Mining ZimbabweLatest Mining News, Policy and Industry Updates

THAT Zimbabwe has been blessed with abundant natural resources which could transform its economic fortunes overnight is not debatable. These resources range from diamonds, gold, platinum group of metals, coal, chrome, human, wildlife and land, to name but a few.

Given that rich natural resource base, why are citizens in perpetual poverty? Over a decade ago, the southern African nation catapulted itself to the global map of leading diamond producers, but the resource could not transform the country into even a regional economic powerhouse. Instead, the diamonds turned out to be a national curse as the elite fattened their pockets from proceeds of the earth while villagers living in the vicinity of the gem fields and the nation at large sank into abject poverty.

For many years, mining companies have robbed mother earth of on-demand minerals, with the bulk spirited out of the country for personal enrichment by those connected to the centre of power. Currently, all attention is on the Muzarabani oil and gas project in Mashonaland Central province. The project is being spearheaded by Australian firm, Invictus Energy Limited. If well managed, the project could easily turn out to be the panacea to Zimbabwe’s energy crisis given that these two energy sources drive economic activity globally. Barring everything, Zimbabwe could soon be out of the economic woods. But given our leaders’ propensity for self-enrichment from resources meant to benefit the nation, Muzarabani oil and gas reserves could easily become another national curse.

The rate at which the investor keeps rushing to the international market for capital makes the Muzarabani project appear iffy.

Since the signing of the deal in 2018, Invictus appears to be struggling to get the project off the ground. But, this shouldn’t be shocking as when the government signed the deal, the company only had an asset base of less than US$10 million, whereas high-profile projects of this nature require huge capital investments.

Invictus’s lack of preparedness for the deal first manifested in May 2020 when the firm announced a 25% cut to its board and management annual fees and remuneration in light of global market and oil uncertainty over the coronavirus. What this proved is that Invictus was inadequately capitalised, yet, President Emmerson Mnangagwa’s administration turned a blind eye to those tell-tell signs. Invictus is struggling so badly that it has announced participation in two capital raising exercises. The first was in 2019 when the firm raised US$1,5 million from new and existing investors. The second was held early last year where Invictus successfully raised US$6,2 million via a share placement to new and existing institutional and sophisticated investors.

The most obvious sign of Invictus’s struggles, however, was the recent announcement that in exchange for funding 33,33% of the costs for the Muzarabani project, the firm would give a 25% stake to British-based African oil and gas exploration firm, Cluff Energy Africa.

Given these financial inadequacies, why did the government rush to seal the deal?  Is this not a murky deal? Time will tell. We hope this is not going to be another feeding trough for the elite.

The nation still has vivid memories of the US$5,2 billion deal that government signed with South African company — Nkosikhona Holdings — that would have seen Zimbabwe produce over eight million litres of liquid fuels per day from coal in Lisulu, Hwange.

It later turned out that Nkosikhona Holdings was nothing but a shelf company, and like Invictus, had very few assets to prove that it could handle such a multi-million-dollar project.  Without sounding alarmist, we call on authorities to conduct due diligence on foreign investors so that the nation does not feel hard done when deals collapse before benefiting the economy. Food for thought.

NewsDay

MINE workers have launched a countrywide campaign against the harassment of their female counterparts, after a female human resources officer at Duration Gold Investment (DGI) Private Limited, Queens Mine in Inyathi, Matabeleland North province, took her boss to court for sexual harassment.

The campaign was confirmed yesterday by the Zimbabwe Diamond and Allied Mineral Workers Union secretary-general Justice Chinhema.

“As a union, we want this to stop and we are going to do everything within our powers, including taking this to international level. This is just one case, but we know that several women are suffering in silence and fear for their jobs.”

Chinhema said the manager in question was charged with indecent assault, while the union is of the view that the charge is too light.

He said they would be taking the matter to the Zimbabwe Anti-Corruption Commission, the National Prosecution Authority and Parliament to ensure justice is done for their members.

Court documents in possession of Southern Eye show that DGI administration manager Langton Mharira has a pending court case where he is accused of indecently assaulting a female employee at the mine.

It is alleged that on December 20, 2020, when Mharira arrived for orientation at the company, he proposed love to the lady and she spurned his advances.

In her statement to police, the lady claimed that she told him that she was married.

At the time when she was sexually harassed, the victim used to cook for the company’s chief executive officer, Francesco Marconati.

When Mharira visited the company for orientation, the woman also served him food as a visitor in the boardroom, where he asked Marconati about her marital status.

It is further alleged that when Mharira joined DGI in March as administration and logistics manager, the victim reported directly to him, and that was when the alleged abuses happened.

She alleged that some of the abuses included a salary cut after she refused his sexual advances.

“She took advantage of my gender and sexually harassed me, as well as indecently assaulted me in front of the general manager in his office,” the woman said in the court papers.

Mharira is denying the charges.

NewsDay

AS COMPANIES extract wealth, villagers say they see little benefit and are instead exploited in quarries, live in homes damaged by blasts and are unable to farm polluted land

A convoy of trucks laden with huge black granite rocks trundles along the dusty pathway as a group of villagers look on grimly.

Every day more than 60 trucks take granite for export, along this rugged road through Nyamakope village in the district of Mutoko, 90 miles east of Zimbabwe’s capital, Harare.

The air reverberates with blasts and heavy machinery noises as the mountain above the village is slowly reduced, slab by slab. Quarrying has been happening here since the 1980s.

Mutoko stone is sought after for its lustre. It is a popular material for tombstones. An extension to the Danish royal library in Copenhagen, known as the Black Diamond, is clad in Mutoko granite.

The Buja people who live here say that as mining companies extract wealth from the mountain, they leave behind a trail of damaged roads and bridges, hazardous pollutants and dirty air. Cracks can be seen on houses and blast debris is everywhere.

Now 50 families in the village have been told by a Chinese mining company that they will have to leave their homes and land. People in four other villages in the district fear they will also lose their ancestral lands.

Two families, including an 82-year-old villager and his wife, have already been relocated by Jinding mining company, which wants to build a polishing plant.

“The 82-year-old man collapsed when he heard the news because he never anticipated it. He was later resuscitated at the hospital. This is how bad things are here,” says Claudine Mupereri*, 38.

She says the man was told his house was within the area licensed to the mining company by the government. Zimbabwe’s Communal Areas Act gives the president power to decide the use of an area that makes up 40% of the country’s land, home to about 70% of the population.

“These companies do not respect communities. If the government does not protect us, then where will we get the protection we need?” says Mupereri.

Two other families were given $2,500 (£1,840) to rebuild their homes, but community leaders say this is insufficient.

“There is uncertainty around this village. Right now, we do not have anyone willing to help us because our councillor does not want to help us. Anyone who dares to speak out is threatened. Whether they remove us or not, we are already scared to speak out,” says Anesu Nyamuzuwe*.

The 40-year-old father of four fears losing five hectares (12 acres) of land, his only source of income.

“I have a good farm with fertile soil. My farming always meets my household requirements. I had built a good home and I am close to Mutoko centre, so I am not sure if I will ever get such a piece of land again,” he says.

“What is more important, investors or the villagers? We should have the right to reject these people from entering our community.”

Jinding mining company in China could not be reached for comment.

A manager and interpreter at the company’s plant in Mutoko says families who live within the 500 hectares the company is licensed to mine will be relocated, but adds: “the people who are giving out the claims [to mining companies] have a problem. Why are they giving them [companies] so much land? This land is almost 500 hectares, I am sure they already know that people live in this place.”

Zimbabwe has enjoyed a close relationship with China for decades. But the bond between the two countries solidified when western states imposed economic sanctions on Robert Mugabe’s government.

As credit and investments dried up, China stepped in.

In 2018, Zimbabwe-Chinese relations were elevated from “all-weather friends” to strategic partners, paving the way for Chinese investors to pour money into the country, particularly in the extractive industries, where they have been accused of paying little attention to environmental damage by environmental and human rights activists.

Those living near granite mines say companies are failing to restore the land after extraction. Open pits are left uncovered, endangering children and wildlife.

Zimbabwe’s government has been accused of turning a blind eye to complaints because, critics say, it doesn’t want to anger its biggest investor.

Mineworkers speak of poor working conditions. At another mine in Mutoko, workers give accounts of beatings and poor pay.

“Imagine going to work every day for over 12 hours and getting $50 at the end of it all. When I get home I am tired. My home knows no peace,” one worker tells the Guardian.

“My friend was beaten with a steel rod and another 17-year-old boy had his arm broken after coming to work late. He was given $250 as compensation after villagers complained.”

In 2020, two workers were shot and wounded in Gweru, central Zimbabwe, allegedly by a Chinese miner after a quarrel over salaries.

Evelyn Kutyauripo, a paralegal with the Zimbabwe Environmental Law Association (Zela), who has been rallying villagers in Mutoko to resist evictions, says local officials need to protect people.

“I blame the headmen and the councillors because they are working with the Chinese. They should stand with the community,” she says, adding that companies were taking from communities and not helping them develop.

“They are not developing anything in the community. They should have a strong corporate social responsibility because they are killing our environment. We are suffering, our houses are cracking and there is pollution. The government should come to see what is happening.”

Another Chinese mining company, Shanghau Haoying Mining Investments, is also causing unease among Nyamaropa villagers.

Last year, the company was reportedly given a government licence to mine granite on tracts of land belonging to local people.

“I hear they want to remove us so that they take the rock, which is underneath, but the people do not want to. They will have to use guns to remove us here,” says Gladman Murape*, 34.

Shanghau could not be reached for comment.

Richard Ncube, a legal officer at Zela, says people in Mutoko were “extremely worried” about evictions. “The major challenge is they are living in the dark, and they are not sure what is going to happen.”

He said people were too scared to challenge the company. “We have gathered that most of the communities [in Mutoko] are afraid to come forward and take these matters to court due to intimidation and fear of being victimised,” says Ncube.

Attempts to challenge the mining companies elsewhere in Zimbabwe have had mixed results.

In November, Heijin mining company lost its mining licence in Murehwa, a district about 55 miles from Harare, after local leaders complained to the government that the company planned to evict locals.

In 2020, Zela was involved in the successful fight to overturn licences to mine coal in Hwange national park, the country’s largest national park, home to 40,000 elephants. Following protests, the government banned mining in all its national parks.

However, in September, hundreds of people in Chikomba district, 80 miles south of the capital, were evicted from their ancestral homes to make way for a $1bn iron and steel mining project.

The Zimbabwe government says it has not received any reports of abuse of workers in Chinese-owned mines, but it did encourage workers to report any incidents.

Deputy mines minister, Polite Kambamura, urged villagers to approach the ministry if they had problems.

“We haven’t heard of any Chinese company which has relocated people in Mutoko. If villagers are not happy, they may approach our provincial mining office in Marondera or come directly to the ministry,” he says.

“We understand that if ever there is a company that wants to relocate the people, they should engage the community, to buy that social licence from the community.”

Kambamura adds that an environmental impact assessment – to ensure the environmental, social, economic and cultural issues related to any mining project are considered before it begins – must also be conducted by the company and should address any concerns.

The Chinese embassy in Zimbabwe did not respond to numerous requests for comment. Mutoko leaders were also approached for comment.

* Names have been changed

The Gardian

THE steel manufacturing sector has welcomed Government’s decision to ban exportation of chrome ore saying this will assist local players to secure ferrochrome at competitive rates.

The banning of chrome ore and chrome concentrate follows a Cabinet resolution that was made in August last year. The former is already effective while the later will be effective in July 2022.

In announcing the policy shift Minister of Information, Publicity and Broadcasting Services, Monica Musvangwa, on Tuesday said the ban of the chrome ore exportation will capacitate current smelters and maximise the value chain to be realised from the country’s abundant resources as spelt out in the National Development Strategy 1.

Institute of Zimbabwe Foundries (ZIF) president, Itai Zaba, said the Government’s bold stance was crucial for the metal foundry industry, which was facing challenges in securing inputs at affordable rates.

“Zimbabwe foundries will be able to get all grades of ferrochrome at better rates opposed to current high import cost,” he said.

“This means we will lower our cost of production and make our products cheaper on the market.”

This is also of the need to safeguard the ferrochrome industry including metallurgical processes such as steel manufacturing.

As such, Zaba said the ban will promote beneficiation of chrome ore, which will promote industrial growth, employment creation and technology transfer to the country.

He said the ban will not benefit the foundry family alone but downstream suppliers.

“Beneficiation will promote industrial growth via setting up of new plants and this will bring about the much-needed employment and also brings about technology transfer to Zimbabwe,” said Zaba.

“Also, the value chain cannot be closed in at the foundry alone, it goes far to various suppliers in services, chemical, gas, fuel, power, construction, banking and Zimra who will find opportunity to do business in the foundry and chrome beneficiation sectors.

“So, one should never be blinkered like a horse to only see the foundry industry in this equation, it’s a big net of benefits to the nation.”

Also commenting on the issue, chairperson of the Mines and Mining Development Parliamentary Portfolio Committee, Edmond Mkaratigwa, he said directive given by the Government was in the national interest.

“The Government has banned the export of chrome ore. This will bring long term benefits to the country, which will be seen soon as the decision was done at the interest of the people of Zimbabwe,” said Mkaratigwa.

“Market monitoring is important as returns are the main considerations in all business endeavourers. And this ban was done after determining the cost and benefits analysis of available options to the country and its citizens.

“There were challenges around returns from the sales of these primary resources relative to its benefits to its implicated citizens. These are the matters we need to consider,” he said.

Under vision 2030, President Mnangagwa’s administration has identified the mining sector as a key player towards realising an upper-middle-income economy.

Business Weekly

AUSTRALIA Stock Exchange-listed resources junior, Invictus Energy, says it is on track to commence its planned two-well oil and gas exploration drilling programme in Muzarabani in May.

The muzarabani prospect is believed to host 8,2 trillion cubic feet plus 247 million conventional gas condensate while  the total assessed reserves of Invictus’ special grant 4571 stand at 9,25TCf and 294 million barrels of condensate.

Discovery of oil/gas would mean significant benefits for Zimbabwe’s economy, including energy self-reliance, production of petro-chemicals, Liquified Natural Gas (LNG), fertliser, increased exports and fiscal revenue among others.

“We are planning for a successful drilling campaign, which if transpires will be a transformational event for both Invictus and Zimbabwe,” Invictus Energy managing director Scott MacMillan said.

Already, the company has posted major milestones on the project, including signing petroleum exploration development and production agreement with Government, completion of a seismic survey, signing agreements for a drilling rig and contract.

The company said this week it had secured the necessary casing, wellheads and long lead
items for exploration well drilling programme scheduled.

A well casing is a lining that is installed in an oil well once it is drilled and surrounds the well entirely. Typically, the casing is hollow steel pipe that lines the inside of the wellbore.

The casings are used to support the oil or gas wells, as the raw sides of the well would collapse in without the support rendered by these key equipment.

A wellhead is the component at the surface of an oil or gas well that provides the structural and pressure-containing interface for the drilling and production equipment.

Long lead items are those components of a system or piece of equipment for which the times to design and fabricate are the longest, and therefore, to which an early commitment of funds may be desirable in order to meet the earliest possible date of system completion.

The announcement came days after the Australian firm announced plans to raise A$5,5 million (A$) to finance further development of the Muzarabani project through issuance of at least 55 000 new shares.

The company also said it had completed an extensive tendering exercise for the integrated well services contract including cementing, directional drilling, logging. The formal award of the contract is expected shortly.

“We are very pleased with the way the drilling programme is coming together with Invictus securing the wellheads and casing long lead items for a high impact 2-well drilling programme,” said managing director Scott MacMillan.

“We are now finalising the well services contract award and working to execute the binding rig agreement with Exalo for the #202 drilling rig.

“Invictus remains on track for the upcoming drilling campaign to commence in May 2022,” he added.

Invictus has registered significant milestones in the exploration for and development of the Muzarabani oil and gas project, including completion of a seismic (subsurface data gathering) study and conclusion of drilling agreement with a British company.

The company, which expects that its recently concluded 2D seismic data will help refine the location and path of the planned Mzarabani-1 gas exploration that will test the potential of the Cabora Bassa project (Muzarabani), has also secured drilling for the project.

Official data shows that the Muzarabani prospect has been independently assessed to host prospective resources of about 9,25 trillion cubic feet of gas and 294 million barrels of condensate, essentially a light oil.

Invictus last year signed a petroleum exploration development and production agreement (PEDPA) with the Government, which spells out the rights and obligations of each party through the development phase of the project.

In terms of the fundraising, the Australia Stock Exchange (ASX) listed company has received firm commitments from sophisticated and institutional investors to raise A$3,5 million (before costs) by way of placement of new shares and US$2 million through a share purchase plan.

“As announced on December 9, 2021, we are positioning Invictus to undertake a 2-well exploration campaign commencing (first half of 2022) including the drilling of Muzarabani-1 well targeting prospective resources of 8,2 Tcf + 247 million barrels conventional gas condensate.

“We have a busy (first) half of 2022 planned with finalisation of our data processing for our seismic survey, update of our prospect and lead inventory, conclusion of our farm-out processnand securing long lead items as we embark on our planned 2-well drilling campaign of our world-class asset including the Muzarabani-1 well which will be one of the largest conventional targets drilled globally in 2022,” Mr MacMillan said last week.

Essentially, the funding enables Invictus to finance critical programmes ahead of planned exploration drilling of two oil and gas wells in Muzarabani, which the company has said is scheduled for the first half of next year.

Under the planned placement, Invictus Energy will issue 35 000 000 new fully paid ordinary shares (New Shares) at an issue price of A$0,10 per new share, a 13 percent discount to the last closing price on December 22, 2021.

Proceeds from the placement will be used to fund the rig mobilisation fee, purchase of long lead items for the planned second-well drilling programme and finalisation of the data processing of its Muzarabani seismic survey. A share placing (placement) is when new equity shares are issued to individual investors, corporate entities, or small groups of investors for capital.

This increases the amount of shares in issue and dilutes existing shareholders.

In concert with the placement, Invictus said it would offer all eligible shareholders a share purchase plan (SPP) to raise up to A$2 million, resulting in a maximum of 20 000 000 shares being issued under the SPP.

All eligible shareholders will have the opportunity to apply for up to A$30 000 worth of New Shares.

A share purchase plan (SPP) is a form of capital raising by a listed company that offers
share holders the opportunity to apply for new additional shares.

Regulations limit the maximum application per shareholder to A$30 000.

Typically, an SPP is conducted at a discounted price to the current listed price of the stock to encourage shareholders to purchase more shares.

“The issue price under the SPP of A$0,10 is equal to that of the new shares issued under the Placement, with SPP participants also receiving attaching options on a 1-for-2 basis, at a strike price of A$0,14, with a 3-year term,” Invictus said.

In the event of over-subscriptions, the company said its directors may also, in their absolute discretion, decide to increase share purchase plan acceptances by a further $1 million.

Proceeds from the SPP were to be allocated to further purchases of long lead items for the planned 2-well drilling campaign and for general working capital.

Business Weekly

The country’s sole buyer and exporter of gold, Fidelity Printers and Refiners (FPR) says it will “soon” engage the Zimbabwe Revenue Authority (Zimra)  over taxes charged on miners in a bid to attract small scale miners to sell on the formal market.

Zimbabwe’s mining sector has high tax burden which discourages small scale miners to formalise hence more gold will be lost through parallel market.

FPR acting general manager Peter Magaramombe told Business Times the sole buyer will remove all hurdles in its way to chase the 100-tonne target by 2023.

“We will engage Zimra to lessen the tax burden on small scale miners so as to lure them to sell to the formal channel by giving them friendly tax regime. As long as we continue with punitive taxes gold will continue to be sold on parallel market hence we should make a plan on reduced taxes,” Magaramombe said.

An average of three tonnes is believed to have been sold on the parallel market monthly.

Magaramombe said there are plans to increase presence by establishing more gold buying centres in all active regions.

“We are facilitating a loan facility to capacitate existing and new gold mining ventures so as to increase production,” he said.

Gold is Zimbabwe’s third largest foreign currency earner after platinum and diaspora remittances.

It is one of the most liquid minerals thereby fuelling smuggling as small scale miners opt for higher prices.

In the past, Fidelity Printers and Refiners was paying below the international prices and the money would come after more than a month, thereby creating a fertile ground for smuggling.

That has been rectified and miners are paid at prevailing international prices

Gold deliveries rose 45% to 25.36 tonnes during the 11 months of the year from 17.44 tonnes delivered to Fidelity Printers and Refiners during the same period last year due to improved mining conditions and incentives.

From the cumulative 25.36 tonnes delivered to Fidelity Printers and Refiners, small scale miners accounted for 15.21 tonnes with primary producers delivering 10.14 tonnes.

Business Times