Mining ZimbabweLatest Mining News, Policy and Industry Updates

Russia’s Vi Holdings says it has exited from Great Dyke Investments (GDI), leaving the futute of what is supposed to be Zimbabwe’s biggest platinum project at risk.

Vi Holdings is ceding its 47.8% stake to its local partners, Kuvimba Mining House and Fossil, according to Vi Holdings representative Igor Higer.

In a statement, GDI said its decision to exit the project is “in connection with the global sanctions of Western countries against Russia, which naturally also applies to Russian investments abroad”. Leaving GDI would “create favourable conditions for further development of the project”, the company said.

Russia’s involvement in Ukraine had made GDI’s already tough fundraising mission impossible.

GDI had planned to mine the first ore in 2021 and at its peak produce 860,000 ounces of platinum. This would have made it the biggest mining venture in Zimbabwe.

However, GDI saw a series of missed fundraising deadlines, and the collapse of funding proposals under sanctions on Russia put on a lid on the project.

In 2020, GDI announced that the African Export-Import Bank (Afreximbank), the lead arranger for project funding, had completed due diligence on the project, allowing the company to start raising capital.

But GDI Chief Executive Officer Alex Ivanov said coronavirus delayed project fundraising, which was originally due to be completed in 2021. Financing of a US$665 million first phase development was pushed to the first quarter of 2021.

In December 2020, in a bid to raise capital, GDI sold a 4.4% stake for US$30 million to Fossil Mines as COVID-19 disrupted fundraising.

That sale valued GDI at US$680 million.

Vi Holding, owned by Russia’s Vitaliy Machitskiy, has had to carry the burden of exploration alone, spending US$100 million on pre-development.

Needing funding, GDI reportedly tried to sell the project to Implats, which runs Zimplats. But Implats turned down the offer over concerns about the ownership of GDI, especially the involvement of Kuvimba.

Sanctions on Russian businesses over Ukraine made GDI’s efforts to raise capital even harder. Russian companies are no longer able to raise capital in London or New York, making Afreximbank’s task virtually impossible.

Signs that funding was hard to get showed as work stalled at the site, and the company started to seek out cheaper ways to develop the mine.

Kuvimba CEO Simba Chinyemba recently said the strategy for the project has had to change.

“The original project was modelled on the possibility of underground mining,” Chinyemba said.  “After further exploration and analysis common to projects such as this, it is now believed that the orebody may be more amenable to an open-pit project. GDI is thus remodelling the whole Darwendale project in order to take this into account.”

Russia sanctions: local impact

The failure of GDI is a major knock for Zimbabwe, which has placed mining at the centre of efforts to end the economic crisis.

Sanctions on Russia, which also ban Russian companies and businesspeople from moving money through UK banks, may also affect investment plans by Alrosa. The world’s biggest diamond company is currently exploring diamonds in Zimbabwe.

Alrosa signed an agreement in 2019 with the state-owned Zimbabwe Consolidated Diamond Company (ZCDC) to jointly explore for diamonds in Zimbabwe. It has 35 prospecting special grants. It is now also under US sanctions.

Alrosa plans to invest at least US$9 million each year in greenfield exploration and assessing the diamond content of any kimberlite pipes that are discovered.

Zarubezhgeologiya, the operation of the international projects of Russian state company Rosgeo, might be brought in to work on the geological mapping of Zimbabwe.

Newzwire

GOVERNMENT has set up an inter-ministerial team to oversee the improvement of security systems at ports of entry to curb mineral smuggling, Mines and Mining Development deputy minister Polite Kambamura has said.

A 2019 report by the International Crisis Group estimated that the country was losing around US$1,5 billion a year through the smuggling of gold, mainly to Dubai and other countries.

Black market sales of minerals are currently rife because Reserve Bank of Zimbabwe (RBZ) prices are lower than those being offered by illegal foreign dealers.

“The issue of mineral smuggling is one other area that the ministry is working on together with other government ministries and departments. An inter-ministerial team was set up to see that we plug all our ports of exit and entrance so that we improve security systems at those ports and also curb or minimise mineral leakages.

“Government is also working together with miners to improve mineral prices in the gold sector. I think you may be aware that government put a plethora of incentives to the sector to encourage the miners to deliver their gold to government and we have seen this move bearing results as evidenced by the increase of gold deliveries to Fidelity gold refineries from late last year to early this year,” Kambamura said.

In his 2022 national budget statement, Finance minister Mthuli Ncube said the country would ensure the US$12 billion mining industry was achieved by 2023.

The US$12 billion mining industry represents a 344% increase from the US$2,7 billion registered in 2017. The growth of a multi-billion-dollar industry will be driven by gold, platinum, diamond, chrome, iron ore, coal, lithium, and other strategic minerals.

Gold exports are expected to reach US$4 billion while platinum exports are seen at US$3 billion. Diamonds are expected to generate US$1 billion while chrome, nickel, and steel will also realise US$1 billion.

In support of this, a total of $3 billion was allocated to the Mines ministry for the implementation of the sector’s programmes and activities such as the amendment of the Mines and Minerals Act and operationalisation of the Cadastre System, among
others.

Kambamura also said government had put in place mechanisms to ensure that proceeds from the mining sector benefited the nation.

“Minerals that we sell all go through government departments, for example, all other minerals except gold are marketed and sold through the Minerals and Marketing Corporation of Zimbabwe (MMCZ) and this is where we manage all the revenue, this is where government gets its royalties to the Ministry of Finance through MMCZ and for gold we sell through fidelity that is RBZ and to this effect the royalties from all mining operations are then channelled to the fiscus and budgeted or put into the mainstream of the economy.”

He added: “So this is one other way that government is doing to make sure that proceeds from the mining sector benefit all citizens. Projects that will be done under government using these monies will benefit everyone. There is an issue of community share ownership schemes or corporate social responsibility where government urges all mining companies to do community projects for the benefit of locals and other Zimbabweans at large. So, people or citizens, Zimbabweans, should benefit from what government is doing to see that all mining revenue is put back into the
economy.”

Newsday

ZIMBABWE has paid an excess of US$1,2 billion towards power imports in the last 10 years amid calls by the power utility, Zesa, for Government to consider channelling these resources to facilitate the offtake of new energy projects by local Independent Power Producers (IPPS).

While IPPs play a progressive role in boosting electricity supplies in many countries, Energy and Power Development Minister, Soda Zhemu, is on record saying in Zimbabwe most of the planned IPPs investments have failed to take off due to funding constraints as players fail to get suitors.

Since 2010, the Zimbabwe Energy Regulatory Authority (Zera) has licensed over 70 IPPs to establish electricity generation plants across the country, with estimated output of over 6 000MW combined.

However, a few small projects are operational and only producing little at a time the country is experiencing serious electricity deficit.

In the absence of IPPs, Zimbabwe’s power generation is currently at 1 300MW, mainly from the Zimbabwe Power Company (ZPC), which is the major producer, with demand hovering at average 1 750MW, according to official statistics.

The service gap has resulted in continued power cuts, which industry leaders partly blame for frustrating production amid costly imports from regional producers, which drain scarce forex resources from the economy.

The power imports are mainly sourced from regional state-owned utilities and IPPs.

“In the past 10 years alone, we have paid excess of US$1,2 billion in power imports and last year we used up to US$224 million,” Zesa internal consultant responsible for international business, Engineer Cletus Nyachowe, said in an interview.

“As Zesa we have been saying these power imports are not only coming from utilities in the region but particularly from IPPS in other countries.

“Our argument is that why can’t we channel these resources to our own local IPPs? And if we can do that to our own producers, there will be huge impact as they would generate and supply power locally.”

Eng Nyachowe, who represented Zesa executive chairman, Dr Sydney Gata, during last week’s Chamber of Mines of Zimbabwe Conference in Victoria Falls, earlier told delegates that the successful growth of the IPPs sector requires policy fine-tuning, which the Government has pledged to address.

“Under NDS1 (National Development Strategy) IPPs are expected to generate 500MW by 2025 and the Government is looking into this to give investors assurance.

“Most of these IPPs have signed power purchase agreements with the ZEDTC (Zimbabwe Electricity Distribution and Transmission Company) in US-dollars but the actual payments are in RTGS terms at the prevailing exchange rate,” said Dr Nyachowe.

“This has become a major challenge as to why these projects are not taking off and the Government is addressing that.

We appeal to the Government to speed up this policy issue on this matter so as to unlock wider potential from the IPPs.”

The engineer said the full-scale operations of IPPs would not only help ease power supply burden from Zesa, but impact positively on the regionally starved grid.

He said the power utility also stands to benefit more from such projects as the sole provider of transmission infrastructure.

In line with Vision 2030, Government has mandated IPPS to contribute close to 40 percent of the targeted 11 500MW that the country needs in order to attain an upper middle-income economy status where electricity, among other services, should be readily available and accessible to all citizens.

Meanwhile, the Government has outlined a comprehensive roadmap to tame power generation/supply deficit so as to bolster efficient industry operations as well as facilitating speedy connection of 305 000 backlog of domestic customers.

The measures include life extension and rehabilitation of ageing thermal plants, speeding up completion of the 600MW Hwange Units 7 and 8 expansion and securing more imports as a stopgap solution.

The Chronicle

Holcim is selling its Zimbabwe unit Lafarge to Fossil Mines, as part of its global asset sale.

Fossil Mining is run by Obey Chimuka, a long-time associate of businessman Kuda Tagwirei, and is part of a group that has recently won a string of government infrastructure contracts.

“Further to the cautionary announcement dated 31 May 2022, shareholders and members of the investing public are advised that Associated International Cement Limited, a member of the Holcim group, has entered into a binding agreement for the sale of its 76.45% stake in Lafarge Cement Zimbabwe Limited to Fossil Mines (Private) Limited,” Lafarge said in notice.

Fossil beat off interest from other bidders, among them Huaxin, the Chinese cement company that had looked like a favourite for the stake after it recently bought Lafarge’s business units in Malawi and Zambia.

Apart from selling off some of its assets in Southern Africa, Holcim has recently also sold part of its Ghana business and disposed of its Brazil unit for US$1 billion.

Lafarge did not give details on the value of the Fossil deal.

Taking over Lafarge is a major coup for Fossil Mining, which has no track record in manufacturing.

Last year, Fossil bought a 4.4% stake in Great Dyke Investments for US$30 million, partnering with Kuvimba Mining House and Russia’s Vi Holdings in the platinum venture. The Russian company has now ceded its stake to Kuvimba.

Fossil Contracting is one of five contractors working on the Beitbridge Highway, and is part of a consortium that was awarded a contract to build the Mbudzi interchange in Harare.

Concrete mix

Lafarge has had mixed fortunes over the past year.

Rising demand for construction saw Lafarge lay out a US$25 million expansion. But the company also faced rising costs, while a roof collapse at its factory stopped cement production between October and February.

This led to what the company reported recently were “significant liquidity challenges that hindered (Lafarge) from fully meeting its cash obligations” and caused “unplanned downtime and, in some cases, the shortage of materials to keep the plant running”.

Last April, Lafarge commissioned a new US$2.8m dry mortar plant, which increased output of dry mortar products – such as adhesives and agricultural lime – from just 7,000 tonnes per year to 100,000 tonnes annually, equal to national demand.

The company is close to commissioning a new Vertical Cement Mill plant, which will more than double Lafarge’s annual cement milling capacity to one million tonnes.

Newzwire

PLAYERS in the metal foundries sector are keen to work closely with the mining industry to enhance production and help the economy to substitute imports through domestic supplies.

Given that the mining sector is among the top importers of finished industrial engineering products and metal components, the Zimbabwe Institute of Foundries (ZIF) says it is ready to work with local companies to scale up local supplies to meet the needs of the extractive sector.

ZIF president, Mr Itai Zaba, said mines were largely sourcing their metal casting materials from abroad and yet these could be made by local foundries.

“It’s important for the Chamber of Mines and the ZIF to have discourse on these and agree on a programme for import substitution,” he said.

Mr Zaba said the foundry industry has been experiencing shortage of raw material amid high production costs, which has tended to push the sector’s price competitiveness downwards.

With limited capacity, local foundry players end up failing to meet demand from the market resulting in some operators seeking imports from other countries.

ZIF has been lobbying the Government to ban the export of scrap metal saying this was a major source of their raw material since the demise of the giant metal producer, the Zimbabwe Iron and Steel Company (Zisco) in 2008.

Mr Zaba said the mining sector produces a lot of scrap metal during maintenance works hence the need to seal a working partnership to facilitate channelling of scrap metal from mines to local foundries.

He said this will assist in revitalising the local metal foundry value chain.

“This scrap, through the tender system at the mines, ends up with middlemen merchandisers who then either resell it to the foundry industry at extremely high prices or export it,” said Mr Zaba.

“A relationship between the Chamber of Mines and ZIF will enable access to reasonably priced scrap and this will reduce pressure on the foundries charging high prices.”

Mr Zaba said the metal foundry sector’s production could increase capacity utilisation faster if supplied with adequate stocks of scrap metal.

“Zimbabwe will also benefit because the enhanced capacity utilisation and competitive pricing will be exploited for increased exports, thus helping to generate increased forex inflows,” he said.

“The forex expenditure reduction effect of import substitution, will also add on to the effect of increased generation through more exports.”

In its resolutions for 2022, ZIF said it was targeting to increase capacity utilisation from 40 percent in 2021 to at least 80 percent.

The Chronicle

SOUTH Africa-based Mr Hilton Papenfus whose father was a manager at Hwange Colliery Company when a string of underground gas explosions killed 427 miners, his parent included, was in the mining town yesterday on a day of remembrance.

They died in a 5km-tunnel shaft at the then Wankie Colliery’s Number 2 shaft known as Kamandama.

Yesterday marked exactly 50 years since the Kamandama Mine disaster.

It remains the worst mine disaster in the country’s history and every June 6, commemorations are held to honour the miners.

Mines and Mining Development Minister Winston Chitando, Matabeleland North Provincial Affairs and Devolution Minister Richard Moyo, mine workers, local chiefs and security officers also attended the meeting.

Mr Papenfus told Chronicle that his father died at the age of 40 and he received the sad news
when he was at Plumtree High School doing Form One. “I came here with my wife Gillian, my sister who was 12 years when the incident struck and my son.

We came all the way from South Africa to remember my father.

It is a way of reconnecting with my father and making sure we do not forget him.

Let us continue doing this so that future generations do not forget,” he said.
Mr Papenfus said this has to be a legacy for the mining industry.

“We were lucky in that our mother was employed otherwise we were not going to survive.

We never received any cash injection from the company,” said Mr Papenfus.

Speaking during the commemorations, Minister Chitando said Government has come up with a raft of mining initiatives which are supposed to be followed by all mining companies to avert disasters.

Mines and Mining Development Minister Winston Chitando

“Responsible mining initiatives mean all mining activities should conform to the laws of the country.

In observing the laws of the country, this also includes observing responsible mining, which entails observance of the highest standards of safety,” he said.

“We want to ensure that we do not have any mining disasters in our mining activities and good environmental practices in the extraction of all minerals.”

Minister Chitando said the initiative also demanded observance of migration laws, paying taxes, production through recognized channels, and ensuring paying workers according to the stipulated rates set by the National Employment Council.

He said the safety initiatives should be extended to all other sub sectors in the mining sector.

Minister Chitando lauded Hwange Colliery Company for maintaining high safety standards in mining through investing in advanced technology.

“Hwange Colliery Company has implemented a lot of world class safety standards which they should continue to improve.

Since the Kamandama Mine disaster, the company has since re-examined the way it operates by making sure that particular attention is made on safety,” he said.

Minister Chitando said the coal mining sector plays a critical role in the development of the country.

“His Excellency, President Mnangagwa came up with the 2030 vision to ensure that Zimbabwe becomes an upper-middle income economy and this entails various sectors contributing towards this vision.

Zimbabwe is on course to achieve the US$12 billion mining industry target by 2023 from a base of US$2,7 billion in 2018,” he said.

“At the base of the onset of the US$12 billion, coke which was being produced in the country was about 280 000 tonnes per annum tonnes and now we are producing 2 million tonnes per annum.

This is premised on the new power stations coming in at Hwange Power Station including additional power stations to be established in the Hwange and Binga areas.”

Hwange Colliery Company administrator Engineer Dale Sibanda said the mine has committed itself towards improving the safety of miners through investing in technology that meets international standards.

“Hwange Colliery Company is in a position to monitor its mine safety procedures as a way to mitigate any disasters that may occur.

Since the disaster, the company has been investing in advanced technology to ensure that the utmost safety standards are adhered to,” he said.

“We have since abandoned the drill and blast method of underground mining for secure equipment such as the continuous miner.

We also observe high standards of safety during underground operations such as disallowing the use of contraband or use match sticks.”

During the commemorations, widows who were clad in tailor-made attire emblazoned with Hwange Colliery Company logos, released white balloons into the air, symbolising their departed loved ones.

In interviews, the widows said the company only remembers them during the annual commemorations.

Other things we get once in a while include pots, plates and cups,” said Ms Senzeni Phiri.

Ms Phiri, who lost her husband when her son, Mr Tapedza Makava was only two years old, said her wish was for the company to either give them monthly allowances or increase the annual payment figure.

Mr Makava said he only learnt that his father was a victim of the disaster when was in Grade Four.

He appealed to the coal mining company to increase his mother’s allowances

“I struggled with my education because my mother wasn’t employed.

In fact, I was a beneficiary of the Kamandama Mine disaster until the age 18 years after which my mother had to struggle with my education,” he said.

The Chronicle