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Interview: Simba Chinyemba, Kuvimba Mining House CEO

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Interview: Simba Chinyemba, Kuvimba Mining House CEO

One of the most talked-about companies in the mining business, Kuvimba Mining House has for some time had many wondering what the giant is all about.

Kuvimba a new kid on the block has among other ventures successfully resuscitated the Shamva gold mine which has risen to become one of Zimbabwe’s top gold producers.

Mining Zimbabwe spoke to the man at the helm of the miner, Mr Simba Chinyemba who gave an insight into the operations of Zimbabwe’s Mining Giant.

A brief introduction of yourself?

My name is Simba Chinyemba. My current role is CEO for Kuvimba Mining House (Pvt) Ltd. I am an actuary by profession. I enjoy hiking, travelling and seeing the world. Indeed, I have lived in 7 countries now, including Zimbabwe where I am glad to be back. Prior to my current role, I have held various leadership and board roles gained in the United Kingdom, Bermuda, Asia, the Middle East and various African countries.

You are running the country’s biggest Mining House what is your working day like?

I would start with a comment on the “running the company” part of your question. As Group CEO of KMH, I really am just the figurehead of a team of leaders including the CFO, Innocent Rukweza and the COO Cobus Bronn. In a different world without titles, we might have seen ourselves as co-CEOs. In addition, most of our mines have their own senior management structure with CEOs who report to the team at group level.

My day is therefore mostly spent discussing matters of strategy and operational progress with the various leaders we have in the business. I also typically engage the different stakeholders we have in the business regularly to ensure that we are still aligned in our common objectives and where necessary, adjust course to ensure alignment.

Which assets (Mines) does Kuvimba currently own?

Kuvimba owns quite a large array of assets either as 100% owner or as a majority shareholder. These are:

  • Freda Rebecca Gold Mine
  • Bindura Nickel Corporation
  • Shamva Mining Company
  • Jena Mines
  • Elvington Mine
  • Sandawana Mine
  • Zimbabwe Alloys Limited
  • Great Dyke Investments
  • Homestake Mines

How much Capex has Kuvimba injected into Mining projects since its inception?

Kuvimba has injected significant funding into the operations, the funding was meant to acquire the assets, and address the mines expansion CAPEX and working capital requirements. The funding was in excess of US$300 million.

How many people are employed by Kuvimba?

Kuvimba currently employs over 4000 employees across the different mining assets we have.

Are there any CSR programmes you are currently engaged in?

All our major mines have CSR programmes in the communities. There are indeed so many it would be difficult to mention them all for this interview.

Just a few examples we have are: Refurbishing and equipping the schools in the villages and providing accessible medical care to the communities through our clinics. We have also opened Covid testing centres and isolation centres which are made available to the communities around our mines.

Are any new projects slated for this year?

The three major projects that we have going on are :

  1. Creating an open-pit mine at Shamva. This will likely be the largest open-pit gold mine in the country both by size and production.
  2. Exploration project at Sandawana where initial indications show a large scale lithium resource.
  3. The Darwendale Platinum project which is still ongoing and is of course part of our major projects.
  4. Resuscitation of the Zimbabwe Alloys mining and ferrochrome production complex.
  5. Assisting the Government of Zimbabwe in the turnaround and resuscitation of the Ziscosteel integrated steelmaking complex.

Given the size of Kuvimba, we also have many other exploration and development projects constantly happening at our various mines and assets.

What exploration projects are you currently undertaking?

As I mentioned above, we have exploration projects at nearly every asset we have. This is indeed a standard part of our operating ethos. We also have major exploration projects going on at Sandawana and Freda Rebecca Gold.

Some of our readers expressed disappointment that important projects specifically Bikita minerals and Arcadia lithium went to foreign companies. Is there no interest in minerals like Lithium for Kuvimba?

KMH has an interest in Lithium. Indeed, we are currently exploring one of our resources where current indications are that we have a very large lithium resource at Sandawana.

As a predominantly Zimbabwean owned company, we obviously wish that most Zimbabweans are able to take part in our economy through both ownership and employment in our massive natural resource sector. As Kuvimba, we do our part in this regard by being both majority-owned by the government and also through our listing program which I will outline below. Our timeline is beyond generations and therefore we acknowledge the lack of capital in our country. 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. When the President said that Zimbabwe is open for business, the practical meaning of that includes that we are open to foreigners investing in our country, especially in the mining sector.

What is the current progress at the Darwendale Platinum mine?

The Darwendale project is still ongoing. The original project was modelled on the possibility of underground mining. 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. Further updates will be provided in due course.

What is the plan of action for the Zisco resuscitation?

The resuscitation of Ziscosteel is a major project. KMH’s role is to be the government’s partner in the turnaround program. This involves leading the strategy formulation, capital injection and raising efforts and helping the board and management of Ziscosteel make the necessary strategic decisions. The plan involves scaling up the iron ore mining capacity of Ziscosteel, Resuscitating the steelmaking complex and ensuring that the products from Ziscosteel.

How much gold did you produce last year?

Kuvimba produced 115,136 ounces.

The government has been calling for mining houses to list on Victoria Falls Stock Exchange (VFEX) are there plans for you to list?

KMH has heeded this call by the government. In December 2021, we led the movement of Bindura Nickel Corporation from the ZSE to the VFEX. We also have major plans to list at least 2 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. We will be making necessary announcements at the appropriate times.

Since the fall of Mhangura mine, the country’s copper production has been relatively low to the extent that copper was not mentioned as a significant mineral towards the achievement of the US$12 Billion milestone. Are there any copper projects you are interested in or currently undertaking?

KMH does not currently have a presence in the Copper sector. We however believe that Copper is an important metal in the economy of the future. We are therefore always looking at opportunities and if one presents itself in a manner that aligns with our vision and strategy, we will definitely consider it.

Chamber of Mines has a zero harm mantra, how is Kuvimba working to achieve zero harm at its mines?

The Group continued to enforce its ZERO HARM policy and sought to create a safe working environment by creating a culture that promotes safety, teamwork, and accountability. Our SHE management system (“SHEMS”) is based on ISO 14001:2015 and ISO 45001:2018 which continued to blossom and guide the business sustainability. In the financial year under review, the Group’s SHE performance continues to be exceptionally better than international and Zimbabwean mining standards. Prior to Kuvimba, one of the mines used to have two fatalities annually, now the Group sustainably achieves ZERO fatalities.

In terms of environmental rehabilitation after mining, what measures are the company currently undertaking to ensure the land can be used for other purposes?

There are various mining regulations in our country including specific requirements on rehabilitation of the environment after mining. As a group, our policy is to comply with all the relevant regulations in all the areas we operate in. Indeed, our motto is Beyond Generations. That in itself means we take very seriously our environmental responsibilities not just today but also for a future that may be beyond our current generation. ENDS//

This article first appeared in the Mining Zimbabwe May 2022 (Mining Indaba) issue.

ZETDC, Dinson steel sign power deal

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ZETDC, Dinson steel sign power deal

China’s Tsingshan Holding Group Company Limited’s subsidiary, Dinson Steel and Iron Company has signed a joint venture agreement with ZETDC for the construction of a 100km power line from Sherwood to the Mvuma based US$1b steel plant.

Prince Sunduzani

The company, which is setting up a US$1 billion steel processing plant in Chivhu, last week announced that it had signed a joint venture with ZETDC as part of its efforts to realise the completion of the setal project.

A delay in the construction of the power line had held back the construction of the plant touted to become the biggest steel manufacturer in the Southern African Development Community.

“Today we signed a Joint Venture Agreement with @ZetdcOfficial  for construction of the 100km power line from Sherwood to the Mvuma steel plant site. Grateful for the cooperation of stakeholders for making this happen,” the company announced on its official Twitter account.

Zesa is on record saying the steel plant will be the largest consumer project for ZESA, requiring up to 500MW in the next two years, which is equivalent to almost a third of today’s national consumption.

Last year the company indicated that it had completed drawing all the plans for the transmission system, which will include two large power substations.

The line that will come from Sherwood near Kwekwe will supply the two lines that constitute the project.

On full production, the integrated project that comprises a carbon and steel plant, an iron ore mine, and a ferrochrome plant is poised to produce 1.2 million tonnes of iron and steel a year. Apart from creating thousands of jobs, the project will revive the country’s collapsed steel industry, which is currently relying on imports from South Africa.

Parly key in the negotiation of better mining deals

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Parly key in the negotiation of better mining deals

There is a need for parliamentary oversight in the negotiation and monitoring of the country’s mining deals to enhance transparency and avoid deals that do not benefit the country.

Prince Sunduzani

The country is in a race to grow its mining industry and is pushing for huge investment in the mining sector.

They noted that there was a growing demand for Zimbabwe’s resources especially the new-age minerals like lithium, hence the need for better negotiation of deals that will ensure a win-win setup.

Parliamentarians and experts have said that legislators have to play an oversight role where they can scrutinize investments before and after they are finalised to ensure that the country does not get short-changed.

They warned that some investors look genuine on paper but they harbour ill intentions which, include tax evasion, and making deals that benefit the investor at the expense of the country.

Speaking at the Parliamentary Portfolio Committee on Mines and Mining Development training workshop, Transparency International Zimbabwe Programmes officer Mr Tafadzwa Chikumbu said parliamentarians have a role to play in mineral contracts and transparency.

He said transparency will ensure that legislators can best protect the public interest.

“The publication of natural resource contracts is an important tool to ensure compliance with legal obligations. The knowledge that contracts will ultimately be published provides an incentive to contract negotiators to improve contract quality. If contracts are subject to public scrutiny, government officials will more likely think twice before signing a bad deal,” he said.

“In recent years, many MPs have become active promoters of contract transparency. The law requires that contracts be made public, MPs together with civil society organizations can better monitor compliance with legal obligations and ensure that contract terms have not undermined legislative work (e.g., contract terms that contravene national legislation). One of the fundamental roles of parliament is the oversight of activities conducted by government and companies.”

He said MPs as representatives of the country’s citizens need to be informed and involved, as Contract secrecy weakens the government’s negotiating position.

Speaking in an interview on the sidelines of the event, Portfolio Committee on Mines and Mining Development chairperson Hon Edmond Mkaratigwa said there is a need for capacitation of officials responsible for contract negotiations.

He said there is a need to attend to gaps in the legislation adding that they are advocating for contract transparency for that to be possible.

“It might be easy to attend to issues of accountability but where there’s no transparency there can be a challenge. Transparency can also affect certain deals and certain investors may lead to reversal or lack of fruition of some investments. I’m hoping and praying for a win-win situation whereby we attend to gaps in legislation and are advocating for contracts that are transparent,” said Mkaratigwa.

Sufficient energy supply critical for 2022 mining growth

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Sufficient energy supply critical for 2022 mining growth

The state of power supply will determine Zimbabwe’s mining performance this year and the moot Energy Intensive User Group (EIUG) could shift the industry’s trajectory for the better by addressing the energy challenges which are bedevilling the mining industry.

Prince Sunduzani.

This could catapult Zimbabwe’s mining fortunes as it might bail out mining houses that are drowning in high operational costs, resulting from using alternative power sources.

According to the Zimbabwe National Chamber of Commerce (ZNCC), power cuts have pushed production costs up by 150%.

The Chamber of Mines says the electricity supply sector remained fragile with outages attributed to both demand management and faults.

Several mining houses had resorted to alternative power sources such as diesel generators and solar farms to bridge the power gap, created by the erratic power supply from Zesa.

The Chamber of Mines confirmed that the National power utility, ZESA Holdings, had constituted a group called the Energy Intensive Users Group (EIUG) for joint access to power as electricity shortages wreak havoc in the country.

Minutes of a meeting held on 26 April 2022 at Zesa National Training Centre, seen by private media, indicate that the EIUG can import power upon approval from the Zimbabwe Energy Regulatory Authority (ZERA) as prescribed in the Electricity Act and can hold funds outside the country.

“The Government established the Energy Intensive User Group (EIUG) to facilitate the direct importation of energy from primary producers and traders within the Southern African Power Pool (SAAP). The initiative had been approved by ZESA and ZERA. A constitution for the EIUG was adopted, and board members were appointed, with the majority of them coming from mining corporations. The Chamber of mines is engaging Government and ZESA on this matter. Meanwhile, the electricity tariff was increased from around USc9.86/ KWh during the period under review. to USc10.63/ KWh effective 15 May 2022,” said the chamber of mines in a statement.

According to the minutes, the meeting recommended that four individuals be appointed as EIUG inaugural board members, with three more members to be appointed at a later date.

Representatives from  Blanket, Afrochin, Riozim, and Eureka mines were then nominated and elected as the first members of the EIUG board, with the secretariat to be determined later.

Kamandama disaster HCCL safety & health policies implementation

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Kamandama disaster HCCL safety & health policies implementation

June 6, 1972 saw the disaster at Wankie Colliery where 427 miners lost their lives.

The Wankie coal mine disaster took place on 6 June 1972 when a series of underground explosions occurred at the Wankie No.2 colliery in Rhodesia (now known as Zimbabwe). With 427 fatalities, it remains the deadliest mine accident to date in the country’s history.

Historical records established that the accident was caused by an underground methane dust explosion and despite the several attempts by the then PROTO teams to rescue mine workers, the fatality of the disaster was such that the mine shaft had to be sealed off.

The disaster took place at the Wankie No.2 Colliery in Wankie, (now known as Hwange) in the Rhodesian province of Matabeleland North, when several gas explosions ripped through the mine. It was initially believed that more than 470 miners were trapped, but the number was lowered after the owners found a number of people had shown up for work.

Eight men were pulled alive from the mine after the initial explosions. Two new explosions on 7 June poured clouds of poisonous gas into the 3 miles (4.8 kilometres) of tunnels, making further rescue attempts impossible.

On 9 June, the general manager of the Wankie Colliery, Gordon Livingstone-Blevins, decided to leave the 424 bodies where they were. Three bodies had been recovered after the initial explosions. A mass memorial service took place on 11 June at a nearby football stadium, where a crowd of about 5,000 people paid tribute. “This has cast a gloom over the whole country,” Rhodesian Prime Minister Ian Smith said during the service.

KAMANDAMA DISASTER COMMEMORATIONS 

Hwange Colliery Company Limited annually gathers to commemorate the lives of the 427 dedicated and hardworking miners who lost their lives in the Kamandama No 2 Underground shaft in 1972. The miners perished while moving the economic wheels of the nation and region at large.

The aftermath of the Kamandama mine shaft disaster saw Hwange Colliery Company play a critical role in the implementation and monitoring of safety and health policies in the mining sector for the benefit of the mining industry in Zimbabwe.  Safety, Health and Environmental sustainability have since become a topical issue at national, regional and international levels following this disaster.

  • As a result Associations such as the Mine Rescue Association of Zimbabwe; founded in 1973 whose mandate is to coordinate mine rescue activities in the country were formed. The disaster was ranked as the eighth biggest tragedy in the world in 2015 with the highest-ranked being the Honkeiko mine disaster in China, where 1 549 lives were lost on 26 April 1942 according to media reports.

 

  • The Memorial service event is attended by Board Members, Management, Widows of the Disaster, Worker Leadership, Mining cluster, Local Government, State Entities, Government Departments, Local Traditional Chiefs, the Hwange Business Community, and Electronic and Print media. A Memorial Golf Tournament is held annually before the commemorations to raise funds towards the cause of the widows and dependents who are assisted through the Human Resources department. The tournament is now a flagship event for over 100 golfers yearly who display their skills in remembrance of the day.

LESSONS LEARNT

  • The company has learnt its lessons from the Kamandama mine disaster of 1972 and since then, great efforts have been made to ensure that there would never be repeat accidents in any of the Company`s mines or workstations.
  • The statutory regulation for coal mines and fiery mines was drastically changed and adopted as more mines were declared fiery. Fiery mines were categorized to have methane and any other inflammable gases as well as mines containing coal dust. Mine Rescue was born out of the 1972 disaster, at the time, there were no rescue teams in the country and rescue teams responded from Zambia, South Africa and Botswana.
  • The company has established a fully-fledged Safety, Health, Environment and Quality Department with competent practitioners who drive various proactive accident preventive strategies.
  • The company has clear leadership, comprehensive safety programmes as well as a 100 per cent commitment by management and staff to zero tolerance towards unsafe working practices and zero targets for injuries, while also cementing constructive interaction with workers’ unions on safety.

Notable improvements at HCCL from Kamandama Mine Disaster to date:

  1. Flame Proof Equipment use – only underground.
  2. Stone Dust Application.
  3. Senior supervision i.e. stringent conditions during any flame cutting and welding activities underground
  4. All workers who operate electrical machines are trained and equipped to test for gases.
  5. Banning of contraband entering the mine.
  6. Establishment of mine rescue teams to assist in times of disaster.
  7. Construction of refuge chambers.
  • Flame Proof Machinery

Drill and blasting were eliminated in normal production activities and replaced by electrically powered continuous mining technology. All the machines are flameproof meaning any short circuit in electrical panels won’t interact with the underground atmosphere. Inflammable gases and methane are known to lead to catastrophic explosions if ignited.

All electrical fittings including bulbs, fluorescent tubes and distribution boxes are made up of a special specification designed from heavy steel which is at least 25mm in thickness. All electrical cabling is of special design; armoured and fire retardant.

  • Stone Dust Application

Stone dusting was introduced in Zimbabwe after the Kamandama Disaster which is an application of very fine limestone dust on all the excavations carried out in coal mines. The limestone controls the propagation of fires and explosions in a coal mine as limestone is inert and incombustible.  An array of activities are carried out in sampling and monitoring of the limestone quality before and after application in the mine.

  • Good ventilation

Good ventilation supplies fresh air to dilute methane or inflammable gases to less than 1.25% in the ambient atmosphere of coal mines. The mine employs high technical personnel who make sure the mine is well ventilated every second and hour of the day. Ventilation is the primary activity in coal mining and takes precedence over all activities in underground processes. High tech fans are used for main ventilation and auxiliary ventilation.

  • Emergency preparedness

The underground coal mines are designed to allow at least two means of ingress and egress. Channels of getting into and out of the mine should be as close as possible to the work areas. The escape routes are clearly marked and easily identifiable.

  • The company strives to equip all miners, contractors and visitors with appropriate skills of enabling their safe escape when caught in an emergency situation. All persons proceeding underground are issued with a serviceable rescue pack and cap lap. A Rescue pack allows all persons to pass through irrespirable atmospheres in any emergency in order to reach safe places or refuge bays or safe-havens.
  • The company has functional rescue teams ready to respond and save lives as well as property. The teams are part of a response zone in the country. They are highly trained and comprised of technical individuals from various professional sectors.

Source: Hwange Website

Fidelity gold prices 6 June 2022

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Fidelity gold prices 6 June 2022

Fidelity Gold Refiners (FGR) official gold buying prices Wednesday 6 June 2022.

SG 90% AND ABOVE US$56.34/g
SG ABOVE 85% BUT BELOW 90% US$55.45/g
SG ABOVE 80% BUT BELOW 85% US$54.86/g
SG ABOVE 75% BUT BELOW 80% US$54.27/g
SAMPLE BELOW 10g BUT ABOVE 5g US$53.38/g
FIRE ASSAY CASH US$/g

Exchange rate TBA

NB: Fire Assay cash price is for gold above 100gs and no sample is deducted.
For Fire Assay Transfer price, a sample of not more than 10g is deducted
2% royalty is charged on all deposits (Small-scale Miners)
5% royalty is charged on Primary Producers

Cash available. Fidelity Gold Refiners’ prices will be changing daily in relation to world market prices.

Arcadia lithium project : Local contractors a priority

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Arcadia lithium project : Local contractors a priority

Huayou Cobalt, the Chinese firm developing the Arcadia lithium project, has said it has engaged local contractors for works being done at the establishment, as a way of empowering local companies.

Prince Sunduzani

The company, which announced a project which will create about 1000 jobs, has said contrary to the belief that they are using Chinese contractors, the company has been engaging local contractors for various works from the onset.

The company said it has used different competent contractors at various stages of the project.

“Our contractors are locally registered companies. Kacee electrical contractors build power lines for us, Speedlink handles import and export business for us, we buy steel from Steel Centre and BSI, and our security services, EIA reports and feasibility studies are prepared by locally registered companies,” said the company last week.

“In addition to the management and technical personnel, more than 75 % of the contractor’s employees are recruited from nearby villages and strictly abide by our rules on recruitment and use of employees.”

Huayou, a worldwide firm headquartered in Tongxiang, China, announced recently the acquisition of the Arcadia lithium project from Prospect Resources Plc and minority shareholders. Following the acquisition, the business stated that it would invest $300 million over the following year to develop the mine and build a processing plant.

According to the firm, the mine would have a capacity of 4.5 million tonnes of ore per year, which translates to around 400 000 tonnes of lithium concentrate per year. Huayou’s large investment can drastically impact the local community and promote Zimbabwe’s economic growth.

The company becomes one of Zimbabwe’s biggest mining houses and is set to contribute towards the attainment of the US$12 Billion Mining Economy by 2023 vision set out by the Mnangagwa led government.

Coal sector constraints can affect the whole mining value chain

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Coal sector constraints can affect the whole mining value chain
Zimbabwe’s coal mining sector is facing serious challenges that can disrupt the whole mining value chain, the President of the Chamber of Mines Collin Chibafa has hinted.
Rudairo Mapuranga
Speaking at the 2022 edition Annual Mining Conference which is running under the theme ‘Consolidating Growth Drivers for the Mining Industry’ Chibafa said the coal industry is facing a myriad of problems that may lead to further power problems.
“As reported last year, Your Excellency, the growth potential of the coal sector continues to be faced by unique challenges of suboptimal pricing framework and foreign currency shortfalls being predominantly a non-exporting sector. While engagements with Authorities on the matter are still ongoing, we feel the issues largely remain unresolved, which may threaten the power supply situation of the country in the medium to long term,” Chibafa said.
Recently the Permanent Secretary for the Mines and Mining Development Onisimo Mazai Moyo acknowledged that the mining industry was affected by the fragile electricity supply that the government was working towards eradicating.
Chibafa also said that the Chamber of Mines was engaging Zimbabwe Electricity Supply Authority (ZESA) for it to prioritize mining companies for available power in order to maximize production.
“Mining companies, specifically those not connected to dedicated power lines continue to face power outages resulting in production and output losses. We continue to appeal for prioritisation of mining companies for available power,” Chibafa said.
The current foreign currency retention thresholds remain the elephant in the room which needs to be addressed according to Chibafa.
“A significant number of mines are facing foreign currency shortfalls to meet their operational requirements. With most mining companies in expansion mode, they now require more foreign currency than they are allocated. The additional foreign exchange requirements are needed to fund the capital projects including setting up beneficiation facilities. We believe retention levels of at least 80% are optimal for the mining industry, given the capital intensity of mining businesses. The Chamber of Mines will remain engaged with your government, Your Excellency, for a more optimal solution to foreign exchange management,” He said.
He also said that the mining industry has a huge funding gap to optimise its operations and meet targets. Most mining houses are struggling to raise offshore funding and are relying on internally generated resources (retained earnings). He also pointed out that most foreign investors are seeking clarification on Government’s position on Indigenisation in the mining sector to enable them to inject capital into the mining industry.
The Chamber of Mines President said the amendment of mining laws was very important for the growth and development of the mining sector.
“Your Excellency, on legislative and policy matters, we have been working closely with Government in addressing outstanding legislative and policy matters and we are hopeful that these matters will be finalised to unlock the full potential of our mining industry. The matters include Amendments to the Mines and Minerals Act. We note that the Amendments to the Mines and Minerals Act remain outstanding. We urge the government to expedite these amendments as some investors remain non-committal on investing pending the conclusion of this process. The upside associated with the introduction of new improved mining legislation is huge. Amendments to the Gold Trade Act: Gold remains a major mineral commodity for the country. We anxiously await the review of the Gold Trade Act with the hope that the chain of custody of gold from mine to market will be enhanced thereby removing the possibility of leakages. In addition, we look forward to an improved marketing framework for gold that will facilitate the raising of capital for gold projects,” he said.
The 2022 Annual Mining Conference was officially opened by President Emerson Dambudzo Mnangagwa pledged his support to see the growth of the mining sector.

Over US$1bil capital needed to unlock gold sector – CoMZ

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Over US$1bil capital needed to unlock gold sector – CoMZ
The gold industry requires in excess of US$1 billion in funding in the next 5 years to sustain growth and development, the Chamber of Mines said after reviewing factors that might hamper the achievement of the US$4 billion gold target.
Rudairo Mapuranga
According to the Chamber of Mines Chairperson for Gold Producers, Mr Qubeka Nkomo, for the country to unlock the potential of the gold sector for sustainable economic development, adequate funding, adequate foreign exchange allocation, adequate and affordable electricity and other factors including a conducive operating environment and system are pivotal for the sector’s contribution.
Nkomo also said the government through the Ministry of Finance should review contentious foreign currency retention thresholds for gold miners to help the industry grow and suggested that the retention should not be below 80 per cent. However, some miners have been suggesting that 100 per cent foreign currency was necessary for the sector’s growth trajectory.
“The gold industry requires in excess of US$1 billion in the next 5 years to sustain growth and development of the sector and achieve output targets, local financial market has limited capacity to finance such huge capital requirements on the back of liquidity challenges and indeed where available such finance is very costly.
“The current 60 per cent foreign currency returned by gold producers is not enough to meet other operational requirements and expansion projects. Meanwhile, the 40 per cent surrender portion which is liquidated at interbank rate is unfairly compensated due to the disparities between the interbank rate and the hugely depreciated parallel market rate which is applied by most suppliers.
“Statistics from gold producers show that the optimum retention that allows gold producers to achieve their production target and expansion project is approximately 80 per cent.
“Foreign investors are demanding gold producers to use their gold as security to secure funding, some are raising concerns about the current retention framework which they say is not supportive of additional capital injections into the gold industry. Therefore there is a need by the government to relax the marketing arrangements and allow gold producers to export their gold and use it for capital raising while also reviewing retention levels,” Nkomo said
Nkomo also said that the gold industry has the potential to produce 60 tonnes of gold which will be nearly double what was produced last year (31.5 tonnes) if bottlenecks affecting the growth of the sector are addressed.
“The presence of extensive gold deposits coupled with idle capacity, present an opportunity for the gold sector to grow and maximize its contribution to the socio-economic development of the country. The gold industry has the potential to grow and surpass annual production of 60 tonnes in the next 5 years with revenues exceeding US$3.5 billion per current gold prices. To unlock this potential there is a need to address structural bottlenecks that continue to ware down on the performance and growth of the gold industry,” Nkomo said.
He also acknowledged that lack of exploration was hindering the growth of the gold sector noting that the country’s gold industry should be in the top 5 gold producers in the world.
“Zimbabwe is rich in gold deposits, gold mining in Zim stretches back to the pre-colonial time as evidenced by the many ancient workings in many parts of the country. Yes, the country boasts of more than 4000 recorded gold deposits. The mineral resources series 23 of the geological survey of Zim indicates that in terms of gold production per square kilometre, the country is ranked above traditional big producers that include the USA, Canada, Australia and Brazil. The country has however remained largely under-explored impacting negatively on potential growth of the gold sector,” he said.
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