Mining ZimbabweLatest Mining News, Policy and Industry Updates

A COUPLE of weeks back, Zimbabwe Chamber of Mines published its state of the mining industry survey report looking at issues faced by the industry and prospects for 2022.

To ensure objectivity, the Chamber states that its involvement was restricted to sponsoring and facilitating access to information to its members who form a greater part of the respondents in the survey.

The report looks at  key highlights, mining business confidence, local content and corporate social investments in the mining industry, expectations of the artisanal and small-scale mining sector (ASSM), COVID-19 and mining industry outlook for 2022 prospects.

Mining sector executives are reportedly positive on the prospects of the sector to be mainly driven by improving international commodity prices and a resultant increase in capacity utilisation in the sector as output is expected to grow.

The downside threats include the continuing high risk perception of the country which is likely to limit major investments in the sector, continuing infrastructure and energy deficits, problems with access to foreign currency and increasing costs of capital and operations.

In my opinion, I don’t see how anyone can be positive about a growth in output without these key challenges being fully addressed.

An increase in mining output is key in order for us to increase our foreign currency earnings and employment in the sector.

We have definitely not been well organised and aggressive in unlocking our mineral resources and most of it has to do with the political economy of the sector.

Chrome, coal and diamond subsectors are expected to grow significantly in 2022 while platinum will continue to dominate the sector.

Major expansions are expected in the gold and platinum subsectors with expectations that gold output will reach 35 tonnes.

Capacity utilisation is expected to increase to 83% in 2022, a miniscule increase from 82% in 2021 mainly driven by gold and ferrochrome.

For the mining sector, the fiscal regime continues to play a significant role and can either stifle or enable growth.

Key fiscal issues identified which continue to undermine viability prospects include high royalty and beneficiation taxes, high environmental management levies and misaligned rural district council charges.

On the issue of access to foreign exchange, miners are not happy with the 60% retention which is viewed as inadequate to meet increasing operational costs.

Added to this, the practice of having to pay for local expenditure in foreign currency reduces funds available for importation of essential inputs and it makes sense to allow miners to pay taxes, royalties, electricity and statutory obligations in local currency and premising of taxes, fees and charges at the obtaining auction market rate.

A key input to mining operations is energy and indications are that on average, miners are facing six hours of power outage per day and this has serious repercussions on operations and output. Unfortunately, the situation is expected to worsen in 2022 and this will limit output growth prospects.

In my opinion, such matters need urgent attention at the highest level. Accepting payment for electricity bills in local currency, for example, will have a significant positive impact on the sector and rehabilitation of dilapidating power infrastructure is critical.

The issue of capital inflows into the sector remains a challenge due to subdued foreign direct investment into the economy as a whole.

Most miners indicated that they are facing difficulties in raising external capital to fund their operations, with some reporting that they had put on hold some of their projects due to capital shortage. Only improved political and macro-economic stability can address these issues.

On the issue of mining policy environment, survey findings show that most respondent executives, 74%, are expecting the mining policy environment to be suboptimal, citing delays in finalising outstanding policy matters including a mineral development policy and mining cadastre.

This falls under mining sector organisation, a matter which I have written on before. An enforceable, transparent and comprehensive regulatory framework for natural resource sectors provides a stable and predictable policy environment which increases long-term investment in the sector.

The quality and consistency of the legal, regulatory and fiscal frameworks in the sector will, therefore, always have a major influence on the growth of the sector.

On artisanal and small-scale miners (ASM), the key issues raised are the need to formalise the sector and develop appropriate legislative tools especially on allocation of mining rights. The ASM sector remains disorganised and highly risky and yet it can significantly contribute to high minerals output.

Overall, although the report tries to create a balanced perspective and to remain positive, there is still a lot to be done to get our mining sector operating at full capacity. What is clearly lacking is substantive progress on stated intentions. Everyone seems to understand what needs to be done and yet progress is very slow.

As a result, Zimbabwe’s mining sector potential remains untapped due to lack of investment in a sector that could do wonders for the economy.

I will conclude by repeating an important quote from the book: “Rents to Riches” – The Political Economy of Natural Resource–Led Development.

“Countries that are more politically inclusive are likely to enjoy better natural resource management and developmental outcomes. Countries where a greater proportion of society has a voice in policy making and where decisions are made on the basis of public goods provision to the many, rather than private spoils to the few, are more likely to benefit from welfare-enhancing policies that share extractive sector developmental riches across social, political, and economic groups in a sustainable fashion.”

That is surely the route we must take if we are to see Zimbabweans benefiting from their mineral resource endowments.

•  Vince Musewe is an independent economist, you may contact him on [email protected]

Zimbabwe’s mining sector will, this month, exhibit at the Dubai Mining expo, as part of efforts to lure  more investors into the mining sector, Mines and Mining Development minister, Winston Chitando  has said.

The capital intensive mining sector has been clamouring for funding to ramp up production as government wants the industry to be a US$12bn sector by 2023.

Chitando said the sector was geared to participate at the expo.

“November is the mining month for Dubai Expo and for Zimbabwe we do have the mining investment on November  24, 2021 and we look forward to it.

“There’s lots from stakeholders and we look forward to a successful expo in November.

“This is an assurance that the US$12bn mining target in 2023 will be achieved as we are working tirelessly,” Chitando said.

Minerals  Marketing Corporation of Zimbabwe (MMCZ) general manager Tongai Muzenda said there will be virtual marketing during the mining expo.

“As a country we will be showcasing what we have and for us as MMCZ, we are really keen on marketing minerals which is in the last week of November.

“So what we will be doing is we will be showcasing our minerals. All minerals we will be showcasing to the world including electronic or virtual marketing. We have platforms that we have set up and all minerals will be there. We will be showing what we have done as Zimbabweans from mining through exports everything: diamonds, copper, gold everything. And this adds also positively to our US$12bn dollar target by 2023,” he said.

Chitando also said government was working on different projects around the country.

“We have very significant projects taking place, the major minerals being platinum, gold, diamonds, chrome and steel.

“We have notable projects in the Hwange area especially for the coal, coke and hydro carbon lithium where we have about nine different coal mining companies registered but most importantly value addition where we have a number of power stations which are being established and also in terms of the value addition,” he said.

Chitando, however, admitted that the Ministry was facing challenges because it was using a manual system  for mining titles.

“To some extent, this has been contributing to disputes in terms of the holding of mining titles. I am glad that we are quite advanced to the mining administration system.”

He said the computerisation of the mining title administration known as the  cadastre system will help in supporting the US$12bn milestone.

Business Times

WILDLIFE conservationists have called on communities to ensure win-win situations for humans and nature in order to reduce human-wildlife conflicts.

This was said on Monday by African Wildlife Foundation (AWF) country director Olivia Mufute in Harare during a wildlife and environment training workshop attended by journalists from Zimbabwe, Botswana, Mozambique and Zambia.

Mufute said as the race to extract Africa’s natural resources heated up, there should be a win-win situation for humans and nature.

Africa is home to a broad variety and abundance of the world’s biological and natural resources and the world’s biodiversity hotspots.

However, the over-exploitation and destruction of natural resources, including wildlife, is said to paint a grim picture of lack of efficient conservation methods.

“Africa’s natural world is declining at an unprecedented rate in millions of years. The way we produce and consume food, and the choice of energy, and the blatant disregard for the environment entrenched in our current economic models is pushing us to the limits of the continent,” Mufute said.

“Despite the importance of biodiversity to our livelihoods and wellbeing, our quest for socio-economic development has caused tremendous loss of biodiversity. The rapid economic and human population growth has come at a very high ecological cost.

“While efforts are being made to attract huge investments and financial capital, the same care is often not being taken to preserve our natural capital.”

Mufute added: “Agricultural expansion, new settlements, infrastructural development, and resources extraction are driving the degradation of forests, rivers, and grasslands. The resulting habitat loss and fragmentation threatens ecosystem goods and services upon which both people and wildlife depend,” she said.

The World Economic Forum estimates that human activities have caused loss of approximately 83% of all wild mammals and half of all plants.

Since the 19th century, there have been concerted efforts towards the conservation of Africa’s natural resources.

Newsday

Zimbabwe is bullish on reaching over 28 tonnes of the gold output this year following a good run averaging three tonnes per month since June.

In June 2021, the half-year gold output was 9.948 tonnes. Output has surged to over 12 tonnes within four months to 22.024 tonnes due to a 5% incentive on deliveries and timeous payments.

Fidelity Printers and Refiners acting general manager Peter Magaramombe told Business Times that the incentive has led to an increase in deliveries.

“As of October 31 2021 gold output surged 37% to 22.024 tonnes from 16.018 tonnes during the same period last year due to friendly policies put in place by the Reserve Bank of Zimbabwe. With an average rate of three tonnes of gold per month, we are expecting to breach 28 tonnes by the end of December,” Magaramombe said.

From the 22.024 tonnes delivered to FPR, small scale miners accounted for 12.95 tonnes against the 9.07 tonnes by primary producers.

According to the official statistics obtained from the Reserve Bank of Zimbabwe, the 28 tonne output will be the third-best output in the history of Zimbabwe.

To date, the 35 tonnes achieved in 2018 is the highest output followed by 29.4 tonnes in 2019.

Experts say Zimbabwe’s output would have surpassed 36 tonnes, had the mining policies been relaxed earlier.

Gold deliveries went up 123% to 3.051 tonnes  in October 2021 against 1.36 tonnes recorded during the same period last year.

The October output will be the third time Zimbabwe has surpassed the three tonne mark.

Experts said the country will surpass last year’s gold export receipts due to an increase in gold deliveries and firming international gold prices.

In June this year, RBZ scrapped taxes on small scale miners, began timeous payments and paid the prevailing international gold prices.

Those who deliver over 20 kilogrammes per month are given an extra 5% incentive and this has pushed volumes.

Though gold smugglers are still there, their role has been greatly reduced.

Smugglers were believed to be swooshing close to 2.5 tonnes every month but with new policies in place, the majority of them are moving out of the country in search of greener pastures.

Small scale miners said FPR is now the buyer of choice who offers the best prices in the world.

Zimbabwe Miners Federation chief executive Wellington Takavarasha said now that FPR is better than all buyers, members are delivering their yellow metal formally.

“As small scale miners we are averaging 500kg per week which gives us two tonnes per month due to new incentives and spot payments by the RBZ,” Takavarasha said.

On Tuesday international gold prices stood at US $58 660 per kilogramme and Fidelity was paying above US$60 000 per kg to woo miners to deliver to FPR.

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

The government wants to establish new gold centres following a sudden increase in output.

The gold centres are expected to provide basic equipment such as compressors and jackhammers as well as working capital to facilitate optimal production by small-scale miners who supply gold ore.

RBZ shall maintain presence, directly or through approved buying agencies at all gold centres so as to buy all the gold produced.

The gold centres will also provide technical services to miners who supply the ore.

In August, the Cabinet approved proposals for the establishment of over 20 gold centres by mid-2022.

Accordingly, memoranda of understanding will be signed with four investors who have been identified for the purpose of setting up the gold centres.

The investors will own 100 % equity in the centres, while those who operate joint ventures with the ministry of Mines and Mining Development will fully fund the operations of the centres in return for a 90% equity stake.

Some of the gold centres are expected to be established in Makaha, Odzi, Mount Darwin, Shamva, Mazowe and Silobela.

Business Times

Eskom boss Andre de Ruyter said yesterday that the power utility was like an old car that needs to be replaced, not fixed.

De Ruyter was updating the nation on the continuous load-shedding plaguing the country.

“How much is required to fix Eskom? On an annual basis generation requires R10bn to R12bn to spend on maintenance. Our generation feed is on average 41 years old and we now need to introduce additional capacity to make provision for the plants that are reaching end of life.

“The question is not how much it will cost to fix Eskom. We need to buy a new car; it just costs too much to fix the old car. This is exactly the opportunity we have with the money made available by COP26. We can access international funding to a lower-carbon economy,” he said.

On the R131bn deal announced at COP26, he said at this stage SA was not a signatory to a commitment by 30 countries to stop pursuing new coal projects.

He also explained that a “blackout” was when an entire electricity system was unable to maintain its frequency, and “leads to the total loss of electricity transmission and distribution capacity”. This could last for “a number of days and, in some instances, even weeks”.

“So that is the catastrophic outcome we are trying to avoid by managing the demand through load-shedding,” he said. – TimesLIVE

CALEDONIA Mining Corporation, the parent company for Blanket Mine, will debut trading on the Victoria Falls Stock Exchange (VFEX) on December 1, 2021, becoming the third listing on the USD-denominated bourse.

The VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), launched late last year as part of efforts to attract global capital, while also helping restore foreign investor confidence in Zimbabwe’s capital markets.

Caledonia will be the third listing on the VFEX, joining SeedCo International and Padenga Holdings.

According to a pre-listing statement, the secondary listing of Caledonia will be by way of introduction of Depository Receipts as Caledonia’s shares cannot be directly traded in Zimbabwe, due to some limitations on the New York Stock Exchange where they are also listed.

“Given that shares cannot be directly traded in Zimbabwe as there are no Securities Exchange Commission of Zimbabwe (SECZim) registered transfer agents with a presence there, Caledonia will therefore issue a number of shares to the Depositary Agent, being Corpserve Nominees (Pvt) Ltd, a SECZ regulated Zimbabwe entity, to hold on the Share Register.

“The Depositary Agent will then issue an equivalent number of ZDRs against shares worth up to US$5 million at a price per ZDR of not less than USD12,50, with the final price and, therefore, number of ZDRs to be issued to be decided and apply to list those ZDRs on VFEX by way of introduction, pursuant to an established structure,” reads part of the statement.

The company noted that further shares could be issued to the Depositary Agent in the future against which further equivalent ZDRs would then be issued.

“There is expected to be a minimum number of ZDRs that must continue to be listed on VFEX but, subject to that and any other conditions imposed by the Reserve Bank of Zimbabwe (RBZ) pursuant to Exchange Control Regulations and otherwise, ZDRs should be redeemable and capable of being converted into shares to be held on the Share Register and tradeable on NYSE or converted to depositary interests admitted to trading on AIM.”

According to the statement, the proposed listing is expected to enable the Group to benefit from incentives announced by the Minister of Finance and Economic Development on 10 May 2021, with it being understood that, with a VFEX listing of ZDRs, members within the Group should be entitled to 100 percent US$ retention of revenue earned on incremental exports.

Caledonia said it will also be able to access investors in Zimbabwe, hence creating local shareholder spread and liquidity. This would allow Caledonia to hold capital raised through the VFEX in approved local or offshore accounts with an internationally recognised banking institution.

“Capital raised would assist the company in funding future expansions, such as financing Caledonia’s proposed purchase of the Maligreen Project claims, situated in Gweru, Zimbabwe,” the company said.

According to Caledonia, the ZDR Offer opens Wednesday, November 10, 2021 and the ZDR Offer closes Wednesday, November 24, 2021 while the proposed listing will occur Wednesday, December 1, 2021.

Caledonia said following the commissioning of the Central shaft at Blanket Mine, production is expected to increase from approximately 58 000 ounces in 2020 to the targeted rate of approximately 80 000 ounces per annum from 2022 onwards.

Work is due to begin on Botswana’s second privately-owned coal mine in the first quarter of next year, the CEO of Maatla Resources has said, despite calls to abandon coal.

At the COP26 climate conference in Glasgow, the southern African country signed up to a global commitment to reduce the use of heavily-polluting coal, but opted out of a pledge to stop issuing new licences to mine the fossil fuel.

Botswana is edging ahead with developing its coal resources, which are estimated at 200 billion tonnes, as it looks to wean its economy off a dependence on diamonds.

Maatla was awarded a licence in February and had hoped to start building the 1.2 million tonnes per annum mine this year, but was stalled by the COVID-19 pandemic and regulatory delays.

Now, Maatla is looking to proceed after a funding deal with Frankfurt-listed HMS Bergbau, which in a US$45 million debt and equity deal concluded in April took a 51 percent stake in it.

“The target is to reach financial close by February next year and then immediately start building the mine. First production is expected within 12 to 15 months,” Maatla CEO Jacques Badenhorst said in an interview. – Reuters