Mining ZimbabweLatest Mining News, Policy and Industry Updates

Zimbabwe’s gold exports rose 42% last year raking in US$1.7bn compared to US$1.2bn earned in the previous year on the back of increased output and firming prices, the central bank has said.

“The country’s gold export receipts have gone up 42% to US$1.7bn during 2021 from US$1.2bn earned during 2020 due to improved gold output and firm prices,” central bank chief John Mangudya told Business Times.

The yellow metal deliveries to the country’s sole buyer and marketer, Fidelity Printers and Refiners (FPR), soared 55% to 29.6 tonnes in the period under review from 19.05 tonnes achieved in 2020.

This was attributed to timeous payments and incentives given to gold producers.

Although the deliveries were higher than that achieved in 2020, the figures are less than the 33.4 tonnes of gold delivered in 2018.

Mangudya said a number of initiatives were rolled by the central bank and the government paid dividends, resulting in a surge in deliveries.

Primary producers delivered 11.15 tonnes  of gold while small scale gold producers contributed 18.4 tonnes.

The secondary miners such as the platinum miners are still working on their quantum delivered to FPR.

Mangudya said the central bank commends the government for the Gold Incentive Scheme introduced in May 2021.

Gold is the third largest foreign currency earner after platinum and diaspora remittances.

However, the yellow metal has in the past been smuggled due to payment delays by FPR and low prices compared to those obtaining on the international market.

Authorities have rectified the problem with payment being timeous and prices at par with those on the international markets.

On Tuesday this week international gold prices stood at US $58 318 per kilogramme and Fidelity was paying above US$57 500 per kg to those who delivered above 20kg.

In addition, the central bank has also scrapped taxes on small scale miners to encourage deliveries through formal channels.

Experts, however, said there was a need to review retention levels for the large scale miners and capacitation of small scale miners to further ramp up production.

The government has moved to provide equipment in gold centres to move towards helping the attainment of the US$4bn gold export revenue target.

Business Times

Zimbabwe’s mining companies need over US$5bn to recapitalise their operation in 2022 to ramp up production and reach optimum levels, the Chamber of Mines of Zimbabwe has said.

It is expected that when fully capitalised,  Zimbabwe will reach the US$12bn mining industry target by next year.

Zimbabwe has over 60 recognised mineral occurrences, which when fully utilised are enough to turn around the country’s economy.

The Chamber of Mines of Zimbabwe CEO Isaac Kwesu told Business Times that mining is one of the key sectors of the economy and value addition before exporting  is needed to ensure maximum benefits.

“This year the whole mining sector requires US$4.5bn  for both greenfields and brownfields. The figure can go  from a minimum of US$3bn to as high as US$5bn depending on the projects that were touted,” Kwesu said.

He said in the platinum, there is Karo Resources and other two key projects that can kick off; in the gold sector there are a number of new and old projects and the base metals projects can also be resuscitated or improve operations.

“All these projects to come to fruition, there is a need to harness adequate capital to achieve the US$12bn mining industry by 2023,” Kwesu said.

Last year, the economy earned close to US$5bn from mineral export receipts.

He said last year Zimbabwe was spurred on by firming commodity prices.

If the prices reverse, the country was not going to get as much revenue as it got hence there is a need to improve on production, Kwesu said.

The Chamber of Mines said the prices saved the day for the mining sector.

“Mining sector leverage on two ends which are prices and volumes but last year prices were beyond the normal prices hence there is need to produce up to our potential had gold been above 30 tonnes, we would have been above US$2bn of gold export receipts,” Kwesu said.

He said production is still way below the targets, although it was higher than initially projected.

The mining sector is expected to contribute more than 70% of the total export receipts.

It is believed gold and platinum sectors need US$1.5bn each with the remaining US$2bn expected to be shared among other minerals.

The mining sector is not experiencing power outages as it ringfenced following the payment for electricity in United States dollars.

Zimbabwe has the second largest  known deposits of platinum, coal, gold, chrome  and diamonds.

Experts said there is need to improve the ease of doing business to help the sector to be internationally competitive.

Miners are also calling  for the removal of punitive taxes to improve the earnings of miners and attract investment into the multi-billion dollar mining sector.

More so, the foreign currency retention threshold and the huge disparities between the formal  exchange rate system and parallel market are some of the biggest challenges that experts say should be addressed to boost output in the mining sector.

Business Times

ZESA Holdings says it needs at least US$17 million a month to import power, and keep lights on amid rolling electricity outages lasting several hours.

In a statement, Zesa said it was engaged in negotiations with power utilities in neighbouring countries to meet local demand.

Recently, Zesa warned of more power cuts to allow the resumption of maintenance work at Kariba Dam.

“To have balance in demand and supply, we need power imports to sustain the growth. We need US$17 million per month to import enough power. Various negotiations and dispensations are ongoing to ensure that we continue to import electricity so as to complement the various internal initiatives that we have embarked on,” the power utility said.

“We have various initiatives that are ongoing to ensure the stabilisation of the electricity supply, chief among them is the Hwange 7 and 8 expansions and the maintenance works at the Hwange Power Station.”

On January 1, Zesa announced a new tariff increase, which will see the first 50 units or kilowatt hours costing $2,25/kWh, and the next 50 units costing $4,51/kWh, while the next 100 units will cost $7,89/kWh. Everything after that will cost $13,50/kWh.

Indications are that consumers will have to fork out $2 253 to purchase 300 units, while 400 units will cost
$3 547, and one must add $1 350 for every block of 100 units after that.

But experts said increasing tariffs was not the answer.

Zesa added: “We can confirm that we have made progress in the settling of power import bills to our regional suppliers that fall in the Southern African Power Pool and we would like to thank the government and Afreximbank for co-ordinated interventions in ensuring that we pay up our dues.”

NewsDay

Statistics released by the central bank showed that gold delivered to Fidelity Printers and Refiners was 55% up last year to 29.6 tonnes from 19.05 tonnes in 2020 on the back of timeous payments and incentives given to yellow metal producers.

This is the second-highest output after the 34.4 tonnes delivered in 2018 signalling that the golden times could be back for the yellow metal.

Gold is the third largest foreign currency earner after platinum and diaspora remittances.

However, authorities have in the past given gold producers a short end of the stick with payments coming more than two weeks after deliveries and the yellow metal being sold at prices lower than those prevailing on the international market.

That has since been resolved resulting in a surge in deliveries to official channels.

The Ministry of Mines and Mining Development is targeting a US$12bn mining industry by 2023. Gold is expected to contribute US$4bn on the back of a favourable investment climate.

While authorities could be popping champagne bottles after a stellar year, more work needs to be done for the 100 tonnes target to be met by 2023.

Small scale miners have complained of taxes which they say inhibit production. They say the Zimbabwe Revenue Authority should not be tough on them to drive formalisation.

They say these obstacles have seen gold being sold on informal channels.

The small-scale miners also require support to buy equipment and boost production.

There have been concerns over the myriad of taxes which has seen small scale miners evading formal channels.

It is estimated 3 tonnes of gold is sold through the informal channels monthly.

Large scale miners want authorities to increase the forex retention threshold to 80% from 60%.

A State of the Mining Industry Report showed that miners are unhappy with the 60% foreign currency retention.

The executives said the 60% retention was inadequate to meet their operational requirements.

They said the retention was under pressure from requirements to pay royalties, electricity bills, taxes and some statutory obligations in foreign currency as well as widespread preference for US$ by suppliers.

The primary producers say they are losing 20% of their revenue due to the disparity between formal and informal exchange rate. While the dollar traded at ZWL$112.228 at the foreign currency auction system on Tuesday, it is ZWL$220 on the thriving parallel market.

They say if the authorities do not increase the threshold to 80%, the 40% they liquidate should be able to settle statutory obligations and payment of electricity tariff.

The mining sector is one of the anchors of the Zimbabwe economy. Its contribution to GDP reached 11.8% in 2020 from 6.5% in 2016. The sector was projected to contribute 11.3% to GDP last year.

The sector’s contribution to export receipts was projected at 77% last year from 64% in 2016.

Indications are that the yellow metal is on the rebound. However, the growth in output requires that monetary and fiscal authorities have to put in place policies that encourage deliveries via formal channels. Gold is one of the most liquid commodities.

Business Times 

CALEDONIA Mining Corporation lifted gold output at Zimbabwe-based Blanket Mine by 17% last year, after scaling up throughput at the “game-changing” Central Shaft, an underground operation that blasted off its first bullion in April, according to chief executive officer Steve Curtis.

In a shareholder update on Tuesday, Curtis said the firm scaled up output to 67 476 ounces (oz) during the review period, above its 2021 target of between 61 000oz and 67 000oz, giving impetus to directors’ long cherished ambition to reach 80 000oz by the end of this year.

On a quarterly basis, Blanket bolstered output by 24% to 18 604oz during the fourth quarter ended December 31, 2021, compared to 15 012 ounces of gold mined during the prior comparable period in 2020, Curtis said.

“This has been an outstanding performance and a tremendous team effort…we were able to exceed our revised annual production guidance.

“The commissioning of the Central Shaft, record gold production, along with a continued commitment to safety, all in one year, is an outstanding achievement and testament to the quality of the Caledonia technical team. Now that the Central Shaft is complete, the company will focus on other areas of its growth strategy, as we continue to evaluate investment opportunities, with a vision of becoming a multi-asset gold producer,” said Curtis.

Central Shaft represents one of the most recent significant gold mining investment projects in Zimbabwe that is a game-changer to Caledonia’s local interests.

The asset performed to expectation during the review period, underpinning most of the growth figures released on Tuesday which were in line with the combined sector output announced by government last week.

For Caledonia, 2020 was a tricky period highlighted by continuing tough foreign currency retention thresholds imposed by the central bank.

These were compounded by the effects of heavy rains which flooded shafts at the beginning of the year.

Central Shaft is expected to further ramp up Blanket’s gold production this year, trim overheads and help the firm build fresh capacity to undertake further exploration and development.

Blanket represents part of Caledonia’s bigger Zimbabwean ambition.

Curtis last year announced plans to pounce on at least two more gold assets and expand Caledonia’s Zimbabwean presence.

Before that, Bloomberg had reported that the firm was interested in buying one of Zimbabwe’s largest gold operations as it embarked on an aggressive programme to acquire more assets in the country.

The report said the Jersey-based gold producer was weighing the acquisition of Bilboes Gold’s Isabella-McCays-Bubi mines in northwest Zimbabwe.

The mines can potentially produce more than 200 000 ounces of gold.

Most of the Isabella-McCays-Bubi operations were at the time mothballed as the owners scouted for investors.

The firm listed on the Victoria Falls Stock Exchange (VFEX) in December 2021.

Caledonia hopes to leverage on the forex-indexed VFEX to fund-raise for its ambitious expansion in Zimbabwe.

Newsday

DEFUNCT steel-manufacturing giant, Zisco, has completed the adjudication process for potential investors expected to spearhead the revival of the Redcliff-based firm.

Names of the prospective investors have since been submitted to Cabinet for approval.

In an interview, Zisco group chief executive officer Dr Farai Karonga dismissed social media reports suggesting that a decision has already been made on the investor to take over the company’s operations.

“We have noted with concern some reports doing rounds on some social media platforms that we have already nominated a company to take over at Zisco. Such information is misleading and should be disregarded.

“The reality is that we have concluded the adjudication process and forwarded the names to Government and we await Cabinet approval,” said Dr Karonga.

Of late, there has been social media reports insinuating that Kuvimba Mining House has been given the nod to take over operations at Zisco.

Kuvimba Mining House is a joint venture between the Government and a consortium of international investors. Government is the majority shareholders with a 65 percent stake.

Its impressive assets include Shamva Gold Mine, Freda Rebecca Gold Mine, Jena Mine, a stake in the Darwendale Platinum project trading under the Great Dyke Investments, Bindura Nickel Corporation, Zimbabwe Alloys Limited,
“There is nothing official yet, we await the Government’s decision. Yes, we have done our part and it is not our duty to be announcing who won the tender before we get a directive from Government,” said Dr Karonga.

The adjudication process for prospective investors at the largest steel plant north of Limpopo began late last year after the Government in April had announced that it was in a fresh hunt for strategic partner to resuscitate Zisco.

In their expression of interest, bidders for the Zisco revival deal were among others, required to submit information on their financial performance and position, attaching a three-year audited financial statement, ownership structure, names of directors as well as information pertaining their position on the need to evaluate Zisco before the investment.

Seven bids from potential investors from which one would be selected were received.

In recent years, Zisco has been a subject of foreign investor interest with companies such as Essar Africa Holdings, a unit of India’s Essar Group having acceded to investing US$750 million into the Redcliff-based steel producer in 2011, during the era of the inclusive Government.
However, the deal hit a brick wall in 2015.

Again, in late 2019 discussions for a US$1 billion resuscitation deal between Zisco and R& F of China, which had shown much interest to revive operations at the local firm collapsed.

Zisco ceased operations in 2008 due to poor management and lack of capital to recapitalise. At its peak in 1999, Zisco produced up to one million tonnes of steel annually and the entity was among Zimbabwe’s major foreign currency earners.

It is hoped that the resuscitation of Zisco, a strategic company to Zimbabwe’s economy would be a step in the right direction under the country’s development agenda.

Following decades of economic collapse, the Second Republic, which came into power in November 2017 led by President Mnangagwa has vowed to rebuild the economy starting with the successful two-year Transitional Stabilisation Programme (TSP) implemented between October 2018 and December 2020.

Riding on the macro-economic stability brought by the TSP, the country has now moved from economic recovery to stimulating productivity under the National Development Strategy 1 (NDS1).

NDS 1, which builds to Zimbabwe’s envisaged upper middle-income economy status by 2030 is a five-year macro-economic policy running between 2021 and 2025 anchored on increasing production across all sectors of the economy, employment creation, and uplifting the living standards of citizens, among other fundamentals.

The Chronicle