Zimbabwe Stock Exchange-listed manufacturer General Beltings (GB) Holdings is banking on a recovery in Zimbabwe’s mining sector, spurred by rising platinum group metals (PGMs) prices, currently hovering around $920 per troy ounce, to bolster its financial performance after a challenging first half of 2024. The increase in platinum prices has driven renewed optimism in the mining industry, which could enhance demand for GB Holdings’ products used extensively in mining operations.
Mixed Results in 2024 First Half
For the half-year ending June 30, 2024, GB Holdings reported a mixed performance. Total volumes rose 13% across its rubber and chemicals business, largely due to Cernol Chemicals’ recovery efforts. However, the core General Beltings Division saw a 37% decline in production volumes, dropping from 203 metric tonnes to 127 metric tonnes due to weaker platinum prices, which reduced downstream demand for conveyor belts used widely in the mining sector.
As a result, GB Holdings’ total turnover fell 15% year-on-year to ZWG 22 million, reflecting softer demand across both divisions. Consequently, gross profit declined 22% to ZWG 11 million, with reduced overhead recovery impacting profitability.
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Optimism Driven by Mining Sector Rebound
GB Holdings Chairman Tichaona Mabeza expressed cautious optimism in a trading update, citing signs of a recovery in the mining sector driven by firming mineral prices. The mining sector is central to GB Holdings’ business, as the company supplies rubber and chemical products extensively used by mining operations.
“The anticipated recovery in the mining sector, supported by stronger mineral prices, is a source of optimism as it underpins the fortunes of the General Beltings Division,” Mabeza stated. Despite the tough first half, he sees potential for improved performance if the mining sector’s recovery continues.
Mabeza also noted the challenges posed by an El Niño-induced drought, which has strained Zimbabwe’s power supply and impacted operational efficiency for heavy industry. He highlighted increased thermal power generation as a potential solution to offset energy shortages, which could also boost demand for conveyor belts.
“To counter the current power supply deficit, augmenting power sources with increased thermal power generation would be beneficial,” Mabeza added.
Platinum Market Rebound Sparks Optimism
The rebound in platinum prices could be especially favorable for GB Holdings. Following a challenging period in 2023, global platinum demand surged 13% year-on-year in the second quarter of 2024, with a 137% spike in investment demand and steady automotive and industrial usage. Platinum prices rose to $920 per troy ounce in September, marking a two-month high and sustaining a bullish outlook.
Industry analysts, including Bloomberg, forecast that platinum prices will average $957.33 per ounce by the end of 2024 and exceed $1,000 in 2025. This recovery is driven by tight supply conditions, with global platinum supply falling short of demand by 464,000 ounces in 2024—a deficit expected to persist into the following year.
As one of the world’s largest platinum producers, Zimbabwe stands to benefit from these rising prices, which could boost mining investments—a key driver for GB Holdings’ sales.
Cost-Cutting and Strategic Realignment
GB Holdings has responded to lower revenue by implementing cost-cutting measures, reducing operating costs by 33% in the first half of 2024, down to ZWG 11 million from ZWG 16 million the previous year. These measures align with the company’s strategy to recalibrate operations in response to reduced demand, protecting its margins amid market volatility.
Future Prospects
With platinum prices showing signs of sustained recovery, the outlook for GB Holdings and Zimbabwe’s mining sector is cautiously positive. Stronger demand from the automotive industry, where platinum is increasingly substituting palladium, as well as from the jewelry sector, could support further price increases and stimulate mining activity. For GB Holdings, this could lead to a rise in demand for conveyor belts and chemicals essential for mining operations.
While energy reliability challenges persist, industry trends favor a potential upswing. With cost controls in place and expectations of a sustained platinum rally, GB Holdings is positioning itself for a recovery closely tied to Zimbabwe’s mining sector’s fortunes.
