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Is Zim vulnerable as mining tips exports? registered 2,7 percent growth

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Is Zim vulnerable as mining tips exports? registered 2,7 percent growth

WHILE the Zimbabwe economy showed great resilience to pull through a Covid-19 ravaged year, after its exports recorded modest growth, the numbers indicate a worrying dependency on minerals and vulnerability to external price volatility.

Despite the Covid-19 pandemic, and expectations that world trade was set to fall by as much as 32 percent in 2020, amid disruptions in normal economic activity and life around the world, Zimbabwe still managed to record modest export growth.

 According to National trade promotion body ZimTrade, local companies were able to sustain exports regardless of the challenges to production and movement of goods that hit almost all countries across the world.

ZimTrade said on the basis of recent statistics from Zimbabwe National Statistics Agency, Zimbabwe’s total exports grew by 2,7 percent between January-December 2020 and the prior year.

Total exports last year stood at US$4,39 billion, up from US$4,28 billion in same period in 2019, but, falling short of the 10 percent growth targeted under the national export development strategy.

Worryingly though, in terms of product composition, primary commodities dominated the exports in 2020.

Of the 30 countries with the lowest human development indicators in 2001, 26 were among either the 54 agricultural Commodity Dependent Countries identified by the European Commission or 25 most mineral-dependent or 25 most oil-dependent countries in the world.”

Since Zimbabwe is looking at leveraging on its competitive advantages through natural resources, good climate, ecological endowment, and skills base, it is worthwhile expanding the export base to lower commodity dependency risks from global price fluctuations.

“The starting focus will be on enhancing food processing sub-sectors that the country has comparative advantages that have high export potential such as sugar, coffee/ tea, fruit concentrates and fish and aquatic products,” ZimTrade says.

Zimbabwe’s mineral exports stood at US$3,210 billion during the period under review, accounting for 73 percent of the total exports in 2020, indicating vulnerability to the dangers of global commodity price fluctuations.

Top mineral exports where nickel mattes (US$985 million), gold (US$982 million), nickel ores and concentrates (US$612 million), diamonds (US$141 million), ferro alloys (US$140 million) and platinum (US$134 million).

Given the contribution of the mining sector to the economy, there is need to enhance investments towards beneficiation and value-addition, ZimTrade said in its latest trade publication.

According to United Nations Development Programme, unpredictable commodity price fluctuations can significantly reduce national revenue and cost millions of jobs in a fell swoop.

“At the national level, fluctuating revenues make fiscal planning extremely difficult and this in turn makes it extremely difficult to plan sustainable social and economic development programmes,” the UNDP said in an earlier report.

Over the longer term, dependence on primary commodities heightens a country’s vulnerability.

This is because (non-oil) primary commodity prices exhibit a largely declining trend over the longer term.

When there is a deterioration in trade for non-oil primary commodity producers over the longer term, increases in volumes must compensate for drops in prices in for an economy to be able to afford the same level of imports.

Notably though, Zimbabwe recorded growth in processed food exports, which increased by 17,96 percent to US$115 million from US$98 million in 2019.

Horticulture, which is amongst the top four foreign currency earners for Zimbabwe, registered a 13,5 percent decline from US$68,8 million in 2019 to US$59,5 million in 2020.

The clothing and textile sector registered 29 percent decline from US$61,9 million in 2019 to US$44 million in 2020.

Exports from arts and crafts sector fell by 49,5 percent from US$10,4 million in 2019 to US$5,3 million in 2020.

Zimbabwe’s fish export value declined by 54,6 percent from US$6,5 million in 2019 to US$2,96 million in 2020.

 

Business Weekly

Co-operation between artisanal miners and companies gains momentum

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Co-operation between artisanal miners and companies gains momentum

Artisanal and small-scale mining (ASM) has long been portrayed as a source of environmental and social problems in developing countries.

But ASM has been being found to have both positive and negative impacts, and is estimated by World Bank data to employ at least 42 million people directly across the globe

The governments of Colombia and Peru are studying the possibility of centralizing gold purchases, in an effort to combat illegal and informal extraction.

“Another possible solution is the co-existence of artisanal miners with conventional mining companies,” says professor Marcello Veiga of the Institute of Mining Engineering of the University of British Columbia.

ANGLOGOLD ASHANTI AND B2GOLD ARE INITIATING A PROCESS OF CO-EXISTENCE IN THEIR GRAMALOTE PROJECT, IN COLOMBIA

“A co-existence system in which artisanal miners can work in areas of the mining concessions seems to be a feasible solution and successful examples are now happening in Latin America,” professor Marcello Veiga told MINING.COM.

According to Marcello Veiga, the obsession of governments to make artisanal mining legal and taxable ends up creating more illegality.

“Mercury has been smuggled from one country to another, the price has increased and the middlemen, who sell mercury at high prices and buy gold at cheaper rates, are the main beneficiaries,” he said.

Violence

In 2018, Continental Gold mining engineer Oscar Alarcon was killed and another one, Jorge Armando Tarra, shot 5 times after being attacked by four armed individuals in northwest Colombia.

The engineers were coordinating the company’s co-existence project in the Buritica gold mine.

“The company was providing technical guidance, creating plans for mining, geology, and that was against the interests of the criminals who dominated mineral exploration,” Tarra told MINING.COM.

“With the work of coexistence, criminal groups started to see a drop of almost 80% in the illegal exploration. The order of the crime bosses was to regain control of mining,” he said.

Investigations showed that the attack was ordered by the Clan del Golfo, one of the most powerful criminal organizations operating in the country.

Of the four hitmen identified by Jorge Tarra, one was sentenced to prison, two are facing charges, and one evaded capture.

Co-existence

Placer Dome organized in 1995 the artisanal miners already working
in the company’s area in Venezuela and separated a small part of the claim to allow them to work. The company also provided technical assistance to the miners and built a simple processing plant for them with grinding and concentration of gold without mercury.

“The approach also came with the added benefit of formalization and training for the miners, who eventually could be employed by the company. Unfortunately, the Placer Dome’s project did not proceed due to
technical and political reasons and all co-existence measures disappeared,” said Marcello Veiga.

Newlox Gold buys gold ore from mining cooperative in Costa Rica (Image: Newlox Gold)

AngloGold Ashanti and B2Gold are initiating a process of co-existence in their Gramalote Project, in Colombia. An assigned area in the
project mineral title was designated for the miners and the preliminary
drilling established a minimum gold reserve.

In Costa Rica, Newlox Gold is also working in partnership with local stakeholders, buying gold ore from an artisanal mining cooperative,with one plant processing 85 tonnes per day amalgamation tailings and a second being installed for 150 tonnes per day.

Canadian miner Dynacor currently buys gold ore from 6,000 artisanal miners, processing at its 330 tonnes per day plant in Peru.

In Ecuador, Lundin Gold has been working since 2005 in partnership with 4,000 artisanal miners at its Fruta del Norte gold mine.

Mining.com

Rare earth, uranium miners benefit from EV mania and dash of ESG

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Rare earth, uranium miners benefit from EV mania and dash of ESG

Rare earth miners and uranium producers are reaping rewards from the flood of money pouring into electrification and ESG investing themes.

Lithium producers have been more traditional beneficiaries of EV and the green energy push. But more recently, rare earth producers have also started to garner investors attention amid enthusiasm about electric vehicles.
Shares of MP Materials Corp., the largest U.S. based miner of rare earths, is up more than fourfold since Biden won the election four months ago, compared with an 86% gain in VanEck Vectors Rare Earth/Strategic Metals ETF.

Shares in the company, which went public via a SPAC deal in July, rose for a third day and were up 0.7% to $49.8 on Wednesday. Morgan Stanley initiated research on the stock on Tuesday, with a price target of $57.

MP is “a play on accelerating adoption of electric vehicles and electrification trends in wind turbines,” Morgan Stanley analyst Carlos De Alba said in a report on Tuesday. “If you like EV, you’ll love MP.” The stock has three buys, zero holds or sells and twelve month average analyst price target is $36.

THE URANIUM SECTOR COULD GAIN EVEN MORE AS SOME ARE SPECULATING THAT LARGE FUNDS ARE PROBABLY SLOWLY INCREASING THEIR POSITION IN THE SECTOR

Meanwhile, with supply tightening and ESG demand from investors ramping up, uranium stocks such as Denison Mines Corp. have surged more than 70% this year, compared to 23% gain in Global X Uranium ETF. The stock rose 2% on Wednesday.

“Uranium sector supply/demand balance is the tightest we’ve seen since pre-Fukushima,” said GJL Research analyst Gordon Johnson, referencing to 2011 nuclear catastrophe in Japan.

“When you add to this, uranium stocks are now gaining attention from ESG investors due to their low GHG footprint and quintessential role as a clean energy alternative, we see the set-up for incremental/new Uranium investments as opportune,” Johnson added, referring to greenhouse gas emissions.

The uranium sector could gain even more as some are speculating that large funds are probably slowly increasing their position in the sector, according to Johnson. “If true, this could go on for a long time as they build significant positions ahead of the inevitable price rise in the commodity,” he said.

The so-called rare earth metals are used in everything from lithium-ion batteries to electric vehicles, wind turbines and missile guidance systems. There are only handful of producers globally, with China controlling a majority of the sector’s production and capacity.

Uranium miner Energy Fuels Inc. announced on Tuesday it partnered with Neo Performance Materials Inc. to produce rare earth together. This pact prompted Stifel Canada to upgrade Neo Performance on Tuesday, citing rare earth as “multi-year growth opportunity.”

Both Energy Fuels and Neo Performance were up on Wednesday after a rally n Tuesday, bringing this year’s advance to 50% and 35% respectively.

Bloomberg News

Gold price touches 9-month low, pressured by firm yields

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Gold price touches 9-month low, pressured by firm yields

Gold prices slipped further on Wednesday as expectations of US Treasury yields moving higher on additional economic stimulus kept non-yielding bullion under pressure.

Spot gold declined 0.9% to $1,722.88 an ounce by 11:30 a.m., having fallen to a 9-month low of $1,702.40 earlier in the session. US gold futures were down 0.7% to $1,721.70 an ounce in New York.

Bikita Minerals upgrades plant

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Bikita Minerals upgrades plant

Zimbabwe’s largest lithium miner, Bikita Minerals has upgraded its plant which will now be able to beneficiate its own lithium ore and that of other players in the country.

The development comes at a time when Zimbabwe is being touted as a future major source of lithium.

“The entire plant at Bikita is now dedicated to beneficiating the ore.  We upgrade our raw mined material from 1.2% Li2O contained to a final product with 4.2% LiO2 contained,” Bikita Minerals managing director, Grant Hudson said this week.

Zimbabwe is the world’s fifth-largest producer of lithium after Australia, Chile, Argentina and China. The country is expected to account for at least 20% of the mineral’s supply on the world market in the near future.

Apart from Bikita Minerals, there are several other players in the sub-sector. These include Arcadia Lithium which has completed a feasibility study and is expected to start production this year.

Premier African Minerals is also working on starting production in Zimbabwe.

This means these players can utilise the Bikita Minerals plant for beneficiation.

Recently, the Minister of Finance and Economic Development, Mthuli Ncube, said lithium has potential to bring economic development to Zimbabwe.

Lithium is used in the manufacture of key components in the ICT industry, manufacturing of batteries and is also beneficiated into lithium carbon which has higher value on the market.

Bikita Minerals was established in 1950 and has reserves amounting to 10.8m tonnes of lithium ore grading 1.4% lithium thus resulting in 0.15m tonnes of lithium.

Business Times

EPOs delay, an insult to Mnangagwa’s US$12 billion mining industry

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EPOs delay, an insult to Mnangagwa’s US$12 billion mining industry

Poor work ethics and incompetency at the Ministry of Mines and Mining Development especially on delaying to grant or reject Exclusive Prospecting Orders ( EPOs) will affect the President’s vision for the Mining sector to achieve a US$12 Billion industry by 2023, Mining Zimbabwe can report.

Rudairo Dickson Mapuranga

According to the Managing Geologist for Great Centre Geological Services Kennedy Mtetwa by delaying to grant or reject EPOs the government is speculatively holding on to land that should be used by either an EPO holder or a small-scale miner.

“An EPO application freezes exploration ground for both the applicant and the smallscale miners. No one can work in an EPO application area that has been gazetted by the government. So the government won’t have granted nor rejected the EPO application. The exploration ground remains frozen from anyone.” Mtetwa said.

This means that the Mines and Minerals Act gives or allows the ground to be covered in expectation of an EPO being awarded which results in perspective areas earmarked for EPOs being covered but the EPO applicant not actually receiving permission to advance.

It is therefore Mining Zimbabwe’s advice that the granting or rejection of EPOs is not supposed to take more than 3 months for mining business to take place. According to Zimbabwe Miners Federation (ZMF) Vice President Ms Lindiwe Mpofu it was of importance for the government to grant EPOs as this would help small-scale miners apply for tributary claims from EPO holders.

“Granting EPO’s would help ease our plight as we can engage the Grant holders to mine out areas that are not suitable for large scale mining or mine out minerals that are not listed by them, remember you can only mine up
to a certain number of minerals and you can only mine those specifically.

It is long understood that the bigger mines use artisanal and small scale miners as an indicator for geological purposes and mapping in some instances and if vast areas are cordoned off for years without any activity it won’t be advantageous to the country or the growth of artisanal and small scale miners who are struggling to find areas to mine.” Mpofu said.

An EPO is a large area of ground targeting selected minerals for exploration. The maximum is 65,000 hectares in Zimbabwe and a minimum size is up to the company or individual to choose. EPO’s tenure is 3 years with an option to renew for another 3 years. EPOs are used by companies as first-pass exploration areas. This means that companies after doing the highly technical exploration studies will eventually drop the EPO ground in 3 years.

Large scale exploration is carried out under licenses issued by the Head of State and administered by the Mining Affairs Board as per the provisions of Mines and Minerals Act 12:05. Two titles are issued under large scale exploration depending on the mineral to be explored according to the act, which are Special Grant (SG) for energy minerals like Coal Bed Methane, natural gas, oil, and uranium, and EPOs for other minerals, example base metals, gold, diamond.

Lithium value addition key in Covid-19 period

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Lithium value addition key in Covid-19 period

Value addition is key to make sure that lithium miners in Zimbabwe benefit from the effects of the Covid-19 pandemic that has affected global prices.

Rudairo Dickson Mapuranga

According to energy experts, global supplies of lithium used to make electric vehicles (EV) batteries will fall short of projections for demand to more than triple by 2025 if prices do not rebound to fund expansions.

Lithium prices dropped last year due in part to the pandemic, the continued downward of global prices might affect mining growth and development.

Exporting Lithium after value addition brings more than export it raw, it also has a horizontal backward integration which will create employment even in the downstream industries thereby boosting the economy.

According to Chrome Miners Association Chairperson Mr Shelton Lucas value addition in the lithium sector can be achieved by the formation of lithium unions responsible for pushing for investments into infrastructure or even manufacturing of EV batteries in the country.

“This can only be achieved by the formation of a lithium association that rope investors to build the beneficiation infrastructure because the government is heavily laden with other pressing issues at hand and with greed and
corruption it will take years to realize the dream,” Lucas said.

Shelton said exporting lithium in its raw form benefits South Africa more than it benefits the country because South Africa will then process the lithium export or manufacture batteries thereby gain more than the producer itself.

“Lithium is not like gold it has other minerals embedded in it which can add value per ton and might also surpass the value of that trending mineral. Lithium has got Gold, Tantalite and Beryl just to mention a few as by-products.

“In their raw form, it will only boost the GDP of South Africa which is the main destination of raw lithium.

Companies that directly use lithium may be attracted by the availability of lithium in pure form not as raw form.” He said.

The lockdown measures introduced by governments globally have made impossible the extraction of lithium with many miners failing to find a market for their productions as most tech companies are closed during the lockdown.

For example, Lithium Australia an Australian listed company has announced that the covid-related restrictions have pushed the company to reduce its presence in Germany. The miner said that restrictions rendered the work in Saxony’s Ore Mountains “almost impossible.”

The failure by mining companies to mine has also affected other EV companies like Tesla with CEO Elon Musk complaining that the shortage of lithium has the production of cells to put new products like Semi truck into production.

Zimbabwe in 2019 produced 1,600 tonnes of lithium maintaining the same level as the
previous year’s total. Bikita mine in Masvingo Province in the south of the country is Zimbabwe’s largest operational lithium mine, and has been active since the 1950s.

Arcadia Lithium Project, a venture run by Australia-based miner Prospect Resources, is nearing commercial readiness. The mine is based just east of the capital Harare.

Another promising Lithium miner Mirroplex based in Bindura is currently in the exploration phase. Mirrorplex is expected to begin mining from between the end of 2021 to 2022.

Nyenje calls miners to adhere to safety and Covid-19 regulations

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Nyenje calls miners to adhere to safety and Covid-19 regulations

Zimbabwe Miners Federation (ZMF) chairperson Makumba Nyenje has called on small-scale and artisanal miners to avoid casual movements during the lockdown to curb the spread of the virus in the mining sector.

Rudairo Dickson Mapuranga

Nyenje who recently established an environmental safety and health administration organisation called Zimbabwe
Safety, Health and Environmental Trust (ZIMSHET) in an endeavour to reduce accidents in the small scale sector said miners were facing a double risk of the pandemic and accidents which needed a strong presence of support groups to minimise the hazards posed.

“Miners are allowed to work 24/7 during the lockdown period but casual movements should be restricted. Covid-19 pandemic is real and miners are facing double risk.

“Underground a lot of mine accidents are being recorded and on the surface, we need to stay safe from the Covid-19 pandemic.

“This is the reason I teamed up with some members to preach about safety, health, and Environmental protection issues,” he said.

Nyenje through ZIMSHET has called on small-scale and artisanal miners to 1. avoid close contact and overcrowding when working 2. clean and disinfect equipment and frequently touched surfaces, 3. sanitise or wash hands with soap, and 4. stay home if they feel sick.

ZIMSHET which will mainly focus its work in the Southern part of the country is looking forward to performing a safe small-scale mining sector through seeking to perform on behalf of relevant stakeholders functions such as mandatory inspections, serious accident investigations, and investigations of hazard complaints (imminent danger).

The organisation is also seeking to curb the pandemic in the small-scale mining sector by encouraging miners to ban visits as well as minimizing contract workers.

ZIMSHET has vowed to monitor the impact of the Covid-19 pandemic on the health and well-being of the communities miners are operating in and to assess where miners can come in to provide support.

According to Njenye ZIMSHET will encourage miners to safeguard the communities they operate in. “We are also looking forward to small-scale miners to practice corporal social responsibility so that communities appreciate the work of small-scale and artisanal miners,” Nyenje said.

Zimbabwe has been plagued with mine disasters over the past few months, often resulting in the death of scores of miners. However, most deaths have occurred at illegally run disused mines.

The Minister of Mines and Mining Development Winston Chitando underscored the need for orderly mining in the country saying this will go a long way in preventing mine accidents.

“Adequate, regular inspections are one of the critical things that we need to ensure that we mitigate against the accidents. According to the law, inspections at mining concessions should be done at least four times per annum.” Minister Chitando said.

This article was first published in  Mining Zimbabwe Magazine February 2021 issue

Angola seeks to boost diamond output, negotiating with major players

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Angola seeks to boost diamond output, negotiating with major players

Angola plans to boost diamond mining and open a new large mine in the east, aiming to produce 5.7 million carats there in 2023, or more than half of its total output last year, Mineral Resources and Petroleum minister Diamantino Azevedo said.

In an interview with Reuters, he also said the state-owned diamond company Endiama had been “instructed to negotiate with the biggest companies in the mining world to invest in the diamond subsector” in other projects, without specifying.
Asked if Angola was negotiating specifically with diamond majors De Beers Group and Rio Tinto to enter its mining sector, he said: “I confirm … The latest information we have is that the negotiations are going at a good pace.”

Angola – the world’s sixth-largest producer – produced 8 million carats in 2020, 23% below the initial plan and down from 2019’s 9.4 million carats due to the global economic meltdown from the covid-19 pandemic, Azevedo said.

But “the prospects for 2021 are encouraging” with two new projects due to start producing in the second quarter, and Angola targeting a total output of 10.1 million carats in 2022.

Despite the “unfavourable situation due to the lockdowns caused by the covid-19 pandemic, we are working to accelerate the start of production in Luaxe”, he said. The project in the eastern province of Lunda-Sul is close to the Catoca mine, now responsible for 70% of Angola’s diamond production.

It will begin pilot production this year.

“We are committed to transforming the Luaxe deposit in 2022 into a structured and organised conventional mine, expecting production of about 5.7 million carats in 2023,” he said.

With 41% each, Angolan state-owned company Endiama and Russia’s Alrosa are the largest shareholders of Sociedade Mineira de Catoca (SMC), owner of the Catoca mine.

SMC owns 50.5% of the Luaxe project, while Endiama and Alrosa each hold another 8%.

“Although Luaxe is in attractive project for any investor, its shareholding structure has already been established,” Azevedo said, without elaborating further.

Reuters

Alrosa reports 49% fall in profit in 2020

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Alrosa reports 49% fall in profit in 2020

Russian state-controlled diamond producer Alrosa on Tuesday reported a 49% fall in 2020 net profit to 32.2 billion roubles ($432 million) on lower sales and a weaker rouble.

The world’s largest producer of rough diamonds, which competes with Anglo American unit De Beers, said output fell by 22% to 30 million carats as it suspended mining at less profitable mines amid the pandemic.

Its revenue fell by 7% to 221.5 billion roubles.

A fourth-quarter recovery in global demand for diamonds, primarily driven by demand for jewellery, helped, the miner said.

“At the end of 2020 and during the Christmas holiday season, sales in the key markets – the United States and China – were growing at double-digit rates year on year,” Chief Financial Officer Alexey Philippovskiy said in a statement.

Alrosa expects to produce 31.5 million carats in 2021 and plans capital expenditure of 25 billion roubles, down 4 billion from its previous guidance but up from the 17 billion it spent in 2020.

Its diamond stockpile stood at 20.7 million carats at the end of 2020.

($1 = 74.5300 roubles)

Reuters

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