Mining ZimbabweLatest Mining News, Policy and Industry Updates

Mining Zimbabwe can report that ART Holdings’ flagship unit, Chloride Zimbabwe, has shelved its plans to manufacture lithium batteries this year, citing bottlenecks in the local manufacturing environment.

By Ryan Chigoche

Chloride, the largest battery manufacturer in Zimbabwe, had initially planned to start assembling lithium batteries this year, with a long-term goal of manufacturing them. Given Zimbabwe’s substantial lithium resources, it was anticipated that Chloride would quickly enter the lithium production sector. The country is home to some of the largest lithium deposits globally, with reserves estimated at up to 23 million tonnes. This positions Zimbabwe as a significant player in the global market, particularly as demand for lithium, crucial for battery technology, continues to rise.

Despite Zimbabwe’s significant lithium deposits, ART Chief Financial Officer Abisai Chingwecha told Mining Zimbabwe that the company will not be manufacturing lithium batteries due to the challenging local manufacturing environment. He mentioned that while manufacturing is not currently feasible, Chloride may consider assembling batteries in the future.

“Given the current constraints in obtaining long-term capital and the difficult manufacturing environment in Zimbabwe, we are not looking at manufacturing lithium batteries at this time. However, we will explore assembly partnerships in line with trading volumes. Currently, we are focused on maximizing and ensuring the availability of our products in existing markets,” Chingwecha said.

Chloride, like many local manufacturers in Zimbabwe, faces significant challenges due to a lack of long-term funding. The scarcity of sustained financial support limits the company’s ability to invest in advanced technology and scale up production effectively. This issue is not unique to Chloride but reflects a broader struggle within Zimbabwean industries.

Adding to that, the manufacturing sector in Zimbabwe is also confronted with multiple challenges that hinder growth and efficiency. Persistent power outages disrupt production schedules and increase operational costs. Additionally, the Reserve Bank of Zimbabwe’s retention policy on export earnings complicates access to foreign currency, while policy inconsistency creates an unpredictable business environment that deters investment.

Currently, Chloride produces nearly 50,000 batteries per month and plans to install an oxide mill to boost its production capacity to approximately 70,000 batteries per month. This move is part of a broader strategy of incremental investments in production capacity over the past decade.

Since its acquisition by new shareholders in 2014, Chloride has made substantial investments in its manufacturing processes. Initial investments included US$800,000 in an acid-filling machine that reduced waste by 20% and increased monthly production to 14,000 batteries. In 2015, the company invested US$3 million to upgrade machines and enhance production quality, improving capacity to 20,000 batteries per month, reducing waste from 7% to 1.5%, and cutting production costs from US$50 to US$42 per battery.

In 2017, Chloride expanded its production further with a US$2 million investment in a plastic manufacturing plant, localizing the production of battery cases and increasing capacity to 35,000 batteries per month. More recent internal modifications have raised capacity to 40,000 batteries per month in response to rising demand and power challenges.

Currently, Chloride exports 40% of its products, with 80% going to Zambia and the remainder distributed to Malawi and Mozambique. However, in the domestic market, the company faces intense competition from low-cost imports and imitators of its flagship brand, Exide. Despite these challenges, Chloride remains committed to producing high-quality, cost-effective products. The upcoming new plant is expected to support this goal by reducing production costs and making its products more competitively priced.

Lead remains a major cost component in battery production, accounting for 65% of total production costs and 80% of raw material costs. Chloride sources its raw materials from South Africa, South Korea, Europe, and locally, spending approximately US$400,000 per month on imports. To mitigate the impact of these costs, Chloride has entered into a trading arrangement with Korean company Taesung. This agreement allows Chloride to receive raw materials in advance, produce and sell batteries, and make payments over five months, thus helping to maintain cash flow.

The value addition of lithium resources presents a transformative opportunity for Zimbabwe. By advancing into lithium production, the country can leverage its mineral wealth to drive economic growth, create jobs, and foster technological advancements. Lithium, essential for manufacturing high-performance batteries used in electric vehicles and renewable energy storage, could stimulate industrial development and increase export revenues.

Furthermore, developing a domestic lithium industry would reduce reliance on raw material exports, enabling Zimbabwe to capture a greater share of the value chain and support broader economic stability and growth.

London Stock Exchange-listed mining and exploration junior, Contango Holdings, has secured a significant US$20 million investment from its strategic partner, Huo Investments (Pvt) Limited, to advance the Muchesu coal project in Binga.

By Patricia Rwafa

The investment marks a major milestone for the company, enabling the acquisition of critical mining equipment, the expansion of the mining site, and the installation of key infrastructure to boost production.

The funding, provided under a US$20 million Revolving Facility Agreement (RFA), has already facilitated the purchase of excavators and trucks, which have helped clear approximately 20,000 square meters of overburden, allowing for the expansion of the existing open pit. This positions the Muchesu site for increased steady-state coal production once full-scale mining resumes.

The strategic investment is also poised to transform Muchesu’s output capabilities with the installation of a Dense Media Separation (DMS) plant. With a production capacity of 3,000 tonnes of washed coal per day, the DMS plant represents a vital component in Contango’s efforts to process coking coal, a key resource that the project will target once the pit expansion is complete. The concrete foundations for the DMS plant have been laid, and full operational status is expected by the end of October 2024.

Huo Investments’ commitment to the Muchesu project extends beyond the current phase, with plans to install additional DMS plants to further boost production output. Under the existing Mineral Royalty Agreement (MRA) between Contango and Huo Investments, Contango will receive royalties of US$8 per tonne of washed coking coal, payable monthly. The first royalty payment of US$1 million is expected in Q4 2024, with subsequent payments following in early 2025. If the DMS plant meets expectations, royalty payments are expected to exceed the minimum of US$2 million annually.

In addition to the ongoing developments, Huo Investments has subscribed to 142 million new ordinary shares in Contango at a price of £0.0111 per share, aligning its interests more closely with the company’s success. The company has submitted a Short Form Prospectus to the FCA for approval, which will enable the issuance of these new shares.

Contango’s Chief Executive Officer, Carl Esprey, expressed optimism about the ongoing developments, highlighting the transformative impact of Huo Investments’ capital commitments.

“Muchesu is now under new stewardship, and we expect significant progress in the coming months.

“With the DMS plant becoming operational in Q4 2024, we anticipate material amounts of coking coal being processed, which will trigger royalty payments well above the minimum outlined in the MRA,” Esprey said.

He further added, “Corporately, we have taken steps to address our creditors, rationalize costs, and position the company for sustained growth. The board has deferred their salaries until substantial royalty income is generated, reflecting our commitment to this project.”

While gold deliveries to Fidelity Gold Refinery (FGR), the country’s sole operating gold buyer and exporter, increased by 7% from January to August 2024 compared to the same period last year, the government believes that deliveries should have been higher, given the current favourable gold prices, Mining Zimbabwe can report.

By Rudairo Mapuranga

Speaking at the gold mobilization send-off workshop held at Cresta Jameson Hotel in Harare on Monday, the Minister of Mines and Mining Development, Hon. Winston Chitando, noted that while gold deliveries rose to 20.7 tonnes in the first eight months of 2024, compared to 19.3 tonnes during the same period in 2023, the rise should have been greater, especially considering the current surge in gold prices.

“The global demand for gold is on the rise, as the world turns to gold as a safe haven amid economic and geopolitical issues. This has seen the price of gold increase from about $1,980 in September 2023 to its current price of $2,500. It is absolutely crucial that, as a country, we maximize both the volume and the unit price. At a time when market prices for other minerals, such as platinum and lithium, are subdued, gold is experiencing an increase.

“From January to August 2024, gold deliveries through Fidelity stood at 20.7 tonnes, compared to 19.3 tonnes for the same period in 2023, reflecting a modest increase. However, it should be more, especially with the rise in gold prices. Some old gold deposits, previously deemed unprofitable, have now become viable. Therefore, while we celebrate a 7% increase, we believe we should aim for even more,” Chitando said.

The government hopes that, through its gold mobilization efforts, deliveries to FGR will eventually surpass the current annual target of 35 tonnes.

“In 2024, large-scale miners delivered 8.5 tonnes of gold through Fidelity, compared to 7.7 tonnes in 2023, representing a 10.4% increase. Small-scale miners delivered 12.1 tonnes in 2024, up from 11.7 tonnes in 2023, a 3.4% increase. However, considering the significant rise in gold prices, this increase should have been much higher. We hope that through today’s intervention and other measures, we will see a rise in gold deliveries,” Minister Chitando added.

Zimbabwe’s gold sector remains strategic to national economic development, contributing significantly to the country’s economy. In 2020, gold deliveries through Fidelity Printers and Refiners amounted to 30.1 tonnes, and the 2024 target has been set at 35 tonnes. To achieve this goal, the government emphasizes the need to curb leakages to side markets, which have hindered the sector’s growth. The Gold Mobilization Task Force is seen as a key initiative to prevent these leakages.

The country’s currency is anchored on gold, underscoring the importance of ensuring that all gold trades within Zimbabwe are conducted through FGR. The gold mobilization exercise has proven successful, receiving positive feedback and making a substantial impact each time it is implemented.

“Sometimes, we feel that this exercise should happen more frequently because of its positive outcomes. Mineral resources provide the government with much-needed revenue from taxes and royalties. By working together through this initiative, we aim to ensure that every ounce of gold produced within our borders contributes to the national good.”

To the teams being deployed today, this intervention is of paramount importance. I wish you all the best as we embark on this crucial assignment to maximize revenues for the country and minimize losses by stopping illegal gold trade,” concluded Minister Chitando.