Impala Platinum cut its output target on Tuesday and its CEO said Zimbabwe’s drive to wrest majority local stakes from foreign mining firms could curb future expansion in the country.

David Brown, the CEO of the world’s second biggest producer of the metal, said the group would now likely produce 1.82 million ounces of platinum in its financial year which ends in June from an original forecast of about 1.85 million ounces.

“We will probably produce somewhere around 1.82 million ounces, maybe 20000 ounces lower than originally anticipated and that’s really because of lower third-party deliveries than we originally expected,” he said.

He also said that he saw the platinum price at year end at between $1750 (about R12200) and $1800 an ounce and palladium at between $700 and $800 an ounce.

“Palladium still has more upside. There are two factors that are impacting on the palladium equation. The Russian stockpiles are significantly reduced compared to previous years.

“That means supply will be slightly lower and certainly the demand fundamentals are very strong, particularly in Asia.”

Brown also addressed the issue of political risk in Zimbabwe, which has the world’s second-largest platinum deposits after South Africa and where Implats’ unit Zimplats is responsible for around 9% of group production.

The government there wants foreign mining firms to surrender 51% of their local equity to black investors in the country. They have until the end of September to comply and Implats has already submitted its plans to the government.

Brown said Implats was not opposed to the idea in principle.

“But having said that, what we are opposed to is the 51%.

“We just don’t believe a 51% equity stake adequately reflects the risk-reward equation and quite clearly will impact significantly on future expansions,” he said.

In neighbouring South Africa, miners are scrambling to meet a far more modest target to place 26% of their stakes into black hands by 2014 as part of a policy to redress the imbalances of apartheid rule.

On the issue of tight power supplies – a big concern to South African miners as Eskom scrambles to meet growing demand – Brown said he saw no immediate impact on output.

“We have had ongoing negotiations with Eskom. Certainly we don’t see there will be any material impact on our production profiles over those periods,” he said, referring to the peak energy June to August winter months.

Brown was in London for Platinum Week, an annual gathering, of analysts, miners, refiners and other industry participants.

– Reuters