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While Zimbabwe is committed to the global transition towards cleaner energy, amid growing calls for the adoption of such energy sources, the country says it has no immediate plans to dump its fossil fuel energy sources.

Secretary for Energy and Power Development Dr Gloria Magombo said in an interview that while efforts were underway to adopt cleaner energy sources, fossils remained a key element of Zimbabwe’s energy security mix.

Dr Magombo said Zimbabwe had demonstrated commitment to the global transition towards cleaner energy when it crafted a renewable energy policy, but will retain fossils in its energy mix.

She said while there was palpable growing conversation over the need to switch over to less carbon-emitting energy sources, Zimbabwe would stagger its transition over the period to 2050.

Dr Magombo said the movement towards cleaner energy sources, as provided for in terms of the global charter, will be anchored on the most viable alternatives available to the country.

“What is key is that the energy mix of a country is dependent on the resources within that country. It (however) is important to have a certain amount of power coming from renewable,” she said.

Dr Magombo pointed out that while cognisant of the growing pressures on financiers to stop funding fossil energy projects; Zimbabwe will seek to supply energy those that still have the appetite. Zimbabwe, Dr Magombo said, will continue to support investment and partnerships that seek to develop both fossil and renewable energy projects, among them coal bed methane, natural gas and hydro power.

“We are looking at engaging in an energy mix which is sustainable for us as a country…we are going to include a certain amount of renewable energy in our energy mix,” Dr Magombo said.

“As Government, we want to make sure that we optimise the use of our natural resources,” she said, adding Zimbabwe will also make full use of the most viable technologies available to it.

She stressed the country was not sitting on its laurels regarding the adoption of cleaner energy, saying apart from drifting towards renewables, it was switching to fossil technologies that limit less carbon emissions and dust.

“For instance, the technology that we are putting on Hwange Power Station 7 and 8 is not the technology that was used on Hwange Power Station (generators) 1 to 6,” Dr Magombo said.

It is an undeniable fact that the world is moving away from fossil fuels over environmental concerns. The shrill calls from environmentalists are getting louder and their influence expanding.

In the past, Zimbabwe has shown commitment to addressing the climate change issues by being among the first countries to ratify the United Nations Framework Convention on Climate Change.

Yet despite this, the country is considered to have failed to reduce carbon emissions released by its coal power stations, which account for a significant portion of the country’s power output.

Notably though, a less than 1 percent (0.2 percent), the country’s carbon emissions global footprint is deemed too insignificant to warrant any special attention or campaign to dump fossils.

Zimbabwe has reason to be worried, for the longer term. Coal, a fossil fuel and resource Zimbabwe has in limitless abundance, forms a major part of the Southern African’s country’s national energy policy.

For a long time, Zimbabwe has had its based load energy production capacity largely steeped in fossils, specifically coal. Its major coal power plant, Hwange, has an installed capacity of 900 megawatts.

The power station is however now only capable of producing half its design potential due to advanced age. But the Government has engaged Chinese firm Sinohydro to add two more generators with capacities of 300MW each.

Further, the Government has secured funding from India banks to finance nearly half a billion US dollar life extension programme on Hwange Power Station generators 1 to 6 to improve output.

But the recent withdrawal by the Industrial and Commercial Bank of China (ICBC) from financing RioZim’s 2 300 megawatt (MW) project, at the behest of environmentalists, is a cause for concern.

The southern African country is signatory to international treaties on transition to clean energy, specifically environmental targets under the United Nations’ National Development Goals (NDSs).

Former ZESA Holdings managing director Ben Engineer Rafemoyo, said while it was a good idea for countries to switch to renewables, it was unlikely Zimbabwe would make a full transition in 40 years.

He pointed out that the loudest calls for a transition to clean energy sources were coming from first world countries whose industrialisation and development was driven by fossil fuels.

Eng Rafemoyo also noted that while clean energy sources were the future, at this point in time they have their own limitations in terms of availability, especially wind and solar systems.

Business Weekly

Global oil demand is rising following an accelerated vaccination campaign and an economic recovery, pushing oil prices to two-and-a-half-year highs amid an output deficit.

Although an agreement for more output reached among the Organisation of the Petroleum Exporting Countries (OPEC) and its allies on July 18 is expected to calm rising oil prices, concerns for a further climb in the coming months or longer remain, which would dampen a global recovery from the Covid-19 pandemic.

Rising oil ouput

OPEC together with non-OPEC countries, known as OPEC Plus, agreed to boost oil production by 400,000 barrels per day (bpd) each month from August until December this year as demand increases.

Last year, the OPEC cartel cut production by a record 10 million bpd amid a pandemic-induced decrease in demand and dropping prices. Countries including Iraq, Kuwait, Russia, Saudi Arabia and the United Arab Emirates would see their baseline production rise from May 2022. By then, total output quotas of OPEC Plus will be adjusted upward from the current 43,853 million bpd to 45,485 million bpd.

Oil market fundamentals have continuously strengthened with oil demand showing clear signs of improvement and the Organisation for Economic Co-operation and Development stocks falling, as the economic recovery continued in most parts of the world with the help of accelerating vaccination programs, said OPEC.

Oil prices on July 19 plunged by more than 6 percent for both West Texas Intermediate (WTI) for August delivery on the New York Mercantile Exchange (NYMEX) and Brent crude for September delivery to below the level of US$70 per barrel.

Prior to the agreement, both crude oil spot prices and futures prices rose firmly in June amid higher oil demand from refiners and the transportation sector.

According to the latest monthly oil market report issued by OPEC on July 15, North Sea Dated averaged US$72,96 a barrel in June, while NYMEX WTI averaged US$71,35 a barrel for crude oil futures, with ICE Brent at US$73,41 a barrel.

Future oil prices worry

Although the OPEC Plus agreement has stabilised market speculation, market insiders remain mixed over future oil prices due to the uncertainties facing the global economy, particularly with the spread of the Delta variant.

Credit Suisse expects the average Brent crude price to settle at US$70  a barrel in 2021, up from a previous prediction of US$66,5, and WTI crude at US$67 from US$62.

“The oil market is still facing a supply deficit over the remainder of the year. This should limit the downside for oil prices,” said the London-based PVM Oil Associates in a research note.

“The market is clearly unsettled about the demand outlook. And rightly so. The rise in Delta variant cases is raising questions about the sustainability of demand,” said the note.

Even though some countries have lifted almost all restrictions, fresh constraints on economic activity are still possible if Delta becomes more rampant.

Phil Flynn, senior market analyst at the United States-based Price Futures Group, said OPEC’s deal should have supported oil yet more concerns are being raised about the Delta variant of the coronavirus. 

“It is now causing a risk-off situation that is weighing on global markets.”

UBS strategists said in a report that they “remain positive on oil” and maintain their forecast for Brent prices to rise to 80 dollars per barrel by the end of September. 

Global oil demand is now likely above 97 million bpd, up from a low of 78 million bpd in April 2020 and global demand is anticipated to exceed 99 million bpd this year.

According to OPEC’s monthly oil market report, global demand in 2021 is projected to increase by 6,0 million bpd to average 96,6 million bpd, and increase by 3,3 million bpd in 2022 to average 99,86 million bpd. 

 Xinhua.

Zimbabwe’s gold export receipts rose 23% to US$464.2m in the first six months of this year from US$377.9m achieved in the prior comparative period propelled by firming prices on the international markets.

The yellow metal was on average fetching US$46,600 per kilogramme (kg) during the reviewed period compared to US$35,600 per kg in 2020.

However, gold deliveries to the country’s sole buyer and marketer of the yellow metal, Fidelity Printers & Refiners (FPR), fell 6% to 9.948 tonnes during the reviewed period from 10.6 tonnes in the same period in the previous year.

“For the month of June gold export receipts went 113.1% up to US$141.5m from US$66.1m achieved during the same month last year, taking our total tally for the half year to US$464.2m from US$377.9m during the same period last year,” central bank governor John Mangudya told said this week.

“This is a result of firming commodity prices and improved mining policies which encourage miners to deliver gold through formal channels.”

Gold deliveries more than doubled to 2.92 tonnes in June 2021 from 1.409 tonnes during the same period last year due to improved mining policies introduced last month.

Mangudya said the US$141.5m export receipts achieved in June was the highest this year. He said this was the first time gold export receipts have breached US$100m this year. Before the June haul, April had the highest export receipt of US$97m.

Zimbabwe achieved US$78 in May.

Having realised that the country is losing over 2.5 tonnes per month, RBZ introduced   a 5% incentive for those who deliver above 20kg a month and cut royalties and the cost of importing cash on small scale miners to improve gold production in the country.

The central bank is now paying the prevailing international gold prices which had spurred on gold deliveries.

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

However, an FPR executive recently revealed that the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling.

Gold experts say given the current set up, Fidelity is guaranteed huge volumes of gold with smuggling expected to go down significantly.

Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said: “The sky is now the limit for the country’s gold sector as the authorities have put in place good policies that encourage deliveries through the formal channels.”

Business Times

Zimbabwe’s central bank has tabled a shareholding agreement for its subsidiary, Fidelity Printers and Refiners (FPR), almost eight months after a proposal to unbundle the company into two entities was announced.

The Reserve Bank of Zimbabwe (RBZ) wants to unbundle FPR into two entities — gold refining and printing and minting.

Under the proposal, RBZ wants to retain the printing and minting business but would dispose of its 60% shareholding in the gold refining unit.

RBZ governor John Mangudya (pictured) told Business Times this week an agreement on shareholding had been submitted and the deal would be concluded by the end of the third quarter.

“We have made significant progress on the FPR unbundling as we have submitted an agreement of shareholding to the relevant parties and they are going through them so that they will give us feedback on the issue,” Mangudya said.

Under the proposal, big mining houses have been offered a 50% stake in the gold refining unit, while the small-scale miners and FPR gold buying agents were offered 7% and 3% respectively.

The proposal follows the model of Rand Refinery, South Africa’s biggest refinery, which is owned by the five largest gold miners — AngloGold Ashanti, Gold Fields, Harmony, Sibanye Gold and DRDGOLD.

Mangudya said the unbundling of FPR is designed to partially privatise the gold refining business by allowing private players to acquire a stake therein and in the process secure and endear the private sector’s interests in the production and marketing of gold in Zimbabwe.

RBZ is expecting  that the gold producers’ compliance levels in the trading of gold will significantly increase the output due to the fact that gold dealers will be part of the decision-making process in gold trading.

The privatisation of FPR comes after lobbying from some players in the mining business.

Large scale miners’ representative arm, Chamber of Mines of Zimbabwe  CEO Isaac Kwesu said: “Some of our members are confirming the development but we only wait to hear from them if they have agreed or not.

“We don’t tell them to agree or turn down the offer but it is best for them to do so.”

Gold Miners Association of Zimbabwe chief executive officer, Irvine Chinyenze  said progress has been made in the unbundling processes.

However, there was a need to bring in more players in the gold buying sector to promote competition in the sector, he said.

“The unbundling process is going on smoothly but we need  more players in the buying of gold to be competitive and give the miners a good run  for their money,” Chinyenze said.

Among the country’s biggest gold producers are RioZim and Caledonia Mining.

FPR started refining gold in 1988, and at its peak producers from abroad sent in their gold for refining at its Msasa refinery. However, FPR has not used most of its installed capacity to refine 50 tonnes of gold per year.

With more gold expected through the formal channels, experts believe FPR full capacity will be reached by 2022.

Business Times

THE Zimbabwe dollar has slightly weakened to 85,63 against the United States dollar at this week’s foreign currency auction platform conducted on Tuesday.

Last Tuesday, the exchange rate at the auction was $85.50.

A total of US$46 million was allotted this week, according to the Reserve Bank of Zimbawe (RBZ) with the bulk of the allotment channelled towards raw material procurement followed by machinery and equipment.

The Apex Bank said a total of US$8,7 million was allocated to the Small to Medium Enterprises auction against US$37,3 million that was allocated to the main auction.

The main auction received a total of 402 bids from which 370 were accepted while 32 were disqualified. The SMEs auction received 588 bids with 544 accepted and 44 disqualified, it said.

The Chronicle

The Mines and Minerals Act (Chapter 21:05) (the Act) is the principal Act regulating the mining industry in Zimbabwe. 

There are several regulations and other Acts that apply. In this article an overview is given of the Act. Space permitting specific issues or parts of the Act will be dealt with in future.

Arrangement of the Act

The Act is arranged into twenty seven parts (27) from Part 1 to Part XXVII. Each part is made up of related sections. The key parts are explained below.

Preliminary Issues

These are covered in Part 1, sections 1 to 5 and cover aspects such as the Act’s short title, that rights to minerals are vested in the President.
It also includes how mining rights are acquired with respect to all minerals, mineral oils and natural gases. The interpretation section contains definitions of key words used in the Act.

Establishment and functions of the Mining Affairs Board (“MAB” or “the Board”)

Part 11, comprising sections 6-13, covers the establishment and functions of the MAB and that the Board shall exercise and perform the powers, functions and duties conferred and impose upon it by the Act. Broadly, the MAB deals with the granting of mining rights, their withdrawal or cancellation, approving certain mining agreements and transactions. The composition of the MAB is addressed.

Register of approved prospectors

Part III, made up of sections 14-19, applies. Prospecting means searching for a mineral deposit. The Secretary in the Ministry shall establish and maintain a register of approved prospectors. Details will include the prospectors, application to be an approved prospector, expiry of registration (5 years) and its renewal, cancellation or suspension.

Acquisition and registration of mining rights

Part IV, comprising sections 20-62, is of interest to many. Basic mining rights involve the right to prospect for mineral deposits, the right to carry on mining operations on a claim and leasing. 

The holder of mining rights is entitled to the exclusive right of mining any ore or deposit of any mineral which occurs within the deposit of any mineral which occurs within the vertical limits of the area covered in the mining location.

Any adult person who is a permanent resident of Zimbabwe or any duly appointed agent of such person may take out one or more prospecting licences on payment of prescribed fees.  According to section 23 a prospecting licence shall be valid for two years. Sale of prospecting licence is forbidden.

Section 26 covers land that is open to prospecting which includes all State and communal land, certain private land, certain land held under any enactment and requiring title from the State. 

Other sections cover the discovery of minerals or precious stones, registration of blocks, numbering of locations, pegging of sites, registration of sites, cancellation of certificate of registration of block or site and lost certificates of registration.

Mining leases

Part VIII, made up of sections 135-157, applies. In terms of section 135(1) the holder of a registered mining location or contiguous registered mining locations may make written application to the mining commissioner for the issue to him of a mining lease in respect of a defined area within which such mining location or locations are situated. The MAB decides on the application and its decision is final and without appeal.

Section 142(3) covers the conditions to be met for the application for a mining lease to succeed. Section 150(1) covers the rights enjoyed by the holder of a mining lease.

Special mining leases

Part IX, comprising sections 158 to 168, applies. Section 159(1) defines conditions for a special mining lease, essentially a minimum foreign currency investment and that the output therefrom should be principally for export. The special mining lease is approved or refused by the President upon recommendations by the MAB and Minister.

Rights of claim holders and land owners

Part X, being sections 169-196, applies. This part covers mining rights in respect of a registered block of precious metal reef claims.

Preservation of mining rights

Part XI, consisting of sections 197-221, applies. The part deals with aspects such as first inspection certificate, second inspection certificate and subsequent inspection certificates.

Royalty

Part XIV, comprising sections 243-254, is applicable. Royalties are charged on mining output. According to section 244(1) the miner of a registered mining location shall pay royalty on all minerals or mineral bearing products won from such location which have been disposed of by him or on his behalf, whether in Zimbabwe or outside during any month at rates set from time to time.

Payment to local authorities

Part XV, being sections 255-257 applies and deals with payments made to local authorities with respect to mining.

Abandonment and forfeiture

Part XVI, or sections 258-273, deals with abandonment of unregistered locations, registered blocks or sites, forfeiture of precious metal claims, of precious stones blocks, of mining leases or mining locations.

Registration of transfers, hypothecations, options, tribute agreements and conditions governing mining rights on reserved ground

Part XVII, being sections 274-282, applies. This is a key part of the Act and covers areas such as registration of transfer of mining locations, registration of hypothecation of mining location, hypothecation in respect in respect of loans granted to State and registration of tribute agreements, etc.

Approval of tribute agreements

Part XVIII, being sections 283-290 is applicable. In terms of section 284 every tribute agreement should be examined and approved by the MAB or Mining Commissioner.

Special grants

Part XIX, comprising sections 291-296, applies. In terms of section 291 (1) special grants to carry out prospecting or mining operations are issued by the Secretary and rights thereto are in terms of section 294(2).

Special grants for coal, mineral oils and natural gases

Part XX, being sections 297-307, applies. According to section 298 — rights to mine coal, mineral oils or natural gases may only be acquired under special grant. The special grant is approved by the President.

Some areas not covered

Many other parts of the Act have not been covered due to space considerations.

Disclaimer

This simplified article is for general information purposes only and does not constitute the writer’s professional advice. Due to the numerous laws involved frequent changes are inevitable. 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].

THE planned US$1,8 million steel manufacturing plant in Bulawayo through a joint venture agreement between Primetone Investment, a local company and an Asian group companies, Kanku International, has failed to take off due to funding challenges.

In February 2019, a delegation from Kanku International in India visited the site of the proposed project in Kelvin Industrial Site and announced their strategic partnership discussion to build the steel manufacturing plant.

Speaking by telephone yesterday, one of Primetone Investment directors, Mr Kudzai Mumvuri, said the planned project has fallen by the way side.

“We had some challenges with those guys (Indian investors), they failed to raise part of the money that was required and they left,” he said.

“However, by the end of this year because we have found an investor locally, we will be able to bring what is required and then start the project sometime next year.”

It is hoped that if the latest project plan materialises, the proposed enterprise would create 250 jobs. Mr Mumvuri said when they were mobilising equipment for the plant, some of the equipment that was at the project site was stolen, further delaying plans to kick-start the investment.

“The other hurdle that we also encountered for the project is that when we were also trying to look for the equipment, thieves broke into the place and stole all the copper pipes and copper gadgets,” he said.

“That stripping also had an impact on the project.”

It is hoped that the coming on board of this new steel producing company would bring a lot of benefits in the engineering, iron and steel sector and the country at large. Following the demise of the Zimbabwe Iron and Steel Company (Zisco) in 2008, the country is spending US$1 billion per year on steel related imports.

In addition, the closure of Zisco has also had some negative repercussions on the engineering, iron and steel sector, construction industry as well as the downstream industries.

Some of the companies have either scaled-down or closed operations as a result of the demise of Zisco, then the country’s largest integrated steel manufacturing plant in Africa.

At its peak in the late 1990s, Zisco employed 8 000 workers, producing one million tonnes of steel annually.

The Government, which is seeking a strategic partner to revive operations at the Redcliff-based steel plant, last month announced that it had extended expressions of interest on investors willing to invest in the defunct company due to the Covid-19 disruptions. 

The Chronicle

PRETORIA Portland Cement (PPC) Zimbabwe has declared a US$4,4 million gross cash dividend for the financial year ended 31 March 2021.

In its integrated report for the period under review, the holding firm noted that the economic environment in Zimbabwe was greatly affected by the Covid-19 pandemic.

“The resulting lockdowns increased unemployment and impacted operations, negatively influencing volumes in the financial year 2021.

“Nevertheless, PPC Zimbabwe recovered from the slow start to trade slightly above planned volumes for most of the year, declared and paid a gross cash dividend of US$4,4 million,” said the holding company. 

The Chronicle

CEMENT manufacturer PPC Africa suffered a major dent to its profitability as a result of the 75% depreciation of the Zimbabwean dollar against the South African rand, the company has revealed.

In its summarised consolidated financial statements, PPC revealed that the hyperinflationary environment in the country had affected the company’s overall performance

“The impact of hyperinflation accounting and the 75% depreciation of the Zimbabwean dollar against the South African rand reduced PPC Zimbabwe’s contribution to the group’s financial performance,” the company said.

“In light of the prevailing economic conditions affecting the value of the Zimbabwean dollar, PPC Zimbabwe is focused on cash preservation and maximising US dollar EBITDA [earnings before interest, taxes, depreciation, and amortisation].

“The business is financially self-sufficient and declared and paid a cash dividend to PPC of US$4,4 million in December 2020.

“Subsequent to the year-end, a further dividend of US$2,6 million was paid to PPC”

The cement manufacturing entity said it had received a further US$11,2 million  during FY 2021 from the Reserve Bank of Zimbabwe as the central bank settles the  debt from legacy funds.

It said despite the challenging economic environment and the impact of COVID-19-related lockdown restrictions on sales, PPC Zimbabwe cement volumes increased by approximately 10%, supported by ongoing infrastructure projects.

“PPC implemented price increases in local currency to offset input cost inflation and the devaluation of the local currency.”

It said despite the recovery in cement demand in most of its markets, PPC was mindful of the prevailing uncertainties around the COVID-19 pandemic and its impact on economic activity.

“PPC will remain focused on improving cost competitiveness and cash generation.

“It will take the necessary strategic and operational measures to ensure that it can continue to serve its customers, protect its employees, and implement strategic initiatives to ensure financial sustainability through all demand cycles.”

Newsday