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.
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
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.
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.
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 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.
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
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
One of the world’s biggest copper companies has good and bad news for buyers hit with the highest prices in almost a decade.
On the bright side, prices are already well above the incentive level for new projects that would help ease the supply squeeze. Unfortunately, it can take twice as long to build mines now than in the past, meaning the market wouldn’t see that new supply for eight to ten years.To be sure, Southern Copper has its hands full in terms of projects in Peru and Mexico and isn’t looking to accelerate the build-out in any meaningful way. But other companies probably will given copper prices are well above $4 a pound versus last year’s average of $2.80, Jacob said. He put the incentive price for new projects at $3.25 to $3.50 a pound.
“If this price level holds, we should see announcements of new projects coming in the market,” Jacob said in an interview Monday. But the lags from decision to production will make the copper price cycle “a little bit longer than in the past.”
The next generation of copper mines will have to contend with lower ore quality that can push up costs while adhering to higher environmental and social standards.
That’s part of the reason Southern Copper won’t be accelerating its expansion plans to tap higher prices. Projects take “as long as they need to be safe,” he said. “You shouldn’t cut corners to get there.”
The company, like its peers, is awash with cash. Current copper prices indicate a record year of earnings before items in the $5 billion range, Jacob said. While the spending priority continues to be its project pipeline, Southern Copper will look at acquisition opportunities that come along and make recommendations to the board, he said.
“Valuations would be higher because of the better price environment, but at the same time our own valuations will be higher,” Jacob said. With a balance sheet that he said “is probably underutilized,” Southern Copper trades at 24 times estimated earnings, well above its peer group’s median ratio.
In terms of the type of opportunities that might interest the company, he said it would all come down to asset quality.
“We feel comfortable in Latin America and very comfortable and positive about copper,” he said.
Bloomberg News (By James Attwood)
Gold prices have trended lower since the start of 2021, amidst rising US treasury yields and an increasingly positive outlook for the economic recovery.
Investor sentiment towards gold has also continued to ease significantly in recent months following the rally recorded in H120 and the peak in prices reached in August last year.
Gold prices could remain supported over March-April as inflation will likely pick-up and could rise faster than bond yields sending real bond yields even in more negative territory, market analyst Fitch Solutions predicts in its latest industry report, adding that this will likely push real interest rates lower in the near term, temporarily boosting the appeal for gold.
Fitch forecasts gold prices could see some volatility in the coming weeks as financial markets assess incoming inflation readings.
However, the analyst believes gold prices will trend lower on a six-to-twelve-month horizon given its expectations for bond yields to rise this year and as macroeconomic uncertainty eases.
As such, Fitch is revising down its 2021 gold price forecast, to an average of $1,780/oz from $1,850/oz previously.
A key gold driver to monitor in the coming weeks will be rising inflationary pressures. Fitch’s Macro team expects inflation to pick up over the coming months but believes that it will only be temporary as base effects will start to wear off around Q321 and that significant slack in the economy exists.
This helps to underpin the analyst’s view for gold prices to remain supported in the near term, before they ease later in the year as inflation pressures fade and as bond yields continue to rise. However, Fitch notes that a stronger-than-anticipated rise in inflation readings or inflation expectations could provide significant a temporary tailwind to gold as it is traditionally seen as a hedge against inflation.
Prices will be driven by both upside and downside pressures in 2021, but Fitch believes the balance weighted to the downside. The analyst’s forecast implies prices will trend lower overall this year and in 2021, the average price will be similar to the $1,773/oz average in 2020.
Fitch maintains its forecasts for 2022 and beyond, expecting gold to trend lower in the coming years as monetary policy continues to normalise, and as the US Fed raises interest rates and winds down its balance sheet.
Fitch continues to hold a below-consensus view on gold prices, in 2021 and beyond.
Mining.com
The granting of tax exemptions to Great Dyke Investment (GDI) reflects unlimited ministerial powers which can be abused if there are no ‘clear and published guidelines’ on the granting of tax incentives, a local environmental lobby group has said.
Donald Takudzwa Nyarota
In an analysis of the tax exemption policy, the Zimbabwe Environmental Law Association (ZELA) said the lack of transparency and access to information in the mining sector fuels suspicions and makes it difficult to estimate the potential revenue loss.
ZELA said the GDI tax exemption saga is complicated by the lack of public disclosure of the beneficial registry, a situation that can lead to corruption and money laundering’ and fuel Illicit Financial Flows (IFFs).
“Given the opaqueness of the extractive sector, it is very difficult to identify the persons who control the platinum mining project. Secretive corporate structures and anonymous business entities scattered in various jurisdictions are a breeding ground for tax evasion and profit shifting to tax havens.
“There are risks of Illicit Financial Flows (IFFs) in the project as it is alleged that the biggest shareholder of the Landela Mining Venture Limited (Sotic International) is linked to Mauritius, which is a known tax haven.
“The major challenge is that negotiation and performance monitoring of contracts or agreements that the government sign with foreign investors is secretive prompting the public to suspect that the deals are targeted to benefit the investors at the expense of the country and a sense that the burden of taxation is unfair. To increase contract transparency, parliament should exercise its oversight role through contract performance monitoring and during approval of agreements with foreign entities and organisations.
“Parliament’s oversight is critical in ensuring that bad deals are avoided as both government and corporate negotiators will be aware that there is a third eye watching. The parliament must access the contract signed with the Russians and investigate it,” said ZELA.
ZELA said while the Minister of Finance may grant tax incentives to investors, he can also use discretionary powers without due diligence, as could be the case with this exemption, which raises transparency concerns.
“As it stands, the agreement in terms of which the exemption was made, was not made public by the government thus limiting the ability of citizens and CSOs to hold the government to account. So it is difficult to say that there was merit in government granting the income tax exemption because there is no public disclosure of the terms and conditions that were agreed upon.
“The sheer size, at least on paper for now, of the investment and its potential to provide huge economic benefits to the country could have significantly influenced the decision to warrant the project a Special mining lease.
“However, the discretionary powers given to the Minister and President ( in case of the Mines and Minerals Act) to grant tax exemptions can be easily abused in a political and economic context where contract disclosure is lacking and where political actors may hold economic interests or intend to benet from the tax exemptions.
“Dyke Investment a tax incentive is not clearly stated. The good intentions of this exemption can be theoretically deduced. However, the possible abuse of discretionary powers can also be deduced. The discretionary powers given to the Minister may lead to unjustifiable tax exemptions,” read part of the statement.
The Ministry of Finance and Economic Development granted a 5-year tax exemption GDI on the 27th of January 2021 through a Statutory Instrument 26/20211 cited as Income Tax (Exemption from Income Tax) (Great Dyke Investments (Private) Limited) Notice, 2021, effective from 1 January 2021.
The move will see the platinum mining company being exempted, on three fronts, from paying, income tax for a period of ve years, forego paying resident shareholders’ tax payable on dividends paid to its shareholders resident in Zimbabwe, and any additional profits tax.
ZELA called for the Ministry of Finance to ‘urgently develop Guidelines on granting incentives for investors including those for the mining sector, or if the guidelines already exist, they should publish them to promote transparency and accountability’.
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