Mining ZimbabweLatest Mining News, Policy and Industry Updates

THE Government needs to raise the foreign currency retention rate of 12 percent that is remitted by mining companies to a more robust 50 percent. Such a move would invigorate the economy and spur the growth of local industries, a vital step towards reducing unemployment and addressing the prevailing trade imbalances, the chief executive officer of Buy Zimbabwe, Mr Munyaradzi Hwengwere has said.

Miners say they want to be allowed to keep 70 percent of their dollar earnings to allow them to import equipment and mining consumables, including fuel. Mining generates most of the export earnings for the country which is facing a severe shortage of dollars.

In an interview on the sidelines of the Zimbabwe National Chamber of Commerce (ZNCC) Midlands Annual Awards ceremony held over the weekend, Mr Hwengwere said for the economy to grow, there is a need to develop local industries.

“Right now mining is the largest foreign currency earner. Sadly, only 12 percent of the mining order book is domesticated in Zimbabwe which means the ability to create employment in other sectors is very low,” he said.

Mr Hwengwere said the first thing the Government needs to do is to significantly reduce the 12 percent to 50 percent.

“There is a need for the Government to force mining companies to retain at least 50 percent of foreign currency earnings to the country against the current 12 percent which leaves the country in dire need of foreign currency earnings. This development means mining companies will need to work on programmes to make sure that they support local industries and local businesses,” he said.

Added Mr Hwengwere, “Unless that happens we will remain in the same vicious circle of currency problems that we are having in the country. We still have huge trade imbalances, US$17 billion over the past 20 years that we have taken out to other countries.”

He said what needed to be done was the implementation of the Local Content Policy passed by the Cabinet.

“Its implementation of the local content policy that was passed by Cabinet to say mining companies cannot have anything above 50 percent. That needs to be implemented, there is a policy already but the implementation has not been thorough.

“So we just need to make sure that people know what they need to do, we need to make sure that for example bore mills and a lot of equipment can be secured in Zimbabwe.  Let’s just cut our imports, let us use the money to support local industries,” said Mr Hwengwere.

He said over 60 percent of foreign currency earnings in the mining sector come from Zimplats, Mimosa, and Unki Mines. As Buy Zimbabwe, he said they are advocating for the total ban of raw material exports to grow the local industries.

Chronicle

Miners are using their strong balance sheets to reposition for long-term growth, particularly in critical minerals, which accounted for two-thirds of last year’s M&A deals, while gold deals were down 50% as precious metals’ dominance of M&A ended.

That is according to the latest PWC review of the global mining industry that also finds that governments are becoming a major player in the mining industry as advanced countries look to ensure they have access to the critical minerals needed for the green transition.

Though the total value of the top 40 M&A activity was steady in 2022 compared with the previous year, the composition changed as the race for critical minerals accelerated, with critical minerals deals up 151% and copper accounting for 85% of those deals. Miners prefer outright ownership to joint ventures, and there is an appetite for “transformational deals” such as Glencore’s $22bn offer for Teck Resources.

PWC SA’s Laetitia le Roux said mining companies were not the only players in the race, with sovereign wealth funds and carmakers also seeking deals. Further consolidation in the sector was expected.

The race for critical minerals has caused governments to enter into agreements with other governments to collaborate on securing supplies of these minerals, particularly copper, lithium and cobalt. Miners must now “reckon with a whole new set of industry dynamics”, with national governments having reconfigured the competitive landscape, the report shows. Governments, particularly in advanced countries, have put new rules and regulations in place, such as export curbs, as well as new incentives to explore for and beneficiate critical minerals.

Go elsewhere

SA is believed to have significant resources of critical minerals but it would require exploration to identify these. In terms of the regulatory environment, SA had no focus on critical minerals; there had not been much exploration nor much work to incentivise local beneficiation, PWC SA mining lead Andries Rossouw said.

“There is a real risk that if we don’t create an enabling environment for our mining industry the global mining companies will go elsewhere,” he said.

For existing mining companies in SA however, the regulatory environment is less of an issue than the energy, transport and water security issues constraining the sector.

The review shows globally miners are taking advantage of the low net debt and substantial cash holdings they have built up thanks to their capital discipline and the strong commodity prices they have experienced since 2016.

Revenue held steady last year for the top 40, though coal was the leading contributor for the first time since 2013. Earnings were down 3% however, due to pressure on costs.

In the coming year it was expected that prices would soften, costs would stabilise, capital spending would decrease but dividends would remain high, PWC said.

PWC’s top 40 list is again headed by Australia’s BHP and Rio Tinto, but Swiss-based Glencore has risen from fourth to third place on the rankings, ahead of Brazil’s Vale and China’s Shenhua Energy Company.

Anglo-American comes in at seventh place, but other SA miners rank between 30 and 40, led by Impala Platinum. Gold Fields, AngloGold Ashanti and Sibanye-Stillwater are the only other SA-based companies on the list.

Source: businesslive