Mining ZimbabweLatest Mining News, Policy and Industry Updates

The Zimbabwe Environmental Law Association (ZELA) has urged authorities to take decisive action against small-scale artisanal miners accessing disused underground shafts, which are encroaching on local communities.

By Ryan Chigoche

The illegal gold mining crisis in Zimbabwe has escalated into a multifaceted issue, posing serious threats to the environment, public safety, and the socio-economic stability of the nation. As individuals resort to illicit mining due to pervasive poverty and unemployment, the repercussions extend beyond the mines, impacting communities, ecosystems, and the economy at large.

An incident at Globe and Phoenix Primary School in Kwekwe, where a classroom block collapsed last year, starkly illustrates the dangers of irresponsible mining practices. This tragedy serves as a reminder that such activities must be curtailed. Reports indicate that a similar situation is developing in Mazowe, where mining activities are increasingly encroaching on human settlements.

Batanai Mutasa, ZELA’s communications officer, emphasized the need for stricter penalties to deter illegal mining, including a ban on mining disused underground shafts of old, no longer operational mines.

“Illegal miners must be actively blocked from using disused underground shafts. The Mines and Minerals Act should incorporate harsher penalties for those who continue illegal activities despite efforts to promote compliance and environmental protection. The government must enforce legal frameworks by enhancing collaboration among state and non-state institutions. The Ministry of Mines and EMA should work with local authorities and traditional leaders to monitor mining activities, even in resource-limited settings,” Mutasa stated.

In line with this, ZELA is actively promoting responsible and sustainable mining practices by advocating for stricter regulations to monitor the environmental and structural impacts of small-scale mining operations. The organization has analyzed the Mines and Minerals Act and key regional and international frameworks, highlighting both advancements and gaps in the proposed Mines and Minerals Amendment Bill, while offering recommendations for improvement.

ZELA is also implementing programs to equip artisanal and small-scale miners (ASMers) with essential knowledge in Safety, Health, and Environment (SHE), along with Disaster Risk Rescue skills. The organization encourages ASMers to regularize their operations and adhere to mining regulations. Furthermore, ZELA addresses children’s rights within mining contexts, providing crucial insights into the vulnerabilities faced by children in mining communities.

As part of Zimbabwe’s macroeconomic roadmap to achieve upper-middle-income status by 2030, the government unveiled plans in October 2019 to revitalize the mining sector and create a $12 billion economy by the end of 2023, with the latest figures from 2022 estimating its value at around $5.6 billion. This initiative focuses primarily on gold mining, Zimbabwe’s largest export, alongside platinum, diamonds, chrome, iron ore, coal, lithium, and other minerals.

However, the environmental toll of illegal gold mining is staggering. Unregulated operations lead to widespread deforestation, soil erosion, and the contamination of water sources with toxic substances such as mercury.

The future of Bindura Nickel Corporation (BNC) now rests almost entirely on its parent company, Kuvimba Mining House (KMH), as access to capital from other sources appears increasingly difficult.

By Ryan Chigoche

An analyst has said that local shareholders grappling with trust issues stemming from past experiences have grown sceptical of the company’s prospects. This comes as Zimbabwe’s sole primary nickel producer, BNC, faces significant operational challenges that have heightened concerns among investors and stakeholders alike.

BNC is currently in distress, facing significant disruptions that have drawn the attention of investors and stakeholders alike. On May 6, 2024, BNC’s shares were suspended from trading on the Victoria Falls Stock Exchange (VFEX) after a Reconstruction Order was imposed on its major subsidiary, Trojan Nickel Mine Limited. This decision followed severe operational setbacks and a dramatic decline in nickel prices, casting a shadow over the company’s future.

The primary reason companies list on capital markets is to raise capital, making the suspension a major blow to BNC, which has been grappling with challenges such as equipment failures, declining nickel prices, and mounting financial pressures. The broader market downturn has only compounded these troubles, with nickel prices plummeting from record highs in 2022 to levels significantly below historical averages. As Zimbabwe’s only primary nickel producer, the operational issues at Trojan Nickel Mine not only affect BNC but also have broader implications for the national economy and the mining sector.

Speaking to Mining Zimbabwe, Tafara Mtutu, an investment analyst and Head of Research at Morgan and Co, emphasized that BNC must consider a significant capital injection from KMH. He noted that sourcing capital elsewhere will be difficult, especially given the distrust stemming from the 2017/18 incident when investors were repaid in local currency instead of USD.

“And I think it’s time they should consider either getting an injection from their parent company to tap into that resource. If the controlling shareholder isn’t very liquid, they might also need to explore strategic partnerships, ideally with the off-taker of the company’s nickel or other international players willing to invest in Zimbabwe. Another alternative could be listing a bond, but given the current situation, that might be a tough sell,” Mtutu said.

He further remarked, “Raising capital now will not be easy, especially considering the previous experience investors had in 2017 and 2018. The distrust between the company and investors in Zimbabwe is significant, making them unlikely to invest again in the short term. BNC really needs to work on how to raise capital and change that narrative.”

However, Mtutu emphasized that the company’s revival hinges on its ability to secure capital, which is vital for a potential relisting on VFEX. “We can’t just write the company off due to past experiences with similar companies. Their ability to raise capital will be key going forward.”

The Suspension and Its Origins

On May 6, 2024, BNC’s shares were suspended from trading on VFEX after its major operating subsidiary, Trojan Nickel Mine Limited, was placed under a Reconstruction Order due to severe operational and financial difficulties, including equipment failures and falling nickel prices. This suspension complies with Section 8 of the Securities and Exchange Rules, 2020, and the Reconstruction of State-Indebted Insolvent Companies Act [Cap 24:27] (“Reconstruction Act”).

The suspension stemmed from significant operational challenges at Trojan Nickel Mine, including halted production due to equipment failures and low nickel prices. In September 2023, the mine suspended production following a seismic event that damaged critical ore-hoisting equipment. While new gear was installed by April 2024, operations could not resume due to ongoing low nickel prices and high input costs, such as electricity.

Operational and Financial Challenges

Trojan Nickel Mine, 70% government-owned and employing around 1,100 people, has faced severe setbacks. Its nickel concentrate output fell drastically to 1,314 metric tons in the financial year ending March 2024, down from 3,180 metric tons the previous year. This significant reduction reflects both equipment failures and unfavourable market conditions.

Nickel prices have dropped dramatically from record levels above $100,000 per ton in 2022, largely due to geopolitical tensions affecting Russian supply. Currently, prices hover around $19,000 per ton, representing a 25% decrease from the previous year. This decline has strained Trojan Nickel Mine’s profitability and led to global reassessments of nickel operations, such as BHP Group’s review of its nickel business.

Administrative Changes and New Strategic Direction

To navigate these challenges, BNC appointed Mutsa Remba as Administrator in May 2024. Remba’s primary role is to guide BNC through the Reconstruction Act’s requirements, involving a thorough review of the company’s operations and finances to develop a viable recovery strategy.

The administrator’s responsibilities include conducting thorough investigations into the operational and financial challenges facing Bindura Nickel Corporation (BNC), assessing the causes of equipment failures, the impact of falling nickel prices, and the company’s overall financial health. Additionally, the administrator will craft a comprehensive reconstruction plan to address the identified issues, which may involve restructuring debt, upgrading equipment, optimizing processes, and securing additional capital. Effective stakeholder engagement is also crucial, as the administrator will communicate with creditors, shareholders, and other stakeholders through meetings to discuss the proposed reconstruction plan, gather feedback, and ensure transparency throughout the process.

As part of this reconstruction process, BNC requested a waiver to delay the publication of its Financial Year 2024 Audited Financial Statements. The VFEX Listings Committee granted this waiver on July 15, 2024, conditional upon publication by December 31, 2024. This extension is crucial for allowing BNC to complete its investigations and prepare detailed reports.

The Broader Context and Future Prospects

The current global oversupply and low prices for nickel present significant challenges for BNC. However, these market conditions could change, and a potential rebound in prices driven by shifts in global demand or supply constraints might provide opportunities for recovery. Monitoring global market trends will be essential for BNC’s strategy moving forward.

Financial and Operational Revitalization

To revive Trojan Nickel Mine and BNC, a strategic focus on financial and operational revitalization is essential. The company must secure funds for retooling and upgrading equipment, potentially through negotiations with financial institutions, investors, or government bodies. Additionally, addressing inefficiencies and enhancing maintenance protocols will be crucial to stabilizing production.

BNC must also adhere to legal and regulatory requirements throughout the reconstruction process. Compliance with the Reconstruction Act and VFEX Listing Rules will be critical for resuming trading and restoring investor confidence.

Long-Term Strategy and Conclusion

Beyond immediate recovery efforts, BNC should develop a long-term strategy to ensure sustainability and resilience. This may involve diversifying revenue streams, investing in new technologies, and exploring growth opportunities both within and beyond the nickel sector.

Bindura Nickel Corporation’s suspension from VFEX represents a significant obstacle but also a critical opportunity for restructuring and renewal. The appointment of Mutsa Remba as Administrator and adherence to the Reconstruction Act’s requirements are positive steps toward addressing the company’s pressing issues.

While the path to recovery may be complex and uncertain, BNC’s commitment to effective restructuring, stakeholder engagement, and strategic adaptation provides a foundation for potential revitalization. Investors and stakeholders should remain informed and engaged as BNC navigates this complex process, working to restore trust with the hope that these efforts will lead to a successful resumption of trading and a more resilient company.

In a move that has brought relief to locals, who often feel powerless against abusive Chinese miners and businessmen, local courts have sentenced Cai Yulong, a Chinese miner, to 30 years in prison for the murder of one man, the injury of another, and the assault of a third individual.

By Ryan Chigoche

In a report from June 2024, the National Prosecuting Authority (NPA) stated that Cai (58) shot and killed a man from Chief Njelele in Gokwe and injured his colleague after they allegedly encroached on his mine in Zhombe.

On May 26th, Cai Yulong, a Chinese national operating Stone Steel Blue Mine in Zhombe, became involved in a mining dispute with the deceased and his workmates, all employed by Black Hand 10 Mine.

According to court documents, the deceased and his colleagues were on duty, underground, constructing a barricade in an area where their mine meets that of the accused, Yulong. While they were working, the accused approached and opened fire on them. They fled the scene toward the exit, but Yulong pursued them, shooting the now-deceased man in the thigh. The victim later died from the gunshot wound. Yulong also shot one of the deceased’s workmates in the knee and thigh before assaulting another on the head with his fists.

A police report was made, leading to Yulong’s arrest. He has now been convicted and sentenced to 30 years in prison for murder and an additional 5 years for attempted murder, with both sentences running concurrently.

This ruling comes at a critical time, as there have been growing concerns about the protection of locals in the face of abuses by some Chinese involved in small-scale mining operations, as well as the manufacturing industry. With numerous reports of human rights abuses and little action taken against perpetrators, many have questioned whether the legal system is capable of safeguarding local citizens’ rights.

The perceived impunity enjoyed by some foreign nationals has worsened these fears, creating an environment where local communities feel increasingly vulnerable in their own country.

In July, Zimbabwe deported two Chinese nationals accused of hanging two mine employees on a front-end loader, a case that ignited debate about alleged abuses by investors from the Asian country.

Last year, Zimbabwean labour unions wrote to the government, demanding an investigation into Chinese employers, who they claimed had become notorious for violations such as torture, beatings, gender-based violence, low wages, and a host of other labour transgressions.

Although the Chinese have invested millions in Zimbabwe, incidents of abuse against locals by some individuals continue to tarnish their partnership and development efforts.

Moreover, local communities often face displacement as mining operations expand. Residents are frequently forced off their land without proper compensation or resettlement plans, worsening their economic hardships and undermining their livelihoods. Additionally, there have been reports of physical violence and intimidation against local workers and community members who protest these injustices, fostering a climate of fear and oppression.

The lack of oversight and accountability for Chinese companies operating in Zimbabwe’s small-scale mining sector has contributed to these ongoing abuses. As foreign investment increases, the need for regulatory frameworks to protect local communities and uphold human rights has become increasingly urgent. Human rights organizations continue to call for greater scrutiny of these practices and advocate for the protection of local workers and communities affected by Chinese mining operations.

While lithium is critical to the green energy revolution, ensuring emissions are drastically reduced and emerging as a vital energy source alongside other minerals, communities in Kamativi remain largely unaware of lithium’s role in this transition. Moreover, they lack an understanding of the green energy transition itself and the by-products of lithium mining.

By Rudairo Mapuranga

Critical minerals like lithium are essential for the shift to a low-carbon future. They are used in various technologies that reduce reliance on fossil fuels, including electric vehicle batteries, wind turbines, and solar panels. Lithium, in particular, is prized for its high energy density, making it ideal for rechargeable batteries—a key component of green energy infrastructure. As the world seeks to mitigate climate change, the demand for lithium and other critical minerals is expected to surge, making them invaluable to the global economy and environmental sustainability.

In an effort to understand the expectations of Kamativi’s communities regarding mining operations, Mining Zimbabwe discovered that while locals are aware that companies in Kamativi are mining or processing lithium, they are not fully informed about the significance of lithium as a mineral. Many are unaware of its critical importance, and some do not even recognize lithium-bearing pegmatite rocks when they encounter them.

Speaking to Kamativi’s traditional leader, Chief Nekatambe of Dete, Hwange, it became clear that while he understands that Kamativi Mining Company (KMC) is mining and processing lithium, and Pan African mining company Bravura Group is processing the dump left by Kamativi Tin Mine for lithium, he is not aware of what lithium is used for or the broader green energy revolution.

“I’m aware that they are mining and processing lithium here. But I’m not aware of what lithium is used for,” Chief Nekatambe admitted.

He was not alone in these sentiments. Hwange Rural District Council, represented by Eng. Alic Mudenda, although aware of what lithium is, could not clearly articulate its importance to the just energy transition or even define what the just energy transition is.

“I’m aware that lithium is the core mineral being mined here by two companies, particularly Kamativi Mining Company. The call to action, especially regarding greenhouse gases and natural resources, aims to move the country into a $12 billion economy by 2030,” Eng. Mudenda said.

Are Communities Aware of the Benefits Brought by Critical Minerals?

While critical minerals like lithium are essential to the energy revolution, local communities seem more concerned with immediate employment opportunities rather than the potential export of jobs to other countries in the form of value addition, such as battery manufacturing.

“Well, they’ve definitely created employment, which is very good. What I’m looking forward to is if they can also give back to the communities, such as providing water boreholes where there are none. I would be very happy,” Chief Nekatambe expressed.

“The impact of these minerals will primarily affect Kamativi, changing the life of the community in terms of income, shelter, education, and raising money for children to go to school. Additionally, the arrival of these mines will bring benefits to the business community by generating revenue from mining operations, thereby boosting businesses around Kamativi,” Eng. Mudenda added.

Are Mining Companies Employing Enough Local People?

While community leaders were satisfied that companies were employing local people and providing them with opportunities to earn an honest living, members of the community expressed a different perspective. Ian Muleya, a local resident, noted that the community is not truly benefiting from Kamativi Mining Company’s employment, as it includes many Chinese nationals. He suggested that the Chinese should do better by engaging in more skills transfer.

Is There a Significant Change Brought by the Companies?

“Since KMC began operating, we have witnessed several changes. They have improved road infrastructure, rehabilitating the road from Kamativi town to the clinic, which was previously dilapidated. They have also made changes to the infrastructure within Kamativi, including bringing in electricity that had been vandalized in 1994,” Eng. Mudenda stated.

“At the moment, we haven’t seen much because they are not fully operational yet. But from what I’ve observed, they are doing well as far as employment is concerned. When they are hiring, they communicate with me, asking if I can submit a few names from the community to work for them. That communication pleases me very much. I also urge these workers to be 100% sober because the machines they operate are very expensive. I’m happy because this keeps them busy and away from illicit drugs. I’m happy, and I hope our president continues bringing in investors so that people can work,” Chief Nekatambe remarked.

CSR: Do They Engage?

The communities were generally satisfied with how the companies were engaging them in corporate social responsibility (CSR) strategies. However, there are additional expectations that communities have from these companies.

“They engage with us, and I refer them to the communities. The communities are the ones that know what they need, so I always say, go to the communities. They will tell you exactly what they require. We have mentioned that most of our schools are in very poor condition, so we have urged them to improve and even construct more blocks at certain schools. I believe they are listening to what the president is always saying,” Chief Nekatambe said.

“Regarding CSR, KMC has been engaging in activities such as rehabilitating communities, building bus terminuses, drilling boreholes, and re-articulating vandalized areas. However, it’s an area that needs reinforcement, and we also need to ensure that these initiatives are community-driven rather than company-driven,” Eng. Mudenda added.

Do They Operate in a Safe Environment?

“In terms of environmental impact, while there’s a need for improvement in protecting the environment and the people, we haven’t heard any reports of hazards affecting the community. We continue to encourage companies to protect the environment, animals, and people around the mining area. We also urge miners to discuss safety measures, including holding toolbox talks every morning,” Eng. Mudenda emphasized.

“I’ve engaged with them and observed that their protective clothing is very proper. I think in terms of health issues, it’s essential that healthy practices are maintained, and investors should ensure that people do not develop diseases over time. But I think safety first. It’s very, very important,” Chief Nekatambe concluded.

Conclusion

The community in Kamativi is undergoing significant changes due to the presence of KMC and Bravura, particularly with the mining of lithium. Improvements in infrastructure, employment opportunities, and engagement in community-driven initiatives are positive signs of how these companies are impacting the area. However, there remains a crucial need for increased awareness and education about the importance of critical minerals like lithium, which are central to the green energy revolution.

Organizations such as the Green Governance Zimbabwe Trust (GGZT) can play a vital role in bridging this knowledge gap. GGZT, with its focus on promoting sustainable development and environmental stewardship, can work alongside government institutions to ensure that communities like Kamativi are well-informed about the significance of the minerals in their region. GGZT can also advocate for responsible mining practices and help align CSR initiatives with the true needs of the community.

Additionally, corporate social responsibility (CSR) must genuinely reflect the priorities of the local population for long-term sustainable development. Addressing concerns about environmental safety and health practices through ongoing dialogue between the community, companies, and organizations like GGZT will be critical. By prioritizing safety, environmental protection, and meaningful community involvement, these mining operations have the potential to bring about transformative benefits for Kamativi and ensure that the community truly benefits from its rich mineral resources.

The Chamber of Mines Zimbabwe (CoMZ) said that small-scale miners are responsible for the significant debt the mining sector owes to the Zimbabwe Electricity Supply Authority (ZESA), as members of the Chamber are under pre-supply agreements with the power utility.

By Ryan Chigoche

A few weeks ago, ZESA revealed that the mining sector, Zimbabwe’s largest consumer of energy, currently owes a staggering ZWG$684.8 million (US$45.6 million), representing 12% of ZESA’s total debtors’ book. This situation places a significant financial strain on the utility.

This revelation raised concerns, as Zimbabwe’s mining industry has long criticized authorities for their failure to provide a reliable power supply, an essential component for their operations. Mining companies depend heavily on consistent electricity to power machinery and equipment critical for extraction and processing. Without a stable power supply, productivity is severely compromised, leading to increased costs and inefficiencies.

Speaking to Mining Zimbabwe, Chamber of Mines Zimbabwe President Thomas Gono stated that small-scale miners are responsible for the debt, as members of the Chamber are already in pre-supply agreements with the authority.

“Members of the Chamber of Mines enter into power supply contracts, some of which provide for prepayments for estimated electricity requirements. In some instances, these agreements assist ZESA in amortizing obligations with their regional suppliers for imported power. For those not in such contracts, failure to settle electricity bills will result in termination of the power supply. Further analysis of the debt indicated by ZESA shows that the bulk of the arrears are attributable to small-scale operations,” Gono said.

“The Chamber of Mines continues to encourage its members to settle their electricity bills timeously to provide cash flow capacity to ZESA and ensure that ZESA continues to supply power into the economy,” he added.

Faced with a debt crisis, the Zimbabwe Miners Federation (ZMF) recently advised its members to switch to the prepaid smart metering system for electricity to prevent worsening power supply issues that could negatively impact their operations.

It is important to note, however, that artisanal and small-scale miners account for at least 60% of the country’s gold output. According to the country’s exclusive buyer of the yellow metal, Fidelity Gold Refinery (FGR), artisanal and small-scale miners delivered 2.4 tonnes of the precious mineral, a 50% increase from the July figure of 1.6 tonnes.

Underpinned by the small-scale mining industry, Zimbabwe’s overall gold deliveries during the same period improved by 36% to 3.4 tonnes, compared to 2.5 tonnes in July this year, while large-scale producers’ output increased to one tonne from 999 kilograms in July.

Gold remains Zimbabwe’s top export earner, with the government targeting 40 tonnes of gold production this year, up from 30.1 tonnes in 2023. By next year, gold is projected to generate US$4 billion, up from the current US$3 billion.