Mining ZimbabweLatest Mining News, Policy and Industry Updates

In under two years’ time, Zimplats will hit a key milestone on the long path to local beneficiation; it will no longer have to send platinum concentrates to South Africa for smelting.

The company has laid out a US$1.8 billion expansion plan, part of which involves expanding processing capacity in Zimbabwe. Smelting more platinum locally is a step towards staving off a government tax on the export of unprocessed platinum.

The company is investing US$521 million to expand smelter capacity, which will be fed by new mines and redevelopment. The first platinum matte is scheduled from January 2024 while the acid plant commissioning is expected in August 2024, according to Nico Muller, CEO of Zimplats’ holding company Implats.

A new concentrator – which turns ore into the raw materials for platinum extraction – will be completed this year. Zimplats currently has two concentrators at Ngezi and Selous.

“Construction of a third concentrator is well advanced, and we are very confident of commissioning that concentrator before September this year, and the commissioning of all the infrastructure for increasing production is similarly – it happens over a longer time period – on track and on schedule,” Muller told an investor call on Tuesday.

While Zimplats exports platinum mattes, Mimosa, in which Implats has a 50-50 share with Sibanye Stillwater, ships its concentrates to South Africa for smelting. The new capacity being built now will see all smelting – from Zimplats, Mimosa and possibly other producers – being done locally.

“What that will do is give us an opportunity to smelt Zimplats as well as Mimosa concentrate in Zimbabwe, and therefore qualify us for a dispensation against the export levies for unbeneficiated concentrate,” Muller said.

“We will be independent in Zimbabwe from the South African operations. It does then, obviously, with the removal of the Mimosa concentrates from our Rustenberg furnaces, create headroom in Rusternberg.”

According to Gerhard Potgieter, Implats Chief Operating Officer, Zimbabwe is a key asset for Implats and expanding smelting capacity makes sense.

He said: “One of the reasons why we have agreed to increase that capacity in Zimbabwe is that Zimbabwe is our playground, we know how to mine there, we know how to make money there. So, it just makes sense for us to also beneficiate there.”

Amplat’s Unki launched a US$60 million smelter in 2019 and has invested a further US$40 million to expand capacity there, which will increase output by 30%.

____

Good, but not yet good enough

However, a base metal refinery (BMR), which comes at the end of the production chain, is still what government sees as the ultimate prize in its push for local beneficiation.

Government, in its policy document NDS1, insists that “moving up the value chain will ensure Zimbabwe benefits more from the PGMs through job creation and foreign currency earnings”. It says a penalty tax is necessary “to dissuade exportation of concentrates and matte and ensure adherence to set timelines for the establishment of the BMR”.

Industry players say there is not enough output yet to justify the investment in Zimbabwe.

In a letter to Treasury in January, Alex Mhembere, CEO of Zimplats and head of the platinum producers association, asked government to further postpone the tax on unprocessed platinum. He said a report commissioned by platinum producers has recommended that miners build a combined base metal refinery.

“The BMR project will have capacity to accommodate local PGM base metal refining,” he wrote.

Countries in the region have been involved in similar battles for local beneficiation, and some have had to offer generous tax breaks to make it happen.

In 1997, Mozambique agreed with Mozal Aluminium on the building of a smelter by offering the company a 50-year tax holiday. The concession means the company, 72%-owned by BHP spin-off South32, is paying 1% turnover tax. Mozal also gets power at a discounted rate.

In Namibia, zinc refinery projects in the south of the country rose after they were granted export processing zones status, exempting them from company tax.

Newzwire

UK resources investor Galileo Resources is to start exploring for lithium and gold in Zimbabwe after being granted the option to acquire 51% of a local prospecting firm.

Galileo, listed in London, will spend US$1.5 million to explore for lithium and gold at claims held by BC Ventures over the next two years.

BC Ventures’ unit Sinamatella Holdings was one of the companies granted Exclusive Prospecting Orders in March last year. Sinamatella holds an EPO for a potentially lithium-rich area in Kamativi, as well as another two EPOs for two gold areas near Bulawayo.

Colin Bird, an industry veteran, owns Galileo, which is also prospecting for various mineral assets across the region, including copper and zinc in Zambia and Botswana as well as rare earth minerals in South Africa.

This will be the company’s first time in Zimbabwe.

“This is a significant investment for Galileo, in that we have an option to acquire a controlling interest in what we consider a highly prospective lithium project in Southwest Zimbabwe,” Bird said in a statement on Monday.

The lithium prospect is near the Kamativi tin mine, where a joint venture of the Zimbabwe Mining Development Corporation and Canada’s Jimbata is working to treat old tailings dumps to seek out lithium-bearing minerals.

Bird believes the data available from that project gives his company a good chance to strike lithium.

He said: “The project is adjacent to the Kamativi mine, which produced tin for many years, closing in 1994. The pegmatites in the area are known to contain lithium-bearing minerals, as well as tantalum and tin and the pegmatites will be the focus of our exploration programme.”

Galileo will be hoping to have as much good fortune as other lithium prospectors have had in Zimbabwe recently. In December, China’s Huayou announced a deal to buy the Arcadia lithium project from Prospect Resources for US$422 million.

In February, Sinomine Resource said it was spending US$180 million to buy a controlling stake in Bikita Minerals, Zimbabwe’s oldest lithium producer.

Newzwire

A LEADING resources campaigner has claimed that Zimbabwe’s elite are reluctant to push through amendments to the Mines Act, a 60-year-old legislation that has outlived its usefulness.

The Zimbabwe Coalition for Debt and Development (Zimcodd) added its voice to discontentment over delays in passing the 2015 Mines and Minerals Amendment Bill, saying politicians were benefiting from the status quo.

The Bill seeks to shift the industry’s terrain by improving several sections that were relevant when the present legislation was enacted in 1963, but have been overtaken by events.

It contains provisions to resolve farmer-miner disputes, along with regularising artisanal mining, among others.

“The ills associated with the mining sector in Zimbabwe are largely blamed on delays in the finalisation of the Mines and Minerals Amendment Bill,” Zimcodd said in its latest policy digest.

“The reasons for the delay are sketchy yet all due processes were done including public consultations which were conducted as far back as 2016 during the (late former President Robert Mugabe)’s administration. Now, six years down the line, it is still work in progress. There is a high likelihood that there is lack of political will on the part of the Executive to ensure the Bill is finalised,” it said.

The Bill came into the picture following extensive campaigns to amend the Mines and Minerals Act, which many felt lacked provisions to stem rampant mineral revenue leakages, and was replete with opaque licensing regimes that propped up big players. Those pushing for radical changes said the 60-year-old Act promoted poor tax and royalty flows into State coffers, while perpetuating corruption and human rights violations.

In January, Chinese firms confirmed that there were serious legislative flaws, which they have been using as a weapon to displace Zimbabwean villagers to set up operations. Justice minister Ziyambi Ziyambi recently said that the Bill would be re-tabled in Parliament before being passed into law.

But mining representative bodies are planning to petition both Mines and Mining Development minister Winston Chitando and Parliament to stop the reading. They said while consultations took place before the President turned down the Bill in 2020 and returned it to the Attorney-General’s office, it may have had changes that required fresh consultations.

“This raises concern whether the government is willing to amend the Mines and Minerals Act or not. This is aggravated by the fact that, word from the mining industry is that the Justice, Legal and Parliamentary Affairs ministry is now more concerned about the statutory instrument that seeks to formalise artisanal and small-scale mining than the Bill,” said Zimcodd. “This is worrisome, as it might also imply that the government is satisfied with the provisions in the Mines and Minerals Act.”

The Bill has clauses and provisions that are essential in unlocking the US$12 billion mining industry which will result in a 334% jump from the current US$2,9 billion mining industry.

Newsday

FORTUNE 500 company, Tsingshang’s massive steel and ferrochrome production plant is taking shape near Zimbabwe’s mining town of Mvuma, Standardbusiness established last week.

The operation is being established by Dinson Iron and Steel Company (Disco), which is a unit of Tsingshang.

It is on track to produce its first steel early 2023, although officials say there have been significant delays due to Covid-19 induced hard lockdowns.

At peak, the operation will have capacity to produce five million tonnes of iron ore annually.

Buildings are emerging out of thick forests, where staff houses, warehouses and a cement mixing plant are nearing completion.

The company has secured licences and approvals to exploit vast iron ore claims in the area where an industrial park and downstream industries will be established.

The industrial park will be larger than nearby Mvuma on completion, officials said on Wednesday, allaying fears 90 families to be displaced would be left stranded.

A dedicated power supply line has already been established while construction of a railway line and dam is being considered for the project.

Roads are being rehabilitated with a number of bridges also expected to be replaced.

Some of these have already been relocated.

During a tour of the project, Disco public relations manager, Fanuel Utete said work to establish the first of the firm’s five furnaces was under way.

“On phase one, we will have five furnaces,” he told Standardbusiness.

“At this stage, we will be producing 1,2 million tonnes of ore annually. But we will go further to operate 12 furnaces and produce five million tonnes of ore annually.

“This is very possible. The company has capacity and high quality ore is available.

Disco will be spending an estimated US$10 000 on each of the affected families to construct houses.

“I have never been employed in my life and now I own a house that is much better than the one I had.

“I am earning a stable income and able to decently look after my family,” said Wisdom Chimhuka, one of the resettled villagers.

“I have been staying in a temporary structure since last September and my house will be complete (this week).

“They cleared land for us to plant maize and we expect our relatives to join us on this side soon.”

It is one of a few cases where Zimbabweans have said they have been treated well by Chinese investors, who have recently come under fire for a string of transgressions.

Across Zimbabwe, villagers face the threats of being displaced by Chinese investors to make way for mining operations.

Graves have been destroyed, and delicate environments have been trampled on.

“All general or unskilled labour is being hired from the community, this is their project and they are a part of it all the way,” Utete said.

However, the project has been affected by shipping delays caused by the Covid-19 pandemic.

Tsingshan is the proprietor of Afrochine Smelting, a company which has a huge presence in Zimbabwe’s chrome fields.

Last year, Afrochine said the steel plant would sit on 2 000 hectares.

This will comprise a 1,5 kilometre long and 600 metre wide processing plant and mines.

Altogether the operation will turn over at least US$1,5 billion per annum.

Afrochine, Zimbabwe’s largest chrome smelting operation is a subsidiary of Chinese conglomerate Tsingshan Holdings, which accounts for 25% of global steel production.

Afrochine last year said it was determined to roll out a ferrochrome facility three times bigger than the Midlands-based Zimasco, Zimbabwe’s current biggest chrome processor.

Mines and Mining Development minister Winston Chitando said the government had mobilised key state agencies to work around the clock and ensure a flawless decision-making process for the project to be delivered timeously.

“The first is the carbon steel plant, which is about one-and-half kilometres,” Chitando said.

“Next to it will be a ferrochrome plant, which will generate 500 000 tonnes of ferrochrome.

“Those who know Zimasco, Zimasco does around 150 000 tonnes.

“So this will be three times the size of Zimasco.

“Then there is an iron ore mine and iron ore plant.

“The total turnover of this whole project will be US$1,5 billion, bigger than Zimplats and any other project you can think of.

“That is really the grant plan.”

The Standard

GOVERNMENT’S plans to dispose of its controlling stake in the country’s sole gold buyer Fidelity Gold Refinery (FGR) is under scrutiny by some gold producing firms shortlisted for the US$49 million transaction, the Zimbabwe Independent can reveal.

The gold buyer was offered to seven private entities that include Kuvimba Mining House.

Major gold producers included in the deal see red flags in the involvement of  some companies in the deal.

“It has taken a long time in order for us to complete the due diligence on all the possible investors.

“Yes indeed, Fidelity is a good investment. The value of the US$49 million was determined by reputable external auditors who carried out the valuation of FPR,” he said yesterday.

But sources close to a series of meetings between authorities and the seven shortlisted players told the Independent this week that leading gold producing firms RioZim and Caledonia were hesitant to partner some of the potential suitors vying for Fidelity.

As first reported by the Independent on August 20, 2021, government, at that time had selected Kuvimba Mining House, Better Brands, RioZim, Caledonia, Pan-Africa Mining, Zimbabwe Miners Federation (ZMF) and Yellow Credit as prospective new private shareholders at the country’s sole gold buyer.

During a series of meetings facilitated by authorities to bring together the shortlisted private players, sources said, questions arose around the suitability of Kuvimba Mining House, Better Brands and ZMF.

It also emerged that there were concerns that Fidelity, at US$80 million, was overvalued. Suitors consider it too old and its equipment outmoded to be worth that much. They also see its lack of a London Bullion Marketers Association certification as a liability.

Kuvimba, which until last year did not exist, has struggled to offer satisfactory answers on its shareholding structure. But it is now on the cusp of becoming the country’s largest gold producer after embarking on an acquisition spree of lucrative gold assets around the country.

It has, in its short existence acquired Shamva Mine, Freda Rebecca and mines held by Zimbabwe Mining Development Corporation (ZMDC), namely Elvington, Jena, Golden Kopje.

Government has claimed 65% ownership of the entity but has dithered in disclosing the owner of the remaining 35%, sparking questions on the Fidelity arrangement.

According to Finance minister Mthuli Ncube and Kuvimba’s former chief executive David Brown, government owns 65% of Kuvimba’s shares, while the remaining 35% equity is held by Ziwa Investments, a Zimbabwean subsidiary of the Mauritius-registered Quorus Management Services.

Kuvimba’s maze of structures and web of intricate offshore entities has not been disclosed.

Notably, Kuvimba’s relationships with Sotic International, Almas Global Opportunity Fund – allegedly used by local businessman Kudakwashe Tagwirei to invest in Sotic via the Cayman Islands – and Quorus have not been disclosed.

Almas owns 65% of Ziwa Resources while the remainder is owned by Zimbabwe-registered Pfimbi Resources, whose directors are Tagwirei and his wife. Tagwirei is on US sanctions over his alleged abuse of public funds.

Sources, in multiple briefings, said the credentials and status of Kuvimba, among other key concerns, was “of grave concern to other gold producing firms who were shortlisted to take over Fidelity.”

“In meetings with the governor of the central bank John Mangudya, it appears that there has been virtually no movement around the deal largely as a result of the involvement of Kuvimba and Better Brands,” the source said on condition of anonymity.

“The ownership of a gold exporting entity is important. If that entity is owned by someone who is sanctioned, it becomes increasingly difficult to do business.

“Ownership of Fidelity is important and the proposed transaction should serve as a conduit to the international market.

“Fidelity is also not licensed by the London Bullion Market Association,” the source added.

Relating to ZMF, its president Henrietta Rushwaya was last year arrested at the Robert Mugabe International Airport while allegedly attempting to smuggle a 6kg gold worth US$366 000 to Dubai.

Rushwaya’s former driver and staffer at ZMF, Tashinga Masinire, was also arrested in South Africa in 2021 with a bullion contraband worth US$780 000.

Sources close to negotiations to seal the Fidelity privatisation deal added that the involvement of ZMF and its image further rattled the key gold buying firms which wanted to conduct business in a transparent manner.

“During the matchmaking meetings and internal discussions, the key gold producing firms also raised questions on the suitability of ZMF. Basically they do not want to be associated with characters who have been accused of smuggling gold. They want to keep their distance,” the source said.

When contacted for comment, Rushwaya refuted the claims as unfounded.

Better Brands, owned by businessman Pedzai Sakupwanya, which is also vying for a seat among the shortlisted private shareholders, was also a “turn off” for the large-scale gold producing firms angling to take over Fidelity.

Sakupwanya has trended on social media platforms, flaunting gold bars and wads of United States dollars.

According to the firm’s website, Sakupwanya is Better Brands “founder and director” who “is a pro-active businessman, entrepreneur, who takes cognisance of the community requirements and is the duly nominated and elected (Zanu PF) DCC (District Coordinating Committee) Zone chairperson and shadow councillor for Goromonzi Ward 21”.

In February last year, Sakupwanya, who is widely known as “Scott”, found himself in the eye of a storm after his company allegedly grabbed 132 gold mining blocks from Redwing Mine in Penhalonga.

“Some of the characters making up the cast of shortlisted candidates will not wet the appetite of a firm that aims to conduct business openly,” another source close to the ongoing negotiations told the Independent.

Sakupwanya did not respond to questions sent to him via WhatsApp.

Investigations by the Independent last year revealed that a company called Yellow Credit was also interested in snapping a stake in Fidelity. However, efforts to uncover the beneficial owners of the entity drew blanks, as its registration records at the Company’s Registry could not be found.

A company chaired by former Chamber of Mines president Victor Gapare, called Pan-African Mining (PAM), is also among the potential new shareholders at FPR. PAM operates the Aryshire and Muriel gold mines in Mashonaland West.

Questions sent to Rio Zim and Caledonia had not drawn any responses at the time of going to print.

When the Independent disclosed the identities of the private players vying to take over Fidelity, Mangudya declined to name the candidates, saying that would be done after completion of the due diligence exercise running for six months.

“Identity of the entities that have shown interest to purchase stake in Fidelity Printers and Refiners (FPR) are from the primary gold producers, the association of the small-scale gold producers and the FPR buying agents. Their names will be released at the closure of the offer in six months’ time,” Mangudya said at the time.

“The due diligence on those that have shown interest to acquire shares in FPR is ongoing to ensure transparency, adherence to international best practice and to provide ample time to the would-be new shareholders to also carry out their own due diligence on the transaction,” he said, adding that the valuation of FPR was carried out by Grant Thornton before the central bank resolved to unbundle 60% of FPR.

The deal is worth US$49 million, which is the 60% stake the government intends to offload to private players.

Zimbabwe Independent