Mining ZimbabweLatest Mining News, Policy and Industry Updates

ZIMBABWE’s Mines minister, Winston Chitando last week shot down requests by gold producers to channel fresh capital from pension funds to rebuild undercapitalised operators.

Gold miners alone have since the past decade been combing through markets for US$1 billion to help them return to full production.

In total, Zimbabwe’s mines say they require injections of up to US$5 billion to drive operators out of a dire crisis, which has been compounded by weak domestic banks and unsustainable interest rates.

In a presentation made during last week’s Chamber of Mines of Zimbabwe annual mining conference in Victoria Falls, the Gold Producers Association said it had located an avenue for funding through a new insurance Bill that allows pension funds to invest 15% of their portfolios offshore.

Qhubeka Nkomo, president of the association said instead of sending liquidity out to offshore markets such funds would come handy for miners.

Current regulations bar local insurers and pension funds from investing abroad.

But there has been a push by organisations including Life Offices Association of Zimbabwe (LOAZ) for permission to invest funds into offshore markets.

LOAZ says this would help mitigate domestic risks associated with an economy that has been haemorrhaging for 22 years.

Authorities have bought into the idea, and should the Bill be enacted, millions of United States dollars would flow out of pension funds into high return offshore markets.

In his presentation to the conference Nkomo said investing such funds into the mining industry would be vital for addressing the capital problems.

But Chitando said it would be “unfair”.

“Pension funds are already invested into the mining sector through the Zimbabwe Stock Exchange and the Victoria Falls Stock Exchange and through other private placements where they acquire stakes,” the minister said.

“To give the 15% to the mining industry may be unfair to pension funds,” Chitando told the conference.

In 2017, former LOAZ chairman, Reuben Java said offshore investments would help the insurance industry spread risk and mitigate losses during turbulent times.

Java said had insurance firms invested part of the funds offshore, the impact of the hyperinflationary crisis experienced in the last decade could have been mitigated by returns from stable markets.

“We are not allowed to invest offshore,” Java said then.

“We keep having conversations with regulators but we are not allowed. In other countries, insurance companies are allowed to invest offshore so that if there are problems in one country, assets in other countries are safe. Hyperinflation destroyed value. It wreaked (havoc on) our savings… Inflation ran away, it became uncontrollable. It killed our exchange rate; whatever we had became worthless,” he added.

Billions in US-dollar savings were wiped out then, and today, Zimbabwe has one of the most struggling pensioners.

During last week’s conference, the government laid out a multi-pronged approach to help mines scale up production as industry executives indicated that the scale of capital required to bolster operations was too huge for domestic lenders.

More than US$30 million in fresh funding was estimated to be destined for mines immediately from sources outside the banking sector as mining executives digested the industry’s future.

State-run gold buyer, Fidelity Printers and Refiners said loans of at least US$20 million would be injected into sector operators while the Ministry of Mines and Mining Development said it was deploying its share of US$961 million special drawing rights (SDRs) allocated to Zimbabwe by the International Monetary Fund (IMF) to recapitalise the mining industry.

Bankers also said they were ready to fund production.

Onesimo Mazai Moyo, permanent secretary in the Ministry of Mines, told delegates that Treasury had released US$10 million out of the US$961 million IMF package, which will soon be channelled to mines.

Moyo said the government was working out a deployment strategy with banks to determine how SDRs will flow into mining companies.

SDRs will not be free money, but the government says it will charge competitive rates to borrowers in order to revive hundreds of struggling companies across sectors.

“The ministry was allocated US$10 million from the SDRs and we are working with Treasury and banks to make sure this money is lent to the mining industry,” Moyo told delegates.

“Beneficiaries will include small-scale miners because we want inclusive growth. We are establishing a facility with banks, because they are skilled in that area,” he said.

The Independent 

CHINESE mining firm Anjin Investments suffered a massive slump in diamond production in 2021 recording 70 000 carats from 790 000 carats produced the previous year due to the relocation of its processing plants.

The diamond company is, however, projecting a production ramp up this year.

Anjin is a 50-50 partnership between Chinese investor Anhui Foreign Economic Construction Company (AFECC) and the Zimbabwe National Army.

The company’s production trends came into the spotlight following the Commodity Outlook 2022 report released by the Chamber of Mines in February this year.

The report indicated that all the diamond firms produced an annual output of 4,2 million carats last year.

It further quantified that the Zimbabwe Consolidated Diamond Company (ZCDC) contributed 89% while 10% came from RioZim’s subsidiary Murowa Diamonds.

Technically, this left a mere 1% unaccounted for, which could be attributed to Anjin.

“Production started in April 2020. Approximately 790 000 carats (have been produced in two years). 720 000 carats (were produced) in 2020 and 70 000 carats in 2021.

“Most of the work in 2021 focused on relocating plants to bring them closer to the mining area. From the old mining area of our mining concession to Portal B area,” Anjin public relations officer Special Matarirano said in an interview recently.

Anjin’s operations used to be centralised in Jesse and Chirasika concessions now known as Portal C and L2, prior to its forced exit in Marange in 2015.

Former Mines minister Walter Chidhakwa revoked licences of all the Marange miners, Anjin included.

However, Anjin made a surprise return to the vast diamond fields following a military coup in 2017. The miner was further awarded the most productive concession — Portal B — previously owned by Marange Resources and briefly by ZCDC.

Matarirano said Anjin is projecting a major comeback targeting to produce 700 000 carats this year and 12 million carats by 2025.

“Approximately 700 000 carats (in 2022) and 12 million carats (by 2025),” he said.

Matarirano added that Anjin is currently making use of the strip method to mine diamonds in the conglomerate matrix and also exploring to determine the resource in Portal B.

Its comeback is expected to boost the country’s combined annual diamond turnover to five million carats by year-end.

The development comes as Anjin is currently operating at 70% capacity utilisation according to information gathered from the firm.The diamond miner also indicated that it has a staff complement of around 500 workers with locals constituting 85 percent. 

The  Independent 

When earnings from selling tomatoes could hardly secure the next meal for Linda Sherekete (29) and her two children — aged seven and 10 — she became desperate for a decent-paying occupation.

In Zimbabwe, employment does not come-by easily and at Lowdale Farm in Mazowe South, Mashonaland Central province, the prospects of getting a suitable job were even slimmer.

The area, situated some 25km north of Harare, is known for smallholder farming and informal gold mining, making it a very masculine environment.

In 2018, Labenmon Investments set up a US$20 million-nickel processing plant to beneficiate the base metal at Lowdale.

Sherekete knew she had to be daring to get a job there nine months ago.

“I used to sell tomatoes at a vending stall, but the money was not enough. So I decided to join the men who were waiting for job openings at the plant’s gate,” she explained. Persistence saw her not only becoming a security guard manning the same gate, but the first woman to be employed there.

“Poverty gave me strength to come job-seeking here. I have two children and now they are getting enough to eat and go to school in appropriate uniforms,. which shows that they have a working mother.”

The plant currently employs 108 people and the number of women has risen since Sherekete got a job.

Labenmon Investments, a Chinese mining and logistics firm, which started its local operations in 2006 with a special focus in gold and nickel mining, has now included value addition and beneficiation through establishment of refineries.

This comes as the country is pursuing an ambitious US$12 billion mining industry target by next year as part of the broader macroeconomic roadmap towards an upper middle-income economy by 2030.

The development has seen an influx in Chinese investments and while they have been contributing to increasing formal employment and setting up infrastructure, critics believe that it has not been enough compared to the profits they are making.

“In our mines, refinery plants and also transportation companies we have employed hundreds of local people, we strive to protect the environment and also conduct our corporate social responsibilities (CSR) just as we do in China,” Labenmon Investments manager Tang Jun told journalists last week.

“Our main purpose is to improve the lives of the people and benefit the community.”

In addition to donations made to a local primary and secondary school, Labenmon has built houses for their workers, among other CSR projects.

Jun also revealed that they have committed US$2 million to convert Lowdale’s rugged 8km main road into a world-class concrete one.

According to him, they have settled for a more costly concrete road instead of a tarred one for its durability — concrete roads last up to 25 years — and as an assurance of their sincere partnership with locals.

“In China we have one saying that if you want to have a good life or become rich you first have to construct a good road,” said Jun adding that the high-priced road is “a sign of sincere contributions by Chinese investors”.

“There is widespread talk on social media that we are looting resources but we are not looting, we are here to partner with the government and local people in mining, refinery and export of products that earn foreign currency for the government and its people.

“We are happy to be with the Zimbabwean sisters and brothers working together to improve livelihoods and contribute to the economic development of the country.”

For years, China has been the largest source of foreign investment in Zimbabwe since the latter adopted a “look-east policy” in 2003 that seeks trade as well as political agreements with Asian countries considered friendly to it.

Last year trade between the two countries, which has seen Zimbabwe export goods like tobacco, ferrochrome and copper among others while importing electromechanical products, communication technology and textile products etcetera, reportedly amounted close to US$ 2 billion.

However, a cloud of uncertainty hoovers over a significant number of local Chinese businesses says Farai Maguwu, the founding director of Centre for Natural Resource Governance (CNRG).

“A baseline of Chinese Investments in Zimbabwe shows that the majority are extractivist in nature, they are very exploitative and negotiated at the political and military level,” Maguwu told The Standard.

“When they get to the community the decision has already been reached and they are not accountable to the local people, but to the one who gave them access to the community.”

It takes two to tango and although Maguwu raises red flags on both parties he mainly accuses government for an apparent pillaging of local natural resources, which he said is a result of rent-seeking behaviour and laxity of local laws.

“The government of Zimbabwe must create a framework at the political level of what we want to get out of our natural resources then the junior officials who make policies will ensure that when investors come they play to the games that we would have set but at the moment it is just rent-seeking,” he said.

But, looking at the Labenmon case where millions of dollars have been poured into developing the community and the positive testimonials of their workers the big question is why is there a blanket perception that Chinese Investors are looters?

“Chinese investors have been bad-mouthed a lot of late and we have not said anything but now we want to show people what we do,” says Steve Zhao, director of China-Africa Economic Research Centre.

Essentially, Zhao says, the Chinese community now wants to “speak out about who we are and what we are really doing” to dispel the “fake accounts intended to smear us”.

“The majority of Chinese people and companies in this country are good people and want to develop the country as well as share the success experiences from China with the local people so as to build the Zimbabwean economy.”

Building together is what Tichaona Gwashavanhu (42), an informal gold miner turned plant supervisor at Labenmon, believes the miner has gotten them to a point where they are seeing development in their community.

“This area was so primitive and it was scary because of rampant crime, but now we are relieved as a result of these developments,” said the married father of four.

“We look forward to a lot of other developments that they have promised and we are ready to help them in these mutual achievements because they are not originally from around so they may not know what we want in our country but we will tell them so we can build together.”

The Standard 

The Minerals Marketing Corporation of Zimbabwe (MMCZ), which earlier this year announced a mop-up exercise of the country’s gemstones, has yet again called for individuals and corporates to participate in buying and selling gemstones as subagents of the company.

Prince Sunduzani

The move is meant to plug the illicit flow of gemstones, which are finding their way out of the country through illegal channels.

The country is said to be losing over 50 million dollars every year through overnight and illicit sales of the country’s gemstones.

The Idea to have sub-agents started about three years back although several individuals wishing to be a part of the initiative fell short of MMCZ’s requirements and ended up failing to register.

It has had many false starts since the issuing of the SI 256 of 2019 and reports are that no subagents have been licenced before.

“Interested Zimbabwean citizens are invited to submit an expression of interest to be considered and licensed as MMCZ subagents to purchase coloured gemstones around the country and sell the same through the corporation as per MMCZ Act.

Chapter 21:04. MMCZ Gemstones sub agents are appointed in terms of SI 256 of 2019,” said MMCZ.

“The function of an MMCZ gemstone sub-agents is to buy coloured gemstones from small scale miners within Special Grants as defined in the SI 256 of 2019 and sell the coloured gemstones through Minerals Marketing Corporation of Zimbabwe.”

The deadline for the application is 14 June 2022.

This call dovetails with the calls by the country’s biggest mining body, Zimbabwe Miners Federation (ZMF), to formalise the gemstone industry.

The organisation held a meeting with MMCZ in Harare, in March and proposed the formalization of operations of Artisanal and Small Scale Miners in the Gemstones industry, which includes among others, MMCZ issues subagents licenses for the trading of Gemstones through  ZMF and creation of a round-robin education and awareness campaign in all gemstone mining districts.

EXALO #202, the oil and gas drilling rig that is on its way to kick off crucial test well drilling at Invictus Energy’s Muzarabani oilfields, which has been stuck in Tanzania, has been released following the completion of clearing procedures and documentation.

Rudairo Mapuranga

Invictus Energy Limited, the Austria Stock Exchange-listed company that is exploring for oil and gas in the Muzarabani-Mukuyu area has confirmed that the company is now mobilizing for the transportation of the drill rig from Tanzania.

“Invictus is pleased to confirm that following the completion of clearing procedures and documentation, the Exalo Rig 202 has commenced mobilisation from Songo Songo Island in Tanzania to Cabora Bassa.

“The rig and associated equipment will arrive over the course of June and commence rig up to drill the first of two wells in the Company’s upcoming exploration campaign in the Cabora Bassa Basin.

“The long lead items, including the casing, have begun arriving at the Company’s supply base in Harare and are being prepared for deployment to the Mukuyu-1 wellsite.”

According to Invictus Managing Director Scott MacMillan, “The commencement of the rig mobilisation marks another milestone in the project as we prepare to commence drilling the Mukuyu-1 well, the first well in our potentially play opening two-well exploration campaign in the frontier Cabora Bassa Basin.

”The enlarged SG 4571 licence provides us with a basin master position encompassing the entire Cabora Bassa Basin in Zimbabwe.

“Subject to making an opening discovery with one of our first two wells, it potentially could provide us with future discoveries on a large scale within the basin which will be transformational for the Company and the Republic of Zimbabwe.“

The Company has been advised that the pre-gazettal administration process to increase the SG 4571 permit area by sevenfold has been completed and awaits publishing in the Government Gazette.

Invictus’ 80% owned subsidiary Geo Associates (Pvt) Ltd (“Geo Associates”) and the Sovereign Wealth Fund of Zimbabwe (“SWFZ”) have executed a Heads of Agreement (“HoA”) to increase Special Grant 4571 (“SG 4571”) licence area from 100,000 hectares to 709,300 hectares which is detailed in the ASX release on 28 March 2022.

The Company has committed to drill a second well in the campaign to test the newly identified basin margin play which was matured through the CB21 Seismic Survey completed in November 2021. Details of the second well will be provided once the gazettal process has been completed. Geo Associates and the Republic of Zimbabwe will also conclude the Petroleum Production Sharing Agreement (PPSA) which will encompass the legal and fiscal provisions to govern the project and the development of any discovered resource.

Under the HoA the SG 4571 licence and application area will be amalgamated with the SWFZ’s MSC003 Cabora Bassa South Reserved Area to cover the entire Cabora Bassa Basin in Zimbabwe.

The Mukuyu-1 wellpad construction is nearing completion following the finalisation of civil works including pad levelling and compaction, water supply and reservoirs. The concrete footings for the rig will be poured for curing ahead of the arrival of the rig to the wellsite.

The Mukuyu-1 well will test multiple stacked targets within the greater Mukuyu structure which is independently estimated to contain 8.2 Tcf + 247 million barrels of conventional gas-condensate (gross mean unrisked) – see Independent Prospective Resource Estimate on 1 July 2019 and #Cautionary Statement on Prospective Resources.

The Company is awaiting an updated Independent Prospective Resources Estimate incorporating the new CB21 Seismic results which will be released when completed.