Mining ZimbabweLatest Mining News, Policy and Industry Updates

MINING activities upstream of Sebakwe River are reportedly contaminating water, making it difficult for Kwekwe City Council to effectively purify it.

Sebakwe supplies Kwekwe and Redcliff towns and lately residents have been experiencing intermittent water shortages due to turbidity.

The local authority, instead of supplying citizens with unclean water, chooses to cut supply until the turbidity settles or when the water is safe for drinking.

Speaking during a full council meeting recently, Works Director Eng John Mhike said since the rains have subsided, the water remained with a lot of turbidity which requires more than normal chemicals to clean.

He said suspicion was that there were illegal miners upstream of Sebakwe who were contaminating the water.

illegal mining
“We are going to send a team to investigate what exactly is going on. But we strongly suspect that there are mining activities that are taking place and possibly contaminating the water,” said Eng Mhike.

He said the Environmental Management Agency (EMA) was conducting the investigations and would furnish the local authority with results. Meanwhile, last week, residents went for close to two days without water after the local authority stopped supply because council ran out of purification chemicals.

“Water chemicals namely aluminium sulphate ran out at the waterworks before arrival of the next consignment from Chemplex Marketing because of production challenges at their plant. The consignment is now on its way from Harare to Kwekwe. As a result, we stopped pumping water to the city at 4.30pm. We will resume production and pumping as soon as the chemicals arrive. Any inconvenience caused is sincerely regretted,” read communication
from council.

In another statement, the local authority said the continued erratic water supply was due to
poor raw water quality which is being abstracted from Dutchman’s pool for purification.

“The raw water that we are currently treating is very turbid with a high concentration of light sediments which are proving very difficult to settle during the water treatment process. In order to control the sludge levels during the water treatment and prevent choking of treatment process, we are being forced to operate intermittently with frequent start-stops,” read the statement.
Muddy water
The local authority has implemented a raft of measures including engaging Zinwa to flush
muddy water that has collected in the dam. Council is also procuring more treatment chemicals that can assist in managing the raw water situation.

“Other efforts are underway to bring a lasting solution to the current challenges and we are kindly appealing to all water users and consumers to use water responsibly until normal water supply is restored,” read the statement.

Kwekwe is one of the best water authorities in Zimbabwe with a reputation of uninterrupted water supply as long as there are no faults.

The Chronicle

The African Energy Chamber (AEC) spoke with Scott Macmillan, Managing Director of Invictus Energy, ahead of the continent’s premier energy event, African Energy Week (AEW) 2022, about the company’s operations on the continent, the challenges independent explorers are facing and the opportunities AEW 2022 provides for explorers such as Invictus.

AEC: What are Invictus Energy’s vision, mission and goals for 2022?

SM: We are currently planning our maiden drilling campaign in the Cabora Bassa Basin in Zimbabwe which is estimated to commence in July. We will be drilling two exploration wells: Mukuyu-1 and an additional well which is being matured for drilling at present. Our goal is to conclude our drilling campaign safely and make a basin opening discovery.

AEC: Please provide insight into the company’s recent projects in Africa. How do these projects contribute to Invictus’ 2022 and overall oil and gas market agenda in Africa?

SM: Our Cabora Bassa project in northern Zimbabwe is an exciting asset. It’s one of the last undrilled interior rift basins in Africa that has significant potential for finding hydrocarbons. Our Mukuyu prospect is world class and independently estimated to contain 8.2 trillion cubic feet and 247 million barrels of conventional gas-condensate. It is the largest undrilled prospect onshore Africa and will be one of the largest targets drilled globally in 2022.

Our vision is to become a regional energy supplier in southern Africa and success in our exploration campaign at one of the material prospects we are drilling will go a long way to fulfilling that goal and having a significant impact in the region. Energy independence and energy security are critical to helping end energy poverty in southern Africa.

AEC: What challenges are companies like Invictus Energy that are operating within Africa’s oil and gas market facing and how can they be addressed?

SM: The challenges for us from an operational perspective are mainly around availability of service providers and the mobilization and logistics hurdles to move equipment to the project. We experienced this during our seismic campaign last year which we executed during the height of COVID-19. It is something that our team has had to be very involved in to ensure that our drilling campaign kicks off on schedule and within budget. We have managed to rapidly progress a very frontier project from acquisition in 2018 to shooting a large 840 km infill seismic campaign in the second half of 2021, and now preparing to drill two wells within six months of completing the seismic survey. We’re very fortunate that we have a very experienced and dedicated local team and a supportive government who have gone out of their way to assist us.

The other challenge is overcoming the perception that whilst Africa has great geological potential, the fiscal terms and above ground environment have made it a difficult place to do business. This is certainly true for some jurisdictions, but others have recognised this and amended their terms to attract investment back into their countries. We are now seeing the change in terms bear fruit in places such as Ivory Coast and Namibia with the recent material discoveries.

AEC: What are the top three key trends that will shape Africa’s oil and gas market in the next three to five years?

SM: Firstly, African oil and gas is going to be in greater demand, particularly in Europe and Asia, because of the changing energy dynamics and desire to move away from dependence on Russia. This will help unlock stalled developments that have struggled to reach Final Investment Decision or secure anchor markets.

Secondly, fiscal competitiveness will determine whether Africa can capture further interest that will lead to exploration and development activity.

Thirdly, the increasing energy demands in Africa from a growing population as well as the industrialization of economies will require affordable and reliable sources of baseload power. Gas is going to play a hugely important role in that regard.

AEC: What are some of the opportunities companies like Invictus Energy can gain from participating at AEW 2022?

SM: The AEW conference will provide a fantastic platform to network with other E&P companies and government delegates from around the continent and provide us with access to new opportunities and partnerships that you can really only get from a meeting face to face.

AEC: What are some of the topics that you will be discussing at AEW 2022 in Cape Town?

SM: We will be discussing the results from our maiden drilling campaign as well as seeking new opportunities to grow our business beyond Zimbabwe.

worldoil.com

A series of investments into Zimbabwean lithium by foreign companies, led by mostly Chinese energy companies and UK explorers, has raised debate on value addition in the sector.

Huayou Cobalt bought Arcadia mine from Prospect Resources, while Sinomine has completed the acquisition of Bikita Minerals from German investor Wilfried Pabst’s Southern African Metals. UK mineral exploration companies Red Rock, Galileo and Premier African Minerals have also joined the queue.

Huayou has announced a plan to invest US$300 million to bring the plant to production and build a processing plant. That, the company says, will be the full extent of its value addition, for now.

Critics say Zimbabwe should force the companies to manufacture batteries locally. But these companies see little sense in these calls, wherever they have invested in minerals. They prefer making batteries closer to their markets, and in places where all the raw materials needed are available.

While Prospect had explored the feasibility of converting battery-grade lithium carbonate – the company had built a pilot plant and produced samples – Huayou says even this is not economic, at least not for another decade.

Huayou will not export raw ore, but will process it before export. However, it says the step beyond that, which is a converter for battery-grade lithium, is not economic. Zimbabwe has neither the required green energy nor the long laundry list of the needed raw materials to justify a concentrator here.

Below, we publish Huayou’s response to questions on the extent of its value addition plan:

__

The establishment of a converter for producing battery-grade lithium carbonate is not feasible for the following reasons:

First, the principal reason the production of battery-grade lithium carbonate is not feasible is based on the lack of supporting and auxiliary materials for battery-grade lithium carbonate production.

For each tonne of battery-grade lithium carbonate production, it needs 2,800 kWh of green (renewable) power, 500-600 cubic metres of natural gas, 2.2 tones of concentrated sulfuric acid (98.5%), two tonnes of first-class sodium carbonate, 20kg of first-class sodium hydroxide, four tonnes of heavy calcium powder, and 1.6 tonnes of food-grade carbon dioxide.

There is a chronic shortage of these supporting and auxiliary materials in Africa, and the costs incurred by importation would be huge and unaffordable. It is worth noting that processing enterprises will be uncompetitive in a global market without cost-competitive inputs, raw materials, gas and power, and first-class sodium carbonate.

The second reason is in respect of the development and economic analysis on the extension of the lithium value chain. It is well understood that the first five-year plan (NDS1) of the national development strategy formulated by the Zimbabwean government sets out macro-objectives to enhance and advance the value-added and efficiency of the mining industry.

The extension of the lithium value chain, however, is a gradual process, which requires the relevant enabling industrial environment, infrastructure, raw materials, and technical competence to be present to create the competitive position of the lithium value chain.

Therefore, based on our comprehensive analysis, we believe there is a certain possibility in practice to establish a converter to produce lithium sulphate from the lithium concentrate within ten years from the date of commencement of commercial production of lithium concentrate under Arcadia Project.

This is subject to the availability of sufficient green (renewable) power, natural gas, sulphuric acid and heavy calcium powder in Zimbabwe, and subject to the economic feasibility of production of lithium sulphate under Arcadia Project.

The construction of a lithium carbonate/battery-grade (99.5%) production plant under Arcadia Project is economically and technically not feasible and impractical in the circumstances.

Newzwire

Kibo Energy, the UK renewables developer, says it has dropped its interest to acquire the 100MW  Victoria Falls solar park, citing incomplete information from the project’s current owners.

The company had said in March that it had agreed to buy the project from Broomfield International Limited for US$12.6 million. Now Kibo says due diligence on the project shows it does not meet its requirements.

Kibo found that certain sections of the project still needed further development over a short period of time. In other instances, the company says, Broomfield did not provide enough information about the project.

“If transactions do not meet our information or returns requirements, it is not appropriate to proceed,” said Kibo chief executive Louis Coetzee. “This transaction, following our due diligence process which included satisfying the board on the documentation required for the regulatory re-admission and subsequent revised economics, ultimately did not meet our acquisition criteria.”

Under the proposed deal, Kibo would have bought 100% of the project, which has started construction of a 100MW plant near Victoria Falls. The first 25 MW of the project is fully funded and under construction. The first 5MW of that 25MW was expected to have been in production by April.

In 2020, government invited bids for the installation of 500MW of solar power plants, hoping a shift to renewable energy will help ease crippling power cuts. But investment into Zimbabwean solar has been slowed by investor doubts that they will be paid in US dollars for supplying power.

The Victoria Falls project, however, attracted Kibo because it has a 10-year, USD-denominated power
purchase agreements with mining and industrial customers.

In its shift from coal to renewables, Kibo’s acquisition strategy has been to target projects that are near production; its renewable energy assets all have a time horizon of less than 18 months to first production.

Newzwire

Kuvimba Mining House says it plans to list two more units on the Victoria Falls Stock Exchange and is exploring lithium at Sandawana, once an emerald mine.

Kuvimba is majority-owned by government and holds assets such as Bindura Nickel Company (BNC) and Freda Rebecca Mine, the country’s biggest gold mine. Kuvimba also controversially holds former state-owned assets, among them Sandawana, and mining companies bought by Sotic International, a company linked to businessman Kuda Tagwirei.

BNC was listed in December last year on the VFEX, a USD-based stock market where listed firms are allowed to keep a bigger portion of their incremental export earnings.

“We also have major plans to list at least two more major companies within the next 18 months. Given the confidential nature of various regulatory processes involved in listing companies, all I can say for now is watch this space,” Chinyemba told Mining Zimbabwe.

Kuvimba produced 115,136 ounces last year from its gold mines. Among its mines are Freda Rebecca and Shamva, bought from Mzi Khumalo’s Metallon in 2020.

Lithium bandwagon

But Kuvimba is now looking beyond gold. Among the assets that Kuvimba took over from the state-owned ZMDC is Sandawana, once one of the world’s biggest emerald mines. The company shut down in 2011 after losing key foreign markets. Kuvimba has been exploring lithium there, Chinyemba says.

“Indeed, we are currently exploring one of our resources where current indications are that we have a very large lithium resource at Sandawana,” he says.

If Kuvimba finds enough lithium there to justify mining, it would be the first local company to join a queue of foreign firms seeking a slice of Zimbabwe’s lithium potential. According to Chinyemba, the strong foreign interest in Zimbabwean lithium is not unexpected, given the capital needed.

“Our timeline is beyond generations and therefore we acknowledge the lack of capital in our country,” he says. “In that regard, we welcome the interest in Zimbabwe lithium from foreign companies and view it as good for the economic development of our country.”

Kuvimba also holds a 47.8% stake in Great Dyke Investments, which is developing what will be the country’s biggest platinum mine in Darwendale. The project has been delayed by funding, according to reports. Chinyemba says the strategy for the project has had to change.

“The original project was modelled on the possibility of underground mining,” he says.  “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.”

Newzwire

LAFARGE Cement Zimbabwe Limited (LACZ) has hailed the sustained spirit of dialogue and engagement between government and industry as a measure to find each other in economic progress.

Presenting a trading update for the first quarter, LACZ said such an engagement atmosphere marked by sustained dialogue will impact positively on the economy.

Ndugwa said during the period, the economic environment benefited from relatively lower inflation which however deteriorated towards the end of the quarter.

The company forecast to double cement output in the second quarter of 2022 following a recent machinery plant machinery upgrade.

“One of the existing cement ball mills was decommissioned to make way for the installation of the new Vertical Roller Mill (VRM) that will double the company’s capacity after commissioning in Q2,” he said.

The company expressed confidence that volumes will recover and grow as the availability of cement stabilises, especially after the new VRM start-up in Q2.

“The overall market demand continues to grow driven by the segment of individual home builders as well as the ongoing major government infrastructure development projects.

“Despite the adverse impact of the cement mill house roof collapse on cement volumes, the company’s historic revenue grew by 36% versus the same period last year and declined by 18% on inflation adjusted performance,” he said.

The company also sustained the highest standards of health and safety through a robust framework of policies and programmes which are tailored to achieve zero harm in its operations.

NewZimbabwe

ZIMBABWE’S platinum output increased by 2% to 121 000 ounces (oz) in the first quarter of this year compared to the same period last year, the World Platinum Investment Council (WPIC) has said.

Last year in the first quarter, output stood at 118 000oz.

Total output for 2022 is seen at 465 000oz, down 4% compared to what was achieved last year.

The southern African country holds the world’s third largest proven platinum reserves after South Africa and Russia.

Output from Zimbabwe has an impact on global output and pricing trends.

The modest increase in platinum output comes at a time the government has scrapped the 5% levy on raw platinum exports that was introduced back in 2020.

The tax was meant to encourage the various mining companies in the platinum sector to invest in domestic value addition services in Zimbabwe.

Zimplats, Unki and Mimosa ship out semi-processed matte for final refining in South Africa.

The lifting of the levy, which comes in the wake of other measures by the treasury allowing miners to pay royalties and a portion of their electricity bills in local currency, is expected to aid the challenges platinum group metal miners have been facing.

In its first quarter report, WPIC said Russia’s invasion of Ukraine at the end of February sent shockwaves through the markets.

The report said global refined platinum production in the period under review declined 13% year-on-year to 1 279 000oz, primarily on lower output from South Africa.

South African production fell 16% to 167 000oz year-on-year during the review period.  Among factors behind the decline in South Africa, maintenance schedules constrained processing availability in the quarter under review as Impala Platinum (Implats) , one of the biggest producers, undertook a programme to rebuild its number three furnace.

“Operations faced headwinds during the first quarter of 2022 as Covid-19 and geopolitical events stressed supply chains, impacting equipment deliveries and disrupting mine output. Safety-related stoppages also continued to weigh on output. Production at Mogalakwena, Anglo American Platinum’s flagship mine (in South Africa), was curtailed by heavy rainfall in the period,” the report said.

Russian output declined 11% year-on-year.

The report said other regions remained largely flat year-on-year.

Total demand in the first quarter declined 26% year-on-year to 1 528 000oz. Key contributors to this performance were exchange stock outflows. Industrial demand was lower, said the report. Low demand was also the result of jewellery demand, which heavily depends on China, but was affected by Covid-19 restrictions.

“In 2022, we expect that the wider markets’ volatility that we have seen over the last two years will persist, in part due to the uncertainties of the conflict in Ukraine,” WPIC said.

It said there had been a sharp escalation in supply disruptions, leading to further inflationary pressures and tightening of monetary policy across a number of key economies.

“The International Monetary Fund downgraded its forecast for global economic growth for the year to 3,6%. Even so, we still forecast a modest growth in platinum demand of 2% year-on-year, although this reflects markedly different trends in a number of key segments. Among these, most importantly, we forecast automotive demand to increase by 16%, on expectations of a recovery in production and higher vehicle loadings,” it said.

On the supply side, mine supply is forecast to decline by 5%, mainly due to lower output from South Africa. Secondary supply will be constrained by reduced scrappage rates and lower jewellery sales.

This will result in a market surplus of 627 000oz, down notably on 2021,” it said.

“We have significantly revised our 2022 forecast downwards, primarily due to expectations of much lower output from South Africa. Three major producers, Amplats, Implats and Northam have lowered their guidance. Although subject to individual operational constraints, common headwinds of increased safety incidents and resultant production stoppages, community unrest and supply chain procurement challenges were cited.”

Overall, platinum mine supply is forecast to decline 7% year-on-year to 5 872 000oz due to the depletion of Anglo American Platinum semi-finished inventory that boosted refined volumes in 2021, while planned smelter maintenance in South African and Russia reduces processing availability.

South Africa will account for the bulk of the fall, with a forecast decline of 9% to 4 258 000oz. Output from North America is expected to grow 22% as Vale’s Sudbury production normalises following the strike in 2021.

However, regional labour shortages continue to impact operations and present a downside risk, the council said.

Platinum is one of Zimbabwe’s biggest foreign currency earners, with South African mining companies such as Impala Platinum and Anglo-American Platinum owning the biggest platinum group metals mines in the country.

According to the government’s vision of attaining a US$12 billion mining economy by next year, platinum is expected to contribute US$3 billion per year.

The Independent

CHINESE conglomerate Huayou Cobalt this week downplayed multiple legal actions over Arcadia Lithium Mine in Zimbabwe, as it disclosed it was pressing ahead to deploy US$300 million for developing an ultra-modern operation that will ship out its first resource early 2023.

In March, Fredrick Mubaira, a Zimbabwean small-scale gold miner, filed lawsuits to reclaim mineral fields that he purported had been “illegally” taken over by Prospect Lithium Zimbabwe (PLZ) during a scramble to secure the resource from 2018.

PLZ’s Arcadia Mine was taken over by Huayou in a US$422 million deal in December last year.

Deputy general manager, Trevor Barnard told businessdigest that as Zimbabwean courts prepared to hear Mubaira’s case, the giant was moving to leverage on its massive balance sheet to tap the capital it requires to execute the Arcadia assignment.

Huayou presides over US$20 billion market capitalisation at Shanghai Stock Exchange, where it trades its stock.

Barnard said regulatory approvals, including exchange control authority, had been secured since Huayou shelled the war chest to takeover 87% stock in Arcadia last month.

Huayou contractors are laying the groundwork for a lithium processing plant, as executives engage authorities to construct a feeder road linking highways for shipping lithium to China.

The US$300 million injection will take the total spend to about US$722 million in a destination that has been battered by capital flight.

Subsequent to the settlement, Huayou dispatched a 14 member team led by general manager, Haijun Zhu to take charge of the asset, the firm said Monday, noting that it was “super excited”.

Barnard said while the legal actions were still sub judice, he was confident that Huayou had not crossed paths with Zimbabwe’s legal system.

“At the moment that case is with the High Court of Zimbabwe, so it is actually sub judice, I cannot divulge details,” said Barnard, speaking exclusively to businessdigest during a tour of Arcadia Mine.

“But I can assure you that we have treated everybody fairly and we have treated everybody on exactly the same basis wherever we have acquired claims and we have done everything according to the legal processes of Zimbabwe. We are incredibly confident that whatever is being alleged about us is not true,” he said.

“We intend to develop the project rapidly over the next year and invest US$300 million to develop the mine and construct a processing plant with a capacity to treat around 4,5 million tonnes of ore and produce 400 000 tonnes of lithium  concentrate per annum,” Huayou said in a paper released to reporters.

Mubaira’s court applications filed in Harare and submitted to defendants in Zimbabwe, China and Australia, came as Zimbabweans began to be concerned that foreign investors were parcelling out Zimbabwean resources and earning fortunes at the expense of locals.

He claimed that PLZ handed over the asset to Huayou before concluding crucial negotiations that were taking place with him over the land.

As PLZ moved to lay out foundations for exploiting the resource in 2018, its representative in Zimbabwe, McCloud Nyasowa talked Mubaira into abandoning gold mining on the claims, the court papers alleged.

The agreement ended with Nyasowa paying a US$5 000 deposit to Mubaira, after persuading him to move out.

PLZ was desperate to avoid controversy at the time, as it was scouting for investors, the court papers claimed, noting that the parties later agreed on a US$55 000 settlement, which would see Mubaira transferring his land to PLZ.

PLZ also undertook to buy a house and a car for Mubaira, while paying school fees for his children, the papers added.

The deal also involved PLZ allocating shares to Mubaira, the court papers claimed.

However, the parties agreed that Mubaira would be bought out once an investor was secured.

But at some point, disagreements emerged, which lawyers now say were motivated by the desire to take advantage of Mubaira’s financial situation and exploit him.

“Using a combination of economic duress, undue influence, cajoling and force, Mr Nyasowa drew up an agreement purporting that the purchase price was US$5 000 and that it had been paid,” Mubaira’s legal representatives, Mandizha & Company, said in letters sent to PLZ’s lawyers.

To A2

“He refused to give the client a copy assuring him that he would get one once all directors had signed. Using fraud, misrepresentation and the same tactics…all of which are reminiscent of the infamous Rudd Concession of 1888, Mr Nyasowa directed our client to lie on the transfer forms that the purchase price was US$5 000,” the papers said.

PLZ later paid Mubaira US$8 415, instead of the agreed US$55 000, court documents showed.

However, Mubaira is said to have stormed PLZ offices, after which an executive directed staff to “treat him to tea and biscuits” while a fresh “Rudd Concession” was being drafted, the lawyers said.

After getting winds that Huayou was coming into the picture, Mubaira confronted PLZ again, but he was “dismissed off hand with the retort that PLZ’s lawyers would deal with whatever claim” he would bring up.

In their letter to the Chinese firm, Mubaira’s lawyers warned that Huayou’s interests would be at stake unless the deadlock over settlement was addressed.

“Our client is the legal owner of a mining block situated on his farm, Lowfield in Arcturus,” Mubaira’s legal counsel wrote in a letter sent to Huayou dated March 23, 2022.

“Our client contends he was defrauded of his aforesaid legal interest by PLZ. Our client became aware of the contract you entered into, and are in the process of consummating with PLZ. His contention is that to the extent that the subject matter for which you contracted with PLZ contains his mining interests, you were unknowingly and fraudulently dragged into a fraud. In our law, and we believe certainly in your own jurisdiction too, fraudulent contracts cannot birth legal and commercially enforceable contracts.

“Our professional and courteous attempts to seek dialogue with your local partners have been rebuffed. It seems to us that your local partners consider our client’s claim to be baseless. In fact, they are on record accusing him of being a fraudster and extortionist. The practice in Zimbabwe is that before litigation, a claimant should give his adversary an opportunity to reply. While we are ready to file a claim against you and your local partners, it is only fair that we draw your attention to facts that our client believes were deliberately withheld from you.

“We are obviously aware of what effect such bob disclosure/s have on your own contract with PLZ. Our client’s brief to us is for us to recover his mining interest from whoever is laying claim to it, which bracket we believe you belong…the courtesy extended to you herein is not a sign of weakness on our client’s part,” Mubaira’s lawyers wrote to Huayou.

“Sometime in July or August 2018, geologists from PLZ sought and obtained permission to prospect on our client’s farm (Lowfield), for lithium,” Mandizha & Company wrote in another letter to PLZ lawyers, Manokore Attorneys.

“Our client is the registered owner of a gold mining block on the said farm.”

The Huayou /PLZ transaction was subject to a series of regulatory approvals in Zimbabwe and China.

Zimbabwe has benefitted from big Chinese investments in the past two decades, which have kept the southern African country running during a tough time when foreign direct investment plummeted in the aftermath of hard-hitting Western sanctions on the southern African country.

The massive push by Chinese investors into Zimbabwe’s multibillion dollar lithium mines has raised fresh fears of plunder with a leading resource campaigner pushing for stronger Parliamentary oversight.

The Independent