Mining ZimbabweLatest Mining News, Policy and Industry Updates

THE investor behind the US$1 billion new steel plant to be located in Mvuma, Midlands province, has applauded the Government for creating a conducive investment climate which has enabled their business to take off.

Mr Benson Xu, the managing director of Dinson Iron & Steel Company, which is a subsidiary of the Chinese global steelmaker, Tsingshan Holdings, said Government had created an investor friendly environment which will see many investors flocking to the country.

He said this during an inter-agency Government consultative meeting held at the factory site, which was convened by the Midlands Provincial Affairs and Devolution Minister Larry Mavima.

The meeting was part of preparations for the groundbreaking ceremony set to be led by President Mnangagwa within two months. The commissioning of the plant is set for December 2022.

The US$1 billion investment project would have an annual turnover of US$1,5 billion.

Mr Xu said various Government departments had facilitated smooth commencement of the massive project that will change the industrial landscape of the Midlands province and the entire country.

“We could not reach this stage without the help of various Government departments and this big plant will definitely unlock the economic potential not only of this province but the entire country,” said Mr Xu.

He said as an investor he was very impressed by they way Government officials especially from the Midlands province handled their case.

Mr Xu explained that the proposed steel plant, believed to be Zimbabwe’s biggest, was part of a chain of investments that President Mnangagwa successfully negotiated during his visit to China in 2018.

The Government subsequently signed a Memorandum of Understanding with the company for local projects. Already, other legs of the investments are at different stages of implementation.

They include the biggest ferrochrome project located at Selous and a coke oven battery in Hwange, which is also Zimbabwe’s biggest and most modern facility.

The steel plant at Mvuma will complete the value chain to produce steel, with massive spinoffs for upstream and downstream industries.

It will also be a boom for employment, with an estimated 6 000 direct jobs being created while a new township — three times bigger than the Redcliff town of heyday — has been planned.

Other infrastructural elements to form part of the matrix include a new dam, bridges and a tarred road. Minister Mavima said the investment fits well into the provincial and national development agenda, advancing the work that had been done by the President when he met the investors in China.

He said it was incumbent upon all civil servants to ensure the successful implementation of all development projects.

Heads of various Government departments and ministries attended the meeting and explained how they would be impacted by the investment.

They pledged to facilitate processes to ensure its successful implementation.

Chief Chirumhanzu welcomed the multimillion-dollar investment in his area and commended the Second Republic under the leadership of President Mnangagwa for creating an attractive investment climate.

The Chronicle

THE Zimbabwe Environment Law Association (ZELA) says plans by the Government to unbundle Fidelity Printers and Refiners (FPR) has potential to improve local beneficiation and investments in the gold sector.

FPR is in the process of being unbundled into two business entities, namely gold refining under Fidelity Gold Refinery and printing and minting under the Printing and Mining Company of Zimbabwe (PMCZ).

“Furthermore, by allowing private companies to be part of the gold refinery process, the country stands a good chance to comply with the London Bullion Market Association (LBMA),” Zela said in a statement.

In terms of the unbundling structure, the RBZ will retain 40 percent shareholding in Fidelity and dispose of 60 percent shareholding to both the large scale and small-scale gold producers, based on the volumes of each individual’s deliveries.

Cumulatively, 50 percent of the shareholding will be offered to primary gold producers while three percent will be offered to main FPR gold buying agents and the balance of seven percent to small scale producers through their representative bodies such as the Gold Producers Association and the Zimbabwe Miners Federation (ZMF).

While presenting the Mid Term Budget Review last month, Finance Minister Professor Mthuli Ncube said the government was moving ahead with its plans to cede its controlling stake in FPR.

Zela’s works cuts across different environmental sectors such as mining, forest management, wildlife management services and urban agriculture, among others. The country lost its LBMA membership in 2008 after it failed to meet the prerequisite gold
production levels and for it to be re-admitted into the LBMA, it needs to be producing 10 tonnes of gold per year.

“Basing on FPR’s gold production and deliveries for the past few years, it is now very easy for the country to re-join the LBMA. The Government should be persuaded to get readmitted into the LBMA as this will attract international investments,” Zela said.

It added that officially, FPR sells its gold to international markets mainly through South Africa and Dubai refineries.

However, Zela noted that the value Zimbabwe gets from selling its gold to Rand Refineries in South Africa is lower than the value that it would get if the gold export stocks were to be sold directly to LBMA and one of the major reasons is that these refiners charge for the refinery process which they do on the country’s gold exports.

Zimbabwe is targeting to produce 100 tonnes of gold per year by 2023, which is part of a drive to achieve a US$12 billion mining industry by that time.

Of the US$12 billion, gold, platinum diamonds will contribute US$4 billion, US$3 billion and US$1 billion respectively. Chrome, iron ore and carbon steel will contribute US$$1 billion while coal and hydrocarbons will contribute the same. Lithium at US$500 000 while other minerals will constitute US$1,5 billion.

Zela also indicated that the Government should also consider making it mandatory for all shareholders who are going to take up equity in FPR to list on the Zimbabwe Stock Exchange (ZSE) or the Victoria Falls Stock Exchange (VFS).

It said this will open a window for citizens to hold the companies to account on mineral revenue transparency since companies will be expected to publicly disclose their Environmental, Social and Governance (ESG) information in line with international best practices.

Business weekly

Zimbabwe’s sole gold buyer, Fidelity Printers and Refiners (FPR) is cautious of reaching 27 tonnes of gold output this year due to the late interventions by the monetary authorities.

But in June and July gold deliveries averaged above 2.8 tonnes, giving a glimpse of hope on the country’s gold export receipts.

A Fidelity official who preferred anonymity told Business Times that the country could near the 27-tonne mark by the year-end.

“Judging from the current trend, we hope to reach 26.7 tonnes by the end of 2021.

We have so far received 12.7 tonnes during the first seven months and we hope to receive 14 tonnes during the last five months,” the official said.

FPR gold operations head Mehluleli Dube told this publication that this year’s gold deliveries are difficult to project due to the different tales of gold deliveries between the January to May period and June to July.

“We are yet to discuss the final figure but I don’t think we will surpass the 28 tonnes achieved due to the difficult period that we experienced from January to May.

I can’t really tell where we would be by year-end as gold deliveries were extremely down during the first five months but during the past two months, the situation has improved significantly,” Dube said.

Monetary authorities are urging gold miners to increase production in an effort to get high returns from the prevailing international gold prices.

The country’s gold exports receipts shot 132% to US$184.2m in July 2021   from US$79.3m in the same period last year.

Overall, gold export receipts rose 42% to US$648.4m for the seven months from US$457.2m due to the 5% incentive, scrapping of taxes on small scale miners and timeous payment in line with the international gold prices.

Smugglers were estimated to be shipping out about 2.5 tonnes every month.

The small-scale miners are delivering above 400 kg weekly and more is expected, according to experts.

Resultantly, the June 2021 gold deliveries clocked 2.92 tonnes against 1.4 tonnes same period last year due to a reviewed Fidelity’s buying price of gold for the artisanal miners and small scale miners.

Small scale miners managed to deliver around 1.7 tonnes against large scale miners’ 1.1 tonnes.

The government has moved to provide equipment in gold centres to move towards helping the attainment of US$4bn gold export revenue.

In May gold deliveries fell 5% to 1.38 tonnes in April 2021 from 1.46 tonnes recorded during the same period last year with the positive output only recorded in March where deliveries improved 2% to reach 1.80 tonnes from 1.77 tonnes.

With the recent surge in production, mining experts are projecting a huge recovery during the second half of the year.

With all miners paid to date and payment at the prevailing international gold prices, a major surge in deliveries is expected.

The gold output plummeted 31% to record 19.052 tonnes during 2020 from 27.66tonnes recorded during 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.

In an intelligence mining report last year, President Emmerson Mnangagwa’s government was advised to pay gold producers at world prices to woo them into selling the yellow metal through the formal channels.

The report blamed FPR’s flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs’ violence in the Midlands Province and Mazowe in Mashonaland Central Province.

In reaching 100 tonnes by 2023, Dube said it is a toll order for the country to reach a centurion due to lack of capital investment and informalisation of the sector.

Business Times

A crackdown by the police and the Environmental Management Agency (EMA) on illegal gold miners has forced Zim Goldfields, a joint venture between Zimbabwe and Belarus, to end its operations in Penhalonga, in Mutare district, Manicaland Province.

Goldfields had been granted the right to mine gold in the province.

But the recent government ban on riverbed mining and the threat of illegal gold miners, forced the company to stop operations.

The joint venture has been subject to controversy as many questioned government policies with regards to riverbed mining.

“After some time, illegal operations were getting out of hand so our company has written numerous reports to the local and district offices of police, EMA, Ministry of Mines. Police had to come on the ground and hold operations against illegal mining, explaining to the local community about mining rights and their importance. The problem was not solved as the illegal miners were benefiting more,” Zim Goldfields representative Dmitri Krasilnikov told Business Times.

Krasilnikov hoped the ban “will soon be lifted and we will be able to hold proper operations”.

Zim Goldfields was planning to set up a test plant which has now been shelved.

Introduction

Mining leases are covered in Part VIII, being sections 135-157 of the Mines and Minerals Act (Chapter 21:05) (or the Act) while special mining leases are covered in Part IX, sections 158-168.

Mining rights of holder of mining lease

In terms of section 150 (1) every holder of a mining lease shall possess the following mining rights:

The exclusive right of mining any ore or deposit of any mineral mentioned in section 135 (2)

(a) which occurs within the vertical limits of the area covered by his or her lease.

It is a requirement in terms of section 135 (2) (a) for an applicant for a mining lease to furnish the mining commissioner particulars of the minerals which are being mined or to be mined in the area applied for.

The exclusive right within the vertical limits of the area covered by his or her mining lease any ore or deposit of any mineral discovered within such area after he or she has notified the mining commissioner.

This excludes the right to mine coal, mineral oil or natural gas.

Section 150 (2) confers the holder of a mining lease which includes any metal blocks in respect of which he gave details under section 135 (2) (c) the right to retain, in respect of such blocks, the extra-lateral rights which he or she held at the date of issue of the lease.

Extra-lateral means the right of following a reef on its dip beyond the vertical limits of the block.

Application for mining lease

According to section 135 (1) the holder of a registered mining location or of contiguous registered mining locations may make written application to the mining commissioner for the issue to him or her of a mining lease in respect of a defined area within which such mining location or locations are situated.

Information requirements are specified in the section.

Consideration of mining lease application

An application for a mining licence is considered by the Mining Affairs Board (MAB or the board) in terms of section 142. The MAB considers the following in determining an application:
Any determination on any objection made by the Administrative Court or the mining commissioner and any objection mentioned in section 139 (3). That the applicant’s financial status is such that he or she will be able to meet any payment due under section 344.

That mining operations on a substantial scale are likely to be conducted for a considerable period within the area applied for.
That no ground not open to prospecting is included in the area to which such approval would relate.

According to section 142 (6) the decision of the MAB to grant or refuse an application for a mining lease shall be final and without appeal.

Issue of mining lease

This is done in terms of section 145. Where the MAB has approved an application for a mining lease, the board shall forthwith issue a mining lease in favour of the applicant in respect of the area approved and in accordance with the terms and conditions fixed by the
MAB itself.

Transfer of mining lease

Section 149 applies. A mining lease may not be transferred except to a person approved by the MAB after consultation with the owner of the ground covered by the lease. The board shall not approve the transfer to any person unless it is satisfied that the person is able to meet any payment which may become due under section 344.

No impeachment to title to mining lease

Section 153 of the Act provides for no impeachment of title to a mining lease on certain grounds.

Special Mining Leases

Special mining leases are covered in Part IX, being sections 158-168 of the Act.

Application for special mining lease

Section 159 applies. Where the holder of one or more contiguous mining locations intends to establish or develop a mine thereon, and:

Investment in the mine will be wholly or mainly in foreign currency and will exceed US$100 million, and the mine’s output is intended principally for export, he or she may apply in writing to the mining commissioner for a special mining lease in respect of a defined area within which his or her mining location or locations are situated.

According to section 159 (2) the MAB may permit a person to make an application for a special mining lease even though (notwithstanding that) either or both the criteria mentioned in section 159 (1)(a)-(b) will not be met, if the MAB considers that it is desirable in the interests of the development of Zimbabwe’s mineral resources to consider the grant of a special mining lease to the applicant. In such a situation the MAB considers:

The nature and size of the mineral deposits within the area over which the applicant seeks a special mining lease, and
The estimated life and economic viability of the proposed mine, and The extent of the investment that will be made in the proposed mine, and The proposed method of extraction, mining and treatment of ore from the proposed mine,
and Any other relevant circumstances.

Issue of a special mining lease

This is done in terms of section 163. The Minister (of Mines) shall forthwith issue a special mining lease if authorised by the President, in accordance with the MAB recommendations or other terms and conditions as the President may direct.

Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice. Laws may be subject to frequent changes. To be compliant, organisations and individuals are advised to consult adequately.

Godknows Hofisi, LLB(UNISA), B.Acc(UZ), CA(Z), MBA(EBS,UK) is a legal practitioner/conveyancer with a local law firm, chartered accountant, insolvency practitioner, registered tax accountant, consultant in deal structuring, business management and tax and is an experienced director including as chairperson. He writes in his personal capacity. He can be contacted on +263 772 246 900 or
[email protected].