Mining ZimbabweLatest Mining News, Policy and Industry Updates

Zimbabwe plans to build a second US$1.3 billion oil pipeline to supply fuel into the country and the region, a deal that would end years of lobbying and rivalry between powerful oil interests.

The project would be under a 50-50 joint venture between state-owned National Oil Infrastructure Company (NOIC) and Coven Energy, Information Minister Monica Mutsvangwa said after Cabinet met on Wednesday.

Coven is registered in South Africa and the UK. Its directors, under an interest known as Mine Oil and Gas Services (MOGS) backed by the Royal Bafokeng investment group of South Africa, have campaigned for a stake in Zimbabwe’s oil sector since as early as 2012, in the face of reported opposition from inside government and the industry.

“The joint venture between NOIC and Coven is for purposes of developing and operating a second pipeline from Beira to Harare. The objective is to establish Zimbabwe as the hub for the transportation of refined petroleum products to the SADC region, namely Zimbabwe, Botswana and South Africa,” Mutsvangwa said.

First, NOIC and Coven will have to sign an MoU to conduct a feasibility study, which would inform government on whether to go through with the plan. If agreed, the new pipeline would be built over four years and the two sides would operate the line for 30 years.

A new pipeline would be the first such infrastructure since 1966, when the Feruka pipeline was built. It would also conclude a long controversy within government over whether the country needs a second pipeline.

Zimbabwe imports 90% of its fuel needs via Feruka, but oil industry firms have complained about the cost of using the pipeline. The test of the new pipeline will therefore be on whether it can deliver an economic service to importers.

Feruka: A slippery battle

While the Feruka pipeline is owned by government, through Petrozim, it was for a period operated by Trafigura. This was after 2014, when the commodities broker funded refurbishment of the pipeline. Penspen, the international engineering company that originally designed the pipeline, is currently refurbishing it after being awarded a new contract in March this year.

Various press reports over recent times have claimed that Trafigura, once tied to businessman Kuda Tagwirei, was opposed to a second pipeline, as it would break its monopoly over oil supply into Zimbabwe.

In 2012, MOGS had tried to buy half of the Feruka pipeline. At the time, Lonmin held 50% of the line. A proposal promoted by then Energy Minister Elton Mangoma and Eddie Cross, then a senior opposition official, would have seen MOGS also build a second pipeline. However, the deal never went though, and Petrozim bought Lonmin’s stake in 2018.

However, MOGS maintained its lobbying over the years, with the support of Cross and, more recently, former Presidential advisor Chris Mutsvangwa.

According to UK company registry listings, Coven’s major shareholder is the Highlands Group, one of whose directors is Heine van Niekerk, a former Delta Mining Executive. Errol George Gregor, who has served as MOGS CEO, is listed as a Coven director.

Gregor has lobbied strongly for the deal for years. In 2014, on behalf of MOGS, he wrote to government saying the plan for a new pipeline would “set up Harare as the regional product supply hub” and that the new pipeline with “an estimated capacity of 400 million litres per month (was) expected to cost US$795 million”.

While Zimbabwe is now planning a second pipeline, it still has spare capacity on the existing one. Feruka has a reported capacity of 2 billion litres per year, and Zimbabwe imported 1,140 billion litres of both diesel and petrol in 2020, according to data from energy regulator ZERA.

NewZwire

ZIMBABWE-focused and diversified mining group, Premier African Minerals, has announced the completion of a new conceptual mine plan for its RHA tungsten project in Matabeleland North province.

The new conceptual mine plan is based on a revised RHA underground mineral resource estimate relating to the parts of the ore body included within the plan.

In a latest update on RHA and the Zulu lithium project in Matabeleland South, the group said the objective of the new conceptual mine plan was to assess the potential impact of returning RHA to production and assess whether the project can generate a return on Premier’s investment.

“Premier has completed a new underground conceptual mine plan for RHA in conjunction with technical assistance from independent South African mine planning consultants, Bara Consulting (Pty) Limited, geological consultants Shango Solutions and metallurgy and
process engineer Multotec Process Equipment (Pty) Limited,” it said.

According to the company, Multotec, the manufacturers of concentration systems including spirals and cyclones, supplied the spiral systems already installed at RHA.

They also conducted test work on a bulk wolframite ore sample from RHA to re-assess and optimise the spiral recoveries and water management at the plant.

Bara Consulting has reviewed Multotec’s test results and proposed, in consultation with Premier, certain changes to the flow sheet.

The conceptual mine plan assesses an underground production rate of 6 000 tonnes per month with a projected mine life of 10 years and indicates a peak funding requirement of US$2,5 million and a payback within 16 months.

“As Premier has resolved not to commit further funding to RHA, the new funding would need to be provided by a third party (being either the National Indigenisation, and Economic Empowerment Fund or another party),” it said.

On Zulu Lithium project, the group said the drilling programme has commenced and despite delays caused by increasing Covid-19 infections in Zimbabwe and Government action in controlling the spread of the virus, it remains on track with its plans to prepare Zulu’s Definitive Feasibility Study in line with previously reported timelines.

Premier chief executive officer Mr George Roach commented: “Surging Covid-19 in the Sadc region is not helping at Zulu where travel and other restrictions are impacting the drilling programme.

“Despite this, the rigs continue to operate and our lab equipment is now only awaiting import clearance to Zimbabwe.

“The drilling is underway at Zulu and is just one component of the Definitive Feasibility Study.”

Mr Roach said they were pleased to be able to provide a preliminary update on the process test work and analysis of bringing RHA back to production based on that part of the underground mineral resources, which the group believes can be cost effectively included in the mine plan at the present proposed 6 000 tonnes per month.

“The next steps for RHA include negotiations with our 51 percent shareholder, NIEEF, to explore alternatives to bring this mine back to production,” he said. 

The Chronicle

VALUE addition and beneficiation of agriculture and mineral commodities would be the most important part of Government policy framework next year as the country seeks to grow exports from the secondary sector.

This would help the country mobilise investments and create employment. According to Treasury, various strategies will be implemented to attain growth of valued added exports, with the Government targeting nearly US$1,4 billion by 2025, from about US$730 million in 2020.

“Priority for the 2022 National Budget will be value addition and beneficiation of agriculture and minerals,” said Professor Mthuli Ncube, Finance and Economic Development Minister.

“This will be achieved through developing and strengthening already existing value chains, beneficiation of minerals and linkage of SMEs with large corporates.”

Last week, the Government banned raw chrome exports to encourage building of smelters locally. Announcing the latest strategy to boost the mining sector during a post Cabinet media briefing, Information, Publicity and Broadcasting Services Minister, Monica
Mutsvangwa, said the moratorium on raw chrome ore exports would promote the local value-addition chain.

Other quick win value chains being prioritised include agro-based value chain, pharmaceutical value chain, bus and truck assembly value chain, iron and steel and general engineering value chain, as well as plastic waste value chain, said Prof Ncube.

The revival of pharmaceutical value is important towards boosting local production and exports of medicines into the region and beyond.

Furthermore, the Covid-19 pandemic had brought to light the weaknesses in the vaccines and medicines supply chain, hence the need for African countries to be self-sufficient in vaccines and medicines due to risks that may arise from border closures.

The Government would also prioritise the leather value chain through increased production capacities from about 30 percent to 75 percent to enable the sector to access local and export markets in line with the Zimbabwe Leather Strategy (2021-2030).

The 2022 National Budget will also prioritise the strengthening of local agro-processing value chains, existing processing capacity and increase throughput from agriculture. The agro-value chains have been identified are soya bean, fertiliser, cotton, sugar, dairy and
leather.

“Furthermore, policy measures will be implemented to encourage and incentivise local producers of agro-inputs and local manufacturers,” said Prof Ncube.

The Government will also expedite implementation of reforms aimed at streamlining and simplifying exporting and importing procedures, eliminating customs delays and improving customs administration.

The Chronicle

Government is set to roll out  mining cadastre system to  computerise the country’s register of mining  rights and titles in the fourth quarter of this year following the completion of a pilot project in Manicaland Province.

The computer-based cadastre system is expected to  enhance transparency  and accountability in the administration of mining titles.

The cadastre system will have all records of interest in the land such as licence holders’ rights,  restrictions and government activities.

The computerised mining register is also expected to be the central database  for storage of information  on applications and licences.

Currently,  mining licence separations  are marked on the ground by metal stakes, concrete beacons or some other fixed points  surveyed using conventional methods such as theodolite or archaic methods  involving tape and chains.

Finance and Economic Development minister Mthuli Ncube said Zimbabwe will migrate to a digital mining cadastre system from the current manual system in the fourth quarter of this year, which is expected to unlock   the potential of the country’s  mineral resources.

It will also help curb corruption  in the allocation of mining claims.

“The implementation of the computerised mining cadastre system is well in progress, with the government having procured both hardware and software for the system.

“A pilot project has since been completed in Manicaland with a view to roll it out to the rest of the country during the fourth quarter of 2021,” Ncube said.

Ncube said determination of the country’s mineral reserves was important in attracting investment and management of the mineral extraction process in order to balance the needs of the present and future generations, given the finite nature of minerals.

He said mineral exploration will be prioritised during 2022 in order to discover new mineral resources and to facilitate the quantification of available resources available in the country, as well as derive maximum benefits from mining activities.

Gold deliveries to Fidelity Printers and Refiners were subdued in 2020 owing to smuggling. But, the situation has improved this year due to incentives introduced by the government.

“Government has since responded by implementing various interventions including introducing incentives,” Ncube said.

He said the interventions have begun to bear fruits as deliveries to Fidelity Printers have increased.

Business Times

The National Oil Infrastructure Company of Zimbabwe (NOIC) has entered into a joint-venture agreement with Coven Energy Limited to establish a second fuel pipeline from Beira to Harare, government said yesterday, a move which makes Zimbabwe as the hub for the transportation of refined petroleum products in the Sadc region.

The project will result in the NOIC and UK-based Coven Energy entering into a 50:50 public-private partnership.

In a post Cabinet media briefing yesterday, Information, Publicity and Broadcasting Services minister Monica Mutsvangwa said the pipeline will be serving Zimbabwe, Botswana, and South Africa with the project  expected to create employment opportunities as well as generate foreign currency for Zimbabwe.

“The partnership will be for a period of 30 years. The pipeline will also help reduce vehicular congestion and the smuggling of petroleum products and the pipeline will be built over four years, at an estimated cost of US$1.3bn,” Mutsvangwa said.

Cabinet resolved that the parties sign a Memorandum of Understanding for purposes of conducting a bankable feasibility study which they will fund.

The project also wants to connect the pipeline to South Africa, Botswana, Zambia, Malawi, and the DRC as part of a long-term plan.

Experts in the oil industry said the deal would radically transform Zimbabwe into a regional petroleum hub, but effectively tilt the dynamics of the local industry largely dominated by Sakunda Holdings owned by business mogul Kuda Tagwirei.

The United Kingdom based firm plans to roll out the project in phases, with the first stage set to receive an US$850m capital injection with the rest expected to come in later stages.

Cabinet also approved the proposed partnership between Bulawayo City Council and Tendy Three (Pvt.) Ltd on the Bulawayo Vehicle Parking Management System Project and proposal for investment by a Belarusian independent power producer in a 100 MW solar energy plant.

Cabinet also approved the proposed partnership involving ZMDC, SIM SEA Pvt Ltd and Honghua International for the resuscitation of Angwa Shaft and the processing of the dump at Chidzikwe.

Business Times

Listed miner, Bindura Nickel Corporation (BNC) has been hit by stubbornly high cost of production, labour and materials, in the quarter to June 30, 2021, which rose 25% to US$10 525 per tonne from US$8 450 recorded reported in the prior comparative period.

Exacerbating the  cost pressures was the planned shutdown and Covid-19-induced lockdowns.

In a trading update, BNC company secretary Conrad Mukanganga said the adverse impact of the cost of local inputs  and the increasing disparity between the auction foreign exchange rate, at which the company surrenders 40% of its revenue for Zimbabwe dollars, and the prevailing parallel market rate battered the miner.

“Production for the quarter was only slightly higher than for the quarter to June 2020.

He said production for both Q1 FY2022 and Q1 FY2021 was approximately 15% lower than average, hence the fixed cost burden per tonne of nickel produced was higher than normal, thus contributing to the higher unit costs.

The production for Q1 FY2022 was affected by the loss of most of the month of April 2021 due to the commissioning of the Re-deep Tie-in Project.

Mukanganga said the company’s production  went up 2% to 93 113  tonnes from 91 322  tonnes while milled ore  rose 4% to 95 518 tonnes from 91 717 tonnes.

Production resumed at the end of April 2021, following the commissioning of these projects.

Despite there being no production for most of April 2021, tonnes milled in the quarter under review were marginally higher than for the comparative period in FY2020.

This was due to the loss of production during the latter period, occasioned by the operational restrictions imposed by the government in response to the advent of the Covid-19 pandemic, coupled with the unavailability of missives in the production mix, which were in turn attributable to lagging development.

Head grade, at 1.45%, was marginally lower than in the prior year. The recovery of 86% was higher, in the quarter under review, than the 85% achieved in the comparative period in the previous year, mainly due to the improved plant performance after the above-mentioned refurbishment exercise.

Mukanganga said  nickel in concentrates went up 2% to 1187 tonnes from 1162 tonnes.

Nickel in concentrates produced was marginally higher than the prior year’s production in the comparative period, mainly due to the increase in tonnes milled.

Nickel sales tonnage for the quarter ended  June 30,  2021 was significantly higher than the tonnage sold in the quarter ended June 30, 2020.

In the latter period, the insignificant sales tonnage was attributable to the temporary suspension of sales, which was necessitated by the need to conclude a more favourable new off-take agreement with Zopco SA, a Switzerland based trading house, in place of the agreement with Glencore.

The average price of nickel on the London Metal Exchange was US$17 343 per tonne during the quarter under review, compared to US$12 197 per tonne, in the same period last year, reflecting the positive impact of the increasing demand for clean energy.

Going forward, the production of nickel in concentrate is expected to be higher than achieved during the quarters ended September 30, 2020 and June 30, 2021 respectively.

Business Times

Coal miner, Hwange Colliery Company  Limited (HCCL)’s profit plunged 78% to ZWL$1.5bn in the 12 months to December 31,2020 from ZWL$6.9bn reported in the previous year on reduced gain on net monetary position despite an increase in volumes.

Gain on net monetary position was ZWL$1.89bn in the year from ZWL$10.14bn in 2019.

Volumes for HCCL, which is under administration, increased 13% to ZWL$4.5bn from ZWL$4bn due to a combination of  increase in high value coking coal sales and regular product price adjustments in line with market value.

The company’s administrator, Dale Sibanda said  there were plans to boost coking coal output by year-end.

“The current underground mining operations are producing an average of 30 000 tonnes per month. Plans are underway to develop a second underground mining section in the medium term, so that coking coal production will double when the new section is fully operational,” Zinyemba said.

“In addition, opencast operations at the JKL pit will continue in order to increase high value coking coal in the product mix. The current JKL operation is producing an average of 50 000 tonnes per month and the target is to increase production to 100 000 tonnes per month by the end of 2021.”

He said HCC aims to grow its market share of coking coal sales in neighbouring countries, as its coking coal and coke meet quality specifications in the ferro-chrome industries and smelters.

HCCL’s coking coal sales increased by 6.5% to 238 112 tonnes in 2020 from 223 662 tonnes in 2019. However, the coking coal sales volumes were however limited by washing capacity constraints as the plant was antiquated and needed retooling. The plant was completed and was commissioned in April 2021.

Total coal mined by opencast operations was 1104 036 tonnes, reflecting a 46% increase in production from the previous year.

Total coal from HCCL’s JKL pit was 353 143 tonnes, a 21% decrease in production from 2019, while at Chaba Mine, the contractor Zhong Jian mined a total of 750,893 tonnes, a 145% increase in production from 2019 done by the previous contractor, Mota Engil. However, heavy rains towards the end of the year flooded the pits and affected production from December into 2021.

A total of 658,031 tonnes of coal was delivered to Hwange Power Station during the course of the year, which was 18% increase from previous year. Main Underground Mine coal production was 49% below the previous year as coal production during the year was 136,137t, against a budget of 360,000t.

In metallurgical operations a total of 642 197 tons of raw coal was processed at both Chaba and No 2 plants against a target of 1 410 396 tons which is 46% attainment of the target. In the outlook, HCCL eyes an increase in production and profits.

Zinyemba  said the company will be focused on raising a significant amount of capital so that they can achieve the desired results.

Business Times

Former Zanu-PF youth leader, Lewis Matutu, could lose his mining concession in Mashonaland Central Province, amid revelations that party bigwigs are eyeing the claims.

It is understood that the special mining grant awarded to Matutu’s investment vehicle, Nyamatsanga Mining, to mine at the heart of the late business tycoon John Bredenkamp’s 1 500 hectares Thetford Estate in Mazowe, is set to expire next year.

The special mining grant was awarded last year.

Well-placed sources told Business Times that bigwigs in Zanu-PF and government are angling to take over the mining concession

Tsenengamu, alongside Lewis Matutu and Pupurai Togarepi, were relieved of their duties as leaders of the youth league. Matutu and Tsenengamu were suspended for a year while Togarepi remained as a Central Committee member.

Matutu was last year suspended from holding a party position alongside Godfrey Tsenengamu after the duo held a press conference where they accused some businesspeople of allegedly being part of a cartel that was derailing the economy. The duo was also ordered to attend the Herbert Chitepo School of Ideology. Tsenengamu refused and was expelled from the party. Then youth secretary Pupurai Togarepi lost the politburo post but retained the Central Committee position.

Matutu’s consortium, through its lawyers Vengai Madzima of Madzima, Chidyausiku and Musera Legal practitioners, has since written to the Mine and Mining Development Minister, Winston Chitando expressing its concerns.

Matutu could not be reached for comment as his mobile phone number went unanswered.

Thetford farm has in the past year been subject to contestation.

Following the death of Bredenkamp, his son Gavin was allocated the farm. Ever since, there has been a serious fight for control of the concession between Matutu and Gavin.

Recently, Bredenkemp’s widow Jennifer filed an urgent chamber application at the High Court to stop her son Gavin from possessing the family farm.

The case was filed under Case Number HC 132/21. Jennifer and five other applicants are being represented by Atherstone and Cook while Gavin Bredenkamp is represented by Titan Law.

The application is seeking protection of Jennifer and other applicants’ residence and usage of Thetford Farm by interdicting Gavin and the ministry of lands from interfering with that residence usage, rights and freedoms until a final decision relating to the rights of the parties are met by the Court.

Business Times

At least 40 fuel companies are being probed by the Zimbabwe Anti-Corruption Commission (ZACC) for allegedly circumventing customs regulations by using fake Bills of Entry to smuggle fuel into the country, it has been learnt.

The investigation also involves President Emmerson Mnangagwa’s Special Anti-Corruption Unit.

ZACC chairperson Justice Loice-Matanda Moyo said a probe was underway.

“The investigation is almost complete and we have since started the process of extracting some of the evidence and then arrests will follow,” Justice Matanda-Moyo told Business Times this week.

Multiple sources told Business Times this week that the investigations have unmasked a cartel involving some of the big names in the local fuel industry that have been smuggling the commodity from South Africa using fake bills of entry especially at the Beitbridge Border Post

The cartel, sources said, was using Bills of Entry for some goods purported to belong to some of the platinum miners in Zimbabwe. The sources said the cartel, which has Zimra officials, is pretending to be importing mining equipment which is exempted from paying duties at the border, yet it would be fuel which would be smuggled into the country.

Instead of selling the fuel in Zimbabwe, well-placed sources told Business Times that the fuel dealers would export it into the region especially to Zambia and the Democratic Republic of Congo.

“The fuel companies have been using Bills of Entry for things like large mining equipment for some platinum mining companies in the country to clear the importation of their fuel into Zimbabwe. This has been a well-orchestrated scam involving Zimra,” one source told Business Times.

They are said to be importing, especially from South Africa, but the commodity does not reach its intended destination.

Instead, the companies end up selling the same fuel in South Africa.

The National Oil Company of Zimbabwe has since instituted investigation into the matter.

Last month, Zimra intercepted three transit fuel trucks in Chirundu for allegedly smuggling fuel into the country under the guise of transporting it to Zambia prejudicing Zimbabwe of potential revenues. Zimra said during the period July 17 to 23, three tankers that had declared fuel at Forbes Border Post en route to Zambia were intercepted at Chirundu One Stop Border Post loaded with water instead of fuel as per the declarations made at Forbes Border Post.

Two drivers of the tankers are out on ZWL$30,000 bail following their arrest. The duo will be back in court on August 24.

Transit shipment of fuel occurs when transporters ship fuel from outside Zimbabwe, which passes through the country destined for another country. Since this fuel is not for local consumption, no duty is paid on importation.

The fuel trucks are sealed at the port of entry and the seals are removed at the exit point after the acquittal process.

Sealed fuel trucks that transit through Zimbabwe, are monitored by an Electronic Cargo Tracking System operated by Zimra’s Customs and Excise Division.

The trucks use dedicated routes and any departure from these routes attracts a fine of US$2 000. Removal of seals is a serious offence which also attracts a fine.

Business Times

AT LEAST 36 000 carats of diamonds are alleged to have been shipped to Angola between 4 April and 16 May in 2013 under illicit dealings.

An internal document from the CIO Director General’s office, “‘Ref/23/13/1432’ dated 23 May 2013, shows that a total of 16 000 carats were shipped out of Zimbabwe to Angola and Hong Kong between 04 April 2013 and 10 May 2013 and a total US$58 million was realized from the illicit sale of the gems,”

“A further 20 000 carats were shipped out of Zimbabwe to Angola between 11 and 16 May 2013 for an undisclosed fee,” revealed a research document published by Centre for Natural Resource Governance (CNRG).

The same internal CIO document clearly states that the money raised was for “Special Interests Projects” (elections) and part of the shipment was taken to “Number 88 Queensway, Hong Kong, “on behalf of the Special Interests Projects” by “Air Vice Marshal H. Muchena” together with “retired Director, Counter Intelligence, Sydney Nyanungo.”

‘According to the JOC internal document referred to earlier, the operation led by Retired Air Marshal Muchena and Retired Director Nyanungo was ‘funded to the tune of US$800 million from Mbada Diamonds and Anjin (Pvt) Ltd’.

A Joint Operation Command (JOC) “Election Brief Meeting” report dated 3 June 2013, reference “JOC/ RG/SS”, reveals that part of the “USD3 billion” budget drawn by Nikuv International Projects to finance the 2013 elections, “US$800 million came from Mbada Diamonds and Anjin (Pvt) Ltd.”

The CNRG research document also reveal that another report from the “CIO Director General’s Office reveals that the “2013 elections were also funded through shady sales of Marange diamonds to mainly ‘Mr Sam Pa’ and ‘China-Sonangol.’ “

A ‘loan’ from a company called Lefever Finance Limited (BVi) which had a joint venture operation with ZMDC called Todal Mining (Pvt) Limited which owned Bokai mine is reported to be part of the funds used to finance the 2013 elections.

Lefever Finance Limited had 60 percent shares in Todal Mining (Pvt) Limited while Zimbabwe Mining Development Corporation (ZMDC) owned the other 40 percent.

Informants’ privy to the deal alleges “the Bokai mine (Todal Mining (Pvt) Limited) deal point out to the fact that, while the mine was ‘sold’ for US$175 million to the Central African Mining and Exploration Company (CAMEC) through an intricate web of shelf companies registered in the British Virgin Islands (BVi), ZMDC benefitted a quick fire of US$100 million from the sale,”

“The same source revealed that Billy Rautenbach, through Meryweather Investments Limited (BVi), got US$75 million from CAMEC in addition to coking coal mining rights in the Hwange Western Areas that he was given by the government of Zimbabwe for arranging the deal.”

NEWS (Mining Index)