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RioZim, which had been banking on Chinese financing to build a major coal-fired power plant, says it is now looking for alternative backers as China pulls back on funding such projects overseas.

The effort by RioZim, one of Zimbabwe’s biggest mining and energy companies, reflects how China’s recent U-turn on foreign coal financing is forcing developing nations across Africa and Asia to rethink their energy plans. China, which had been a top funder of coal power projects around the globe, announced in September it would not build new coal projects abroad as part of efforts to curb future carbon emissions.

Plans for the multi-billion dollar Sengwa power plant in northwest Zimbabwe involve more than doubling the country’s current electricity capacity.

RioZim’s energy division, Rio Energy, had been hoping for funding for the planned plant and associated coal mine from Chinese banks Industrial and Commercial Bank of China (ICBC) and China Minsheng Banking Corporation Ltd.

Now, Rio Energy is considering alternative financing plans. “We are still in the market to fund the project and we will work with all possible funders, including the Chinese,” parent RioZim says.

The company said another option under consideration is to transform the project to a gas-powered plant, but that idea is “subject to the outcome of feasibility studies” and no time frame for those has been set.

RioZim told Reuters that ICBC and Minsheng Bank “came in to play a supporting role” but that it can’t comment on the status of their involvement because it doesn’t have a direct relationship with the companies. Chinese bank financing for coal power plants overseas has often been arranged to support Chinese construction companies, which then enter into building contracts with the company planning the power plant.

ICBC told representatives of environmental non-governmental organisations in a June 2021 meeting that the bank would no longer finance the Sengwa project, according to two people who attended the meeting.

Plans for another large coal power project in Zimbabwe, known as Lusulu, are also up in the air, according to PER Lusulu Power, the Harare-based energy company behind the plant which had been planning on Chinese backing.

A Zimbabwe government spokesperson declined to comment on the status of either project. He said Zimbabwe has the right to exploit its coal resources if needed and would not "sacrifice growth prospects on the altar of arguments to do with the environment."

China’s foreign ministry didn’t respond to questions about the status of the funding of the Sengwa and Lusulu projects. But it said Beijing will support developing countries in shifting to greener energy.

The foreign ministry added that China, which has close economic and diplomatic ties with Harare, “will increase its support to Zimbabwe’s development of renewable energy power projects, and help Zimbabwe’s sustainable development.”

HANGING IN THE BALANCE

Globally, some US$63 billion of Chinese state financing across 57 projects could be at risk from China’s withdrawal from coal financing overseas, according to Global Energy Monitor. The pullback could cut Africa’s pipeline of coal power projects by two thirds to 3.6 gigawatts (GW), estimates think tank E3G.

In Zimbabwe, less than half the population has access to electricity. The country has been betting on coal-fired power to address chronic electricity shortages and create jobs.

RioZim has talked about building the Sengwa plant for more than a decade. Plans include adding 2.8 gigawatts (GW) to the grid and restarting the adjacent coal mine, which has been closed since 2014. Currently, Zimbabwe has the capacity to generate around 2.3 GW, which comes mostly from a large hydroelectric power plant but also four coal-fired power stations.

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The planned Sengwa plant, near the town of Gokwe, would create 1,100 permanent jobs and nearly four times as many temporary construction jobs, according to Rio Energy. Sedeya Jetro, head of a local primary school, said the jobs would enable parents to pay school fees and “mean a lot to this community.”

Rio Energy told Reuters that ICBC had in 2019 provided an expression of interest – or non-binding commitment – to a Chinese construction company to fund the first phase of the Sengwa project. Neither the construction company, PowerChina International Engineering Co., nor its parent, Power Construction Corporation of China, responded to requests for comment.

Minsheng Bank also provided a non-binding commitment to RioZim to fund a second phase of the Sengwa project, according to Rio Energy and an August 2020 letter of interest from Minsheng Bank that Reuters reviewed. The pledge expired in February 2021, according to the letter.

A Minsheng Bank official who signed the document said in an emailed response to Reuters that the letter of interest was "a trade secret" and didn't respond to questions about funding plans. Spokespeople for Minsheng Bank and ICBC didn't respond to requests for comment.

Rio Energy was hoping for US$3.4 billion of funding for the second phase of the power plant, according to a draft contract with a unit of engineering and construction company China Gezhouba Group Corporation (CGGC). The contract, which was reviewed by Reuters, was dated November 2020 and drafted by both companies.

In response to questions about the planned Sengwa plant, CGGC’s parent company China Energy Engineering Corporation told Reuters that a subsidiary signed a construction cooperation agreement in 2020. “There is no progress on this project currently,” it said, citing a lack of financing commitments.

PER Lusulu Power plans to build the 2.1 GW Lusulu plant in Zimbabwe’s western province of Matabeleland North. It announced in 2015 that Chinese financial institutions had agreed to fund its construction, subject to conditions. PER Lusulu Power’s website says the company entered into a construction contract with China State Construction Engineering Corporation, which would secure debt finance from Bank of China.

PER Lusulu Power had also sought financing of up to $2 billion for the project from ICBC, according to extracts of a term sheet dated August 2020 viewed by Reuters. The term sheet is a non-binding agreement setting out the terms and conditions for an investment. It was unsigned, and was prepared by ICBC, according to a person familiar with the document.

Bank of China said in a statement that it doesn’t have any electricity projects in Zimbabwe and has no plans to develop any. ICBC and China State Construction Engineering did not respond to questions about the Lusulu project.

ECONOMIC DEVELOPMENT

One Chinese-funded project that is progressing is in the northwestern town of Hwange, where construction was already well underway when China announced its coal-funding freeze. The project involves the expansion of an existing coal-power plant and has been financed by a loan of roughly US$1 billion from Export-Import Bank of China, the Zimbabwe government has said. Zimbabwe Power Company, which manages the plant, said in a November statement that the expansion “continues to progress well” and was more than two thirds complete. China’s EximBank didn’t respond to a request for comment.

The project is expected to increase employment by nearly doubling the current 2,853-strong workforce, while also sustaining the town’s coal-mining industry, which employs thousands more people. The Zimbabwean government spokesperson said the country will be much better placed to meet electricity demand once the expansion – which is due to add 600 megawatts – is complete.

Renewable power advocates in Africa and elsewhere say China’s pullback from coal power provides an opportunity to clean up. Zimbabwe is expanding its plans for generating renewable energy, such as solar power, but such projects can require fewer permanent employees than coal, making them less attractive for governments keen to generate employment.

Sydney Gata, executive chairman of the Zimbabwe Electricity Supply Authority, said that an instant switch to solar and wind isn’t feasible given the scale of the country’s power needs.

“Renewables are not an immediate plan B for Zimbabwe,” he said.

Newzwire

Zimbabwe’s mining industry sees a funding shortfall of US$10 billion over the next five years, a challenge compounded by erratic power supplies and exchange-rate volatility.

While Zimbabwe has the world’s third-biggest reserves of platinum-group metals, plus gold, diamond and chrome mines, development has been stymied by economic instability, which affected foreign direct investment.

While mining is projected to generate earnings of US$5,5 billion this year, it faces a number of headwinds, the country’s Chamber of Mines of Zimbabwe said in its latest commodity outlook report.

The Government of Zimbabwe is targeting to grow the country’s mining sector to a US$12 billion industry by 2023, a significant milestone towards the country’s Vision of upper middle income status by 2030.

Mining, currently riding high amid a surge in global prices, is expected to anchor short to medium term growth for the mineral rich Southern African country, which has more than 40 mineral occurrences.

Last year, Zimbabwe announced rules forcing exporters to transfer 40 percent of their foreign currency earnings to the central bank, instead of 30 percent. That’s exchanged into local currency at little more than half the parallel market rate.

Those foreign-exchange losses pose a risk to the mining industry, said the chamber, a lobby group that represents companies including Impala Platinum Holdings Ltd. and Anglo American Platinum Ltd.

“Key risks to the Zimbabwe mining sector outlook include inadequate foreign exchange allocations to fund operational requirements and expansion projects,” the chamber said.

While the outlook for steel makers remains cloudy, the weakening of the US dollar is propping up global commodity prices including metals as well as crude oil.

When the dollar weakens, the same amount of any commodity costs more in terms of dollars. Therefore, prices increase. And, the stocks of metal companies are mirroring that optimism. — Bloomberg.

From being treated as a pariah in the global diamond industry in the not too distant past,the remarkable work that Zimbabwe has put in to shrug off the undesirable tag is paying off, and will be on show in Victoria Falls when it hosts the African Diamond Producers Association (ADPA) extraordinary council of Ministers meeting from tomorrow to Friday this week.

Zimbabwe is currently the ADPA deputy chair and will assume chairmanship from Tanzania at that meeting.

Concurrently, Zimbabwe is also the deputy chair of the Kimberley Process Certification Scheme (KPCS) and will again this year take over chairmanship of the global diamond watchdog, laudable milestones for a country whose diamond industry has in the past quoted a lot of controversy, albeit for malicious reasons.

Some Western countries opposed to the land reform programme which the Government implemented in 2000 and being bent on isolating the country as punishment, sought to prevent it from selling its newly found gems by accusing it of violating human rights in their extraction and labelling them “blood diamonds”.

The Ministry of Mines and Mining Development touted the Vic Falls meeting and last year’s elevation to ADPA deputy chair as one of the fruits of Zimbabwe’s re-engagement agenda.

“At the 7th Council of Ministers meeting 2021 held virtually, the Republic of Zimbabwe was nominated to be the incoming chair of ADPA after Tanzania. The nomination falls in line with the National Development Strategy 1 on engagement, re-engagement and international relations,” the ministry said ahead of the meeting.

“Zimbabwe as a country has made efforts to continue to engage with the international community through its ADPA membership.”

The pending assumption of chairmanship of ADPA and the KPCS, two crucial organisations in the global diamond industry, is also testament of the remarkable transformation that the Zimbabwe diamond sector has undergone in recent years.

Zimbabwe, which is a founding member of ADPA, is expecting to push through a strong agenda during its tenure as chair, including by formulating strategies to improve the African diamond industry.

“As the incoming ADPA chair in 2023, the Republic of Zimbabwe is expected to carry out the following mandate, among others: ensuring that African diamond producers present a united voice on the international diamond scene on matters which affect them and promoting cooperation and information sharing amongst ADPA member countries,” the ministry said.

Other ADPA members include the Democratic Republic of Congo, Sierra Leone, Namibia, Central African Republic, Botswana, Ghana, Guinea, Togo and Tanzania.

Speaking at a KPCS pre-inspection workshop late last month, Mines and Mining Development permanent secretary Onismo Mazai-Moyo said the recognition by ADPA and the KPCS was a signal that the international community was beginning to accept Zimbabwe as a serious player in the global diamond industry.

“The elevation to take over the vice-chair of the KPCS is really an honour to us and it shows that slowly the international community is beginning to grow confident in Zimbabwe and of course grow confident in the way we handle our diamonds and the way we relate to all stakeholders in the areas that we operate and the markets that we sell,” he said then.

The local diamond industry is expected to contribute US$1 billion to the targeted US$12 billion mining income level by 2023.

Firm growth is expected in the sector this year, as it regains its sparkle following production challenges experienced in the past.

For example, the Zimbabwe Consolidated Diamond Company (ZCDC), the country’s largest diamond miner, has set a production target of over 5 million carats this year, while others including Anjin and Murowa are expanding production capacities to drive growth in the sector.

ZCDC, along with Anjin, Murowa and Alrosa are the four companies licensed to mine diamonds in the country.
However, Alrosa is still at the exploration stage.

Zimbabwe is also currently conducting a self-assessment exercise of the entire local diamond value chain, in preparation for a mandatory KPCS evaluation next month. A Kimberley Process team will be undertaking a review visit to Zimbabwe between May 8 and 13, with the last one having been conducted in 2012. — New Ziana.

Red Rock Resources plc, a UK-listed exploration company, has acquired lithium claims in Zimbabwe and is setting up a lithium exploration unit in the country to hunt for more.

The company, quoted on London’s AIM market for smaller companies, has bought land in Bikita, near where Bikita Minerals has already been mining petalite. Red Rock will establish a new company, African Lithium Resources (ALR), in which it will hold 75%. The other 15% will be held by an unnamed local partner.

Red Rock already owns some battery mineral prospects in the DRC – it is exploring copper and cobalt there – and its CEO Andrew Bell has explained why Zimbabwe is looking attractive for lithium explorers.

“(Zimbabwe’s) pegmatites have a mineral endowment that has considerable expansion potential, and international investors have shown themselves willing to invest in lithium exploration and development in this traditional mining country that has been in disfavour for decades,” Bell said Thursday.

Red Rock said it bought the 51-hectare claim from a local company, Thebe Resources. It is applying for more licences in the Bikita areas as well as in Arcturus, where Prospect Resources has been developing Arcadia Mine.

“The company set up African Lithium Resources after discussion with its local partner and others with a view to seeking further investment and developing a significant presence in lithium, leading potentially to listing,” Red Rock says.

Zimbabwe lithium rush?

Red Rock’s buy is the latest in a series of recent foreign moves into Zimbabwean lithium.

Since November, there have been at least six Zimbabwe lithium transactions, of various sizes.

Last November, China’s Shengxin Lithium paid US$76.5 million for 51% of MaxMind Hong Kong, which holds the Sabi Star lithium-tantalum project in Zimbabwe.

In December, China’s Huayou announced it would pay US$42 million for Arcadia. It was a big win for Prospect Resources, which had spent about US$26 million on exploration and evaluation. That transaction has piqued the interest of other explorers, keen to also ride on rising global demand for lithium.

In February, Sinomine Resources bought a controlling stake in Bikita Minerals for US$180 million.

Smaller players are now also making their punts.

In March, UK resources investor Galileo Resources said it would spend US$1.5 million to explore for lithium and gold in Zimbabwe after being granted the option to acquire 51% of a local prospecting firm.

Red Rock is also present in the DRC, where it has Luanshimba copper-cobalt project in the Haut-Katanga province. The company has mineral assets in Kenya, Australia, Burkina Faso and Côte d’Ivoire.

Newzwire

VICTORIA Falls Stock Exchange-listed Caledonia Mining Corporation says dividends continue to be a central part of its strategy as the mining firm seeks to grow the business and de-risk it from being a single asset producer.

The company, which is also listed on both the New York and London Stock Exchange declared a quarterly dividend of US$0,14 on each of its shares.

The total dividends paid in 2021 were 50 cents per share, almost 50% higher than in 2020, it said.

“Our dividend continues to be a central part of our strategy as we seek to grow the business and de-risk it from being a single asset producer. We continue to evaluate investment opportunities while balancing returning money to shareholders and investing in the company’s growth,” the company’s chief executive officer Steve Curtis said in a statement.

Caledonia said the payment date for  the dividend is April 29, 2022.

Caledonia’s strategy to maximise shareholder value includes a quarterly dividend policy which the board adopted in 2014. The board, according to the statement, will consider future increases in the dividend as appropriate in line with its prudent approach to risk management.

Dividend declaration comes after the company last month reported gross revenues of US$121 million for the year 2021, up 21% compared to the same period in 2020.

Gross profit stood at US$54,1 million while earnings before interest, taxes, depreciation, and amortisation (EBITDA) was at US$46,4 million.

Cash generated from operations before working capital increased by 17% from US$42,4 million to US$49,6 million.

The company is targeting production of 73,000 to 80,000 ounces of gold in 2022.

Newsday

TEN Zimbabwean men have been jailed for two years by a South African court after they were arrested for illegal mining activities in the Giyani area under Limpopo province.

The gang was arrested by the neighboring country’s elite police, the Hawks in May last year following a tip-off.

They were found with an assortment of mining equipment worth R900 000 and cash of R380 000 along the R81 near Giyani Shopping center.

The jailed are Mpathise Tshuma (29), Decent Ngwenya (22), Lamulani Sibanda (31), Skhumbuzo Mkandla (21), Ocean Mpofu (28), Prince Ndlovu (27), Brandon Nyoni (22), Clive Moyo (29), Tawanda Ndebele (33) and Philani Ndlovu (33).

Hawks’ spokesperson for Limpopo, Captain Matimba Maluleke said the gang had also been slapped with another six months jail term for violating that country’s immigration laws.

“The Directorate for Priority Crime Investigation would like to welcome the sentencing of ten (10) unlawful gold dealers by the Giyani Magistrate’s Court on Friday (1 April 2022),” he said.

“The accused persons who are all Zimbabwean nationals were arrested by the Hawks’ Serious Organised Crime Investigation members assisted by Giyani Police and Local Criminal Record Centre members on 14 May 2021.

Our members received a tip-off about people who were en-route from Phalaborwa to Giyani to sell gold”.

Captain Maluleke said the Hawks spotted the vehicle matching a description given by their  informant while traveling along the R81 road near the Giyani shopping complex.

He said the gang was cornered and the 10 occupants were found in the vehicle and they were searched.

Upon searching them, unwrought gold, pastel, scale, and mine detectors worth over R900 000-00 as well as R3800-00 cash were found and seized.

“The accused appeared several times in the Giyani Magistrate’s Court, and subsequently pleaded guilty to the charges.

The court sentenced them to two (2) years imprisonment for contravention of the Precious Metal Act of which one year is suspended and six months imprisonment for contravening the Immigration Act.

The sentences are to run concurrently,” said Capt Maluleke.

A few months ago, three Zimbabwean men and a South African national were arrested by police in Limpopo province who found them with three truckloads of chrome believed to have been illegally mined.

The four Lloyd Sithole (32), Moses Nemanganda (37), and Wilton Haruzi (34) all Zimbabweans, and a local man, Joseph Hlongwane (23) were arrested along the R37 road in Apel policing area.

Their trial is pending at the Sekhukhune Magistrate court on charges of illegal mining.

The Chronicle

ZIMBABWE’S largest platinum producer, Zimplats, has spent US$166,9 million on the development and upgrade of Mupani Mine against an approved project budget of US$388 million.

According the group’s half year results for the period ended 31 December 2021, the development and upgrade of Mupani Mine was on schedule with earthworks for the dome and load out station complete.

“North downcast ventilation shaft reaming was completed and decline development is progressing on plan. Mupani Mine targets 2,2 million tonnes per annum production in August 2025 and 3,6 million tonnes per annum in August 2027,” the report reads in part.

“A total of US$166,9 million had been spent on this project as at 31 December 2021 against an approved project budget of US$388 million.”

The company also revealed the redevelopment of Bimha Mine, another operation at Zimplats, was completed within budget at US$99,8 million.

“The upgrading of Bimha Mine was progressing well, targeting achievement of 3,1 million tonnes per annum in the first quarter of the financial year 2024. Mining of declines to the north crusher chamber was completed. Mining of crusher ramps to North crusher chamber will be completed in January 2022,” it said.

A total of US$16,9 million had been spent on this project as at 31 December 2021 against an approved project budget of US$81,7 million.

Zimplats said pre-feasibility studies for the establishment of a 2,1 million tonnes per annum mine required to increase mining ore output from the current 6,7 million tonnes to 8,8 million tonnes commenced in the half year targeting completion in August 2022.

A bankable feasibility study will be commissioned thereafter in preparation for the commencement of mine development work, it said.

The mining company said construction of the third 0,9 million tonnes per annum concentrator plant in Ngezi targets commissioning in August 2022. Main site activities in the half year under review were earthworks, concrete pouring, and fabrication and installation of structural steel.

Full equipment delivery will be achieved in May 2022, it revealed.

A total of US$27,7 million was spent on the project in the period under review against a budget of US$75 million.

The plant was designed with flexibility for upgrading it to 2,2 million tonnes per annum, taking overall concentrator capacity from the current 6,7 million tonnes per annum to 8,8 million tonnes per annum.

“The expansion of the Selous Metallurgical Complex (SMC) smelter and installation of a sulphur dioxide abatement plant was approved by the board of directors in November 2021 at a combined budget of US$521 million.”

“Bridging engineering, procurement, construction management services and demolition works was adjudicated, and letters of award were issued in December 2021, with earthworks and civils contract procurement in progress. First matte and acid production is targeted for January 2024 and August 2024, respectively,” it said.

In the period under review, revenue stood at US$585 million, 13% lower than the same period in 2020 largely due to negative revenue from movements in commodity prices arising on pipeline sales following the decrease in average metal prices compared to the second half of the previous financial year.

The Standard