its smelting operations on its 2 East Plant furnaces which are currently switched off.  There is no refurbishment work needed on these two furnaces as they were only switched off in December due to low prices.

Zimasco provides Portnex support services such as

Zimasco’s imminent resumption of operations are based on a full business restructuring plan that  has been put in place of which the Portnex leasing arrangement  plays only a small part (~10%) especially given that this arrangement  is a temporary one as their lease will terminate in 2020

author avatar
Lara Smith
Lara is the CEO and founder of Core Consultants. She has been an analyst for over thirteen years and has focused on commodity markets for just over a decade. She began her career as a buy-side analyst at Foord Asset Management in Cape Town, before taking a Head of Research role at a mining corporate finance and investment firm.

One Response

  1. Greetings! Quite helpful advice on this article! It really is the small
    changes that make the largest changes. Thanks a lot for sharing!

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