Mining ZimbabweLatest Mining News, Policy and Industry Updates

Bindura Nickel Corporation (BNC) may have to rethink its smelter restart plans given the poor outlook of global nickel prices.

Initially, the smelter project was halted owing to low nickel prices, which made the plan unsustainable.

Twelve months ago, nickel prices hit a 16-month high of US$16 000 per tonne on the London Metals Exchange (LME).

At the time, market watchers even forecast the price to climb to US$70 000 per tonne over the next three years.

However, due to Covid-19, base metal prices, in general, have taken a knock.

Global economic data aggregator, Trading Economics, projects a significant decline in prices by year-end.

“Nickel is expected to trade at US$13 051 per tonne by the end of this quarter,” according to Trading Economics global macro models and analysts’ expectations.

“Looking forward, we estimate it to trade at US$11 406/t in 12 months’ time.”

Stockbrokers and market analysts Morgan & Co say the weakening nickel price may not be entirely caused by the pandemic, as anticipated increased demand due to electric vehicles (EVs) may not be as significant as expected.

“While the EV story has been cited as one of the drivers of nickel prices going forward, nickel demand from the electric car market will largely be dependent on the selection of energy storage technology, which is still to be decided by the major PEV manufacturers.

“Nickel is likely to form part of the cathode of choice. However, this is then a function of how large the battery will be in the respective vehicles,” said Morgan & Co.

“We note that nickel is generally the weakest of the so-called battery metals. Only 6 percent of output goes into batteries and nickel is still mainly a steel play (more than two-thirds is used in steel). Nickel is more tied to outlook for China’s economy.”

Nickel is essentially used by China to make nickel pig iron (NPI), a raw material for stainless steel production.

Commodities experts Wood Mackenzie have predicted an increase in nickel demand from EVs from 128-kilo tonnes (kt) last year to 265 kt by 2025 and 1,23t in
2040.

However, over that period the share of global nickel demand taken by EVs is expected to increase from only 4 percent in 2018 to 31 percent in 2040.

Growth in demand for nickel from EVs will take a long time to reach sustainable levels as a result.

For BNC’s short- to medium-term goals, this time span is too long.

Analysts S&P Global Economics have also lowered their short-term nickel price expectations.

“(W)e continue to expect the pandemic’s impact on global primary nickel demand to overcome supply-side support from
the additional negative pressure that the Philippine mining suspensions will have on China’s primary nickel output,” they said.

“In our Nickel Commodity Briefing Service report for April, we increased our forecast for the 2020 primary nickel market surplus to 48 000 tonnes from 11 000 tonnes previously, which would be the market’s first surplus since 2015.

“We, therefore, further slashed our 2020 average LME three-month nickel price forecast to US$11 915/t from US$12 036/t, a decrease of 14,7 percent year-over-year.”

BNC had earlier hinted that the rationale for the smelter was the need to get higher prices of nickel in leach alloy than nickel concentrate, including potential for an increase in revenue by between 15 and 20 percent per tonne.

The Sunday Mail

Chinese diamond mining company, Anjin has halted operations after an unconfirmed number of sta members reportedly tested positive for Coronavirus including its top management.

Reports coming from the ground indicate that at least two workers, one from top management and another working in the plant tested positive and the company has since instructed its workers to down tools.

A well-placed source who spoke on condition of anonymity said as workers they are terrified and in panic as they feel that they are exposed to transmission due to the company’s poor ablution and sanitation facilities.

The source said besides routine checks temperature checks and sanitization, workers have no personal protective equipment, while social distancing protocols are difficult to follow as they live in groups of eight.

“We have been told to stop operations because there are some people who tested positive for the virus. At least two people have been affected one from the plant and the other is from Human Resources, but we are afraid that more persons could have been affected.

“We have at least twelve persons who could have been affected in both night and day shifts because the ones who tested positive were in contact with others during their shifts.

“So far there is no communication from the management they are just silent. We have only been
told to stop working,” said the source.

“We are afraid and concerned that we will perish if there is nothing done on the ground.” Workers have also been told to keep this information under wraps by management which has a strict non-tolerance for workers divulging inside information.

Anjin company interpreter Progress Gwenzi declined commenting on the incident saying he was not directly on the ground and was waiting for confirmation on the ground.

Gwenzi, when contacted for a comment said he had no information as he was tied up in company meetings but he was later not picking up his phone.

“I am currently in a short meeting I will get back to you with regards to that information. I am still trying to establish the facts from the ground, once I get more details I will update you,” said Gwenzi.

However, sources on the ground say a health team has been dispatched on-site to test the workers who are on shift today amid fears that the numbers could spike as the company’s handling of the Coronavirus is shambolic.

The Bocha Diamond Community Trust (BDCT) has already expressed concerns that they could be exposed as a local community to the Covid-19 pandemic owing to alleged weak responses diamond mining companies.

In a statement, the Trust alleged that Zimbabwe Consolidated Diamond Company (ZCDC) handling of the deadly pandemic was lax and could unleash the virus into the community which mingles with its workers.

“ZCDC is promoting the unrestricted movement of massive numbers of people from other provinces to the Marange community. This is due to the fact that more than 80% of ZCDC workers at the diamond mine come from outside Manicaland.

“These workers are highly mobile as they frequent their homes during weekends, majority of the musing public transport. These mobile workers mix with our community thereby unfairly exposing our community to the coronavirus,” read part of the statement.

263Chat

The Bocha Diamond Community Trust (BDCT) has expressed concern over the exposure of the Marange Community to the Covid-19 pandemic owing to alleged weak responses by the Zimbabwe Consolidated Diamond Company (ZCDC).

In a statement, the Trust alleges ZCDC is threatening to unleash the deadly pandemic into the Marange community through its poor handling of Covid-19 cases and lack of contact tracing,

“ZCDC is promoting unrestricted movement of massive numbers of people from other provinces to the Marange community.

This is due to the fact that more than 80% of ZCDC workers at the diamond mine come from outside Manicaland.

These workers are highly mobile as they frequent their homes during weekends, majority of the musing public transport. These mobile workers mix with our community thereby unfairly exposing our community to the coronavirus,” read the statement

The Trust called on the Diamond mining company to alert the community on any outbreak than to have the community find out for themselves.

“ZCDC needs to be proactive in alerting the community on any outbreaks of Covid-19 among the mineworkers. If this information comes to the awareness of the community through other means which are unofficial then the community verifies the claims to be true, it will appear as if ZCDC is hiding away from community awareness the existence of an outbreak of Covid19 among its mine workers.

“Such verification of unofficial reports happened on the 11 of August 2020 when a joint operation Taskforce of community monitors from Bocha Diamond Community Trust (Moses Mukwada and Takura Betera), and Marange Development Trust (Malvern Mudiwa) visited the ZCDC premises at Zengeni.

Four workers who tested positive to Covid-19 were said to be quarantined at facilities at Zengeni Business Centre that are highly unsuitable for human habitation.”

BDCT adds “The community monitors heard that at least nine workers were reported to have tested positive to Covid19. Whilst we located 4 of them, we failed to establish the whereabouts of the other ve. ZCDC reluctantly confirmed the cases after persistent calls from the community monitors.”

ZCDC corporate communications affairs manager Sugar Chagonda dismissed the allegations saying the company is complying with Covid-19 regulations.

“In terms of mining regulations and our policies we have got restrictions and we are working with the Ministry of Health. On the ground movement, within and to the mine is regulated there are procedures to that effect even entry into the mines by our employees is restricted.

“We are following guidelines and protocols set by the WHO and we are working with the Ministry of Health and Child Care so I do not understand what that (BDCT claims) is supposed to mean in terms of our operations they are highly regulated.” said Chagonda.

The allegations come at a time the country is grappling with a spike in Coronavirus cases_263Chat

Following close to one and half decade search for investors, state-owned Zimbabwe Mining Development Corporation (ZMDC) has finally secured equity partners for most of its mining assets.

ZMDC, the holder of vast mineral resources including platinum, gold, coal bed methane, emeralds among others has surrendered a significant portion of its portfolio to private investors in the past two years as part of its strategy to unlock the country’s mineral resources.

The mining assets are a combination of greenfield projects and existing mines, some, that had closed down due to several reasons including lack of funding, structural failures, and the collapse of prices on international markets.

Works at some of the projects have begun.

This, the Government believes provides impetus to Zimbabwe’s mining target of lifting earnings to US$12 billion in the next two years.

The Government is looking at the mining industry as a cornerstone of efforts to revive Zimbabwe’s economy crippled by lack of foreign currency, high jobless rate, low production, and high levels of inflation.

Early this year, Landela Mining Venture agreed to buy four ZMDC gold mines and indicated plans to reopen them as soon as all agreements are in place.

ZMDC had been scouting for the investors for the mines for several years. The gold mines, namely Jena, Elvington, Sabi, and Golden Kopje can produce 85 000 ounces of gold per year, according to ZMDC.

Landela chief executive David Brown said agreements would be in place in the third quarter and funding would be a combination of debt and equity.

Sabi mine claims were first pegged in 1890 with the first recorded production in 1909.

It was acquired by ZMDC in 1984.

It stated experiencing challenges at the turn of the millennium but had been operating.

Elvington suspended operations in 2003 due to the collapse of one of its main shafts.

Landela, which has also acquired private owned gold and platinum and nickel assets is also looking at acquiring the Sandawana emerald mine in the South West of Zimbabwe.

On greenfield projects, Cabinet has since granted Amari Platinum Concession to Bravura, Kamativi Lithium Concession to Beijing PingChang, Lintmar, Zimbabwe Defense

Forces, Mbungu Coal Bed Methane (CBM) concession to Sakunda Holdings, Gwayi CBM Concession to Tumagole, and Lutope Lithium project.

Mberengwa Lithium Concession has been granted to Tsingchan, according to a recent report by the Ministry of Finance and Economic Development.

“The level of seriousness (by investors) is quite encouraging.

“Such projects take time but we are happy with the progress,” said a senior official with ZMDC who requested not to be identified because he is not permitted to talk to the press.

“Unlike in the past where we would have people pretending to invest, it is different this time.

“The commitment is there.”

Sakunda chief operating officer Mberikwazvo Chitambo recently said; “We are assembling technical teams so that we can feed necessary expertise in the boxes. What we intend to do depends on the number of resources. At that stage, we will be clear about what to do.”

Tumagole, a South African company owned by Thapelo Tshepe last year said the company had set aside R55 billion for the exploitation of coal bed methane in Lupane once a binding contract has been secured_Business Weekly

Despite the scrapping of Zimbabwe’s indigenisation equity thresholds on diamonds and platinum, investors remain sceptical as the policy is yet to be regularised into the law, the Chamber of Mines has said.

President Mnangagwa’s administration is stepping up efforts to exploit the country’s mineral resources to help revive the economy currently chocked by high inflation, shortages of foreign currency, devastating effects of the global Covid-19 pandemic, and high levels of unemployment.

The Government initially removed laws limiting foreign ownership of mining firms, except for diamond and platinum sectors to 49 percent.

While the policy was later extended to platinum and diamond, it is yet to be regularised into the law.

“In 2019, Government announced the removal indigenisation equity thresholds on platinum and diamond as is the case with other minerals,” the Chamber of Mines said in a recent petition to Government.

Notwithstanding this policy position, investors have remained sceptical as the policy is yet to be regularised into law.

“It is against this background that we appeal to the Government to urgently finalise the amendment of the indigenisation law to bring certainty to investors in the platinum and diamond sectors.”

The law, known as the Indigenisation and Economic Empowerment Act, was enacted during the era of late former President Mugabe and was meant to increase local ownership in the mining sector.

It was heavily criticised for denting investor confidence.

President Mnangagwa’s administration is hoping the removal of the laws would improve investment into the sector.

Last year, the Government unveiled an ambitious plan to increase investment in mining and raise the sector’s export earnings to US$12 billion by 2023. Some critics say the target was unrealistic.

Last week, the President launched the reopening of Anjin Diamonds in Chiadzwa where the company has so far invested US$38 million in reviving the mine.

The mine stopped operations in 2016, alongside other miners including Mbada Diamonds after the Government cancelled their licences.

President Mnangagwa said the level of investment in the mining sector would ensure the country would meet the US$12 billion target in the next two years.

In the past few weeks, the President toured coal mining firms in Hwange were considerable amounts of investment have been made.

In the petition, mining firms also appealed to have the foreign currency retention threshold from exports raised to least 80 percent and allowed to keep their excess nostro balances beyond a stipulated 30-day period.

The Chamber of Mines noted the current foreign exchange framework for the industry was characterised by inadequate foreign exchange retentions, uncompetitive price for the surrendered portion and the short 30-day compulsory liquidation of unutilised nostro balances.

Mining firms are allowed to keep up to 70 percent of their foreign currency earnings and the remainder is liquidated in local currency at the official rate.

It also warned that some mining firms had halted expansion project as they can’t raise funding due to high country risk profile.

“To sum up as the mining industry is set to increase capacity utilisation and
gain momentum towards the US$12 billion mining sector by 2023, it is imperative
for the government to address the challenges.

“Critical to this are policy consistency and predictability that promotes certainty and investor confidence,” said the Chamber of Mines_Business Weeekly

GWANDA-BASED gold mining company, Blanket Mine, which is owned by Caledonia Mining Corporation has recorded a 12,4 percent increase in gold ouput to  27 732 ounces for the first half ended June 30, 2020.

In the relative period last year, the mining concern registered 24 660 oz.

In a production update for the quarter and six months ended June 30, 2020, Caledonia said Blanket’s output for the quarter was 13 499 oz compared to 12 712 oz in the comparable period last year.

“A total of 13 499 ounces of gold were produced in the quarter while during the same quarter last year 12,712oz  were produced.

“A total of 27 732oz were produced in the first half of 2020 compared to 24 660oz in the first half of 2019,” said the mining group.

The Chronicle

CALEDONIA Mining Corporation says it is impressed by the performance of Gwanda-based gold mining company, Blanket Mine, which has recorded a 12,4 percent increase in gold output to 27 732 ounces for the first half ended June 30, 2020.

In the relative period last year, the mining concern registered 24 660oz. In a production update for the quarter and six months ended June 30, 2020, Caledonia said despite Covid-19 setback, Blanket’s output for the quarter was 13 499 oz compared to 12 712 oz in the comparable period last year.

“A total of 13 499 ounces of gold were produced in the quarter while during the same quarter last year 12,712oz were produced.

“A total of 27 732oz were produced in the first half of 2020 compared to 24 660oz in the first half of 2019,” said the mining group.

Tonnes mined and milled in the quarter under review increased by five percent compared to the same period last year while grade and recoveries also slightly improved. On the impact of Covid-19 pandemic, the dual-listed group said the infectious disease had a negligible effect on production in the quarter.

“Production continued at approximately 93 percent of target during the three-week lockdown, which started in Zimbabwe on March 30, 2020. Production subsequently returned to above-normal levels and production for the quarter was only 1,2 percent below target but was above target for the first half of 2020.

“Production guidance for 2020 remains unchanged at 53 000 to 56 000oz,” said Caledonia.

“Progress on the Central Shaft continued, but at a slower pace due to a reduced contractor team.

“If current travel and transport restrictions continue, delays in sourcing specialist contractors and equipment may delay the completion of Central Shaft.”

As part of a corporate social responsibility programme, Blanket has made substantial contributions of more than ZWL$1million to the country’s fight against Covid-19 in addition to incremental production costs of ZWL $509 000, which were directly related to the pandemic.

The mining group said it was on track to achieve on-mine cost guidance for 2020 of between US$693 to US$767 per ounce and all-in sustaining cost guidance of between US$951 to US$1 033 per ounce.

Caledonia’s April dividend of 7,5 cents per share was deferred and was paid in May 2020 when management had ascertained the negligible effect of Covid-19 on operations.

“The July dividend was increased by 13,3 percent to 8,5 cents per share following the continued strong financial and operating performance.

“Further dividends will depend upon, inter alia, Blanket maintaining production while also considering the balance between delivering returns to shareholders and pursuing the significant growth opportunities within Zimbabwe,” said Caledonia.

Commenting on the mining results, Caledonia chief executive officer Mr Steve Curtis said:

“I am delighted by Blanket Mine’s continued strong financial and operating performance in the second quarter of 2020.

“The management initiatives, which were implemented in 2019 have continued into 2020 and have resulted in a 12,4 percent increase in gold production in the first six months of 2020 compared to the same period of 2019,” said Mr Curtis.

The Chronicle