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Mining earned more than 3,4 billion

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The mining sector earned more than US$3,4 billion last year, driven by high international metal prices and record breaking output particularly for gold, diamonds, chrome and nickel.

This saw the Zimbabwe Revenue Authority (Zimra) getting over US$95 million in mining royalties.

Statistics gleaned by The Sunday Mail Business showed that the sector had out a solid performance, consolidating its position as a critical pillar of this economy.

Although Minerals Marketing Corporation of Zimbabwe (MMCZ)’s corporate communications executive Ms Pretty Musonza, said the actual figures were not yet ready, told The Sunday Mail Business last week that overall mineral output and foreign currency generation statistics for last year are not yet ready, information at hand shows the sector realising significant growth un earnings.

Ms Musonza revealed provisional figures point to “an increase from the 2017 figures”.

“The figures for last year have not been finalised. They should be ready in the near future,” said Ms Musonza.

“However, I can confirm that indicative figures point to an increase from what the sector achieved in 2017.”

MMCZ, which was established through an Act of Parliament (MMCZ Act Chapter 21:04), is an exclusive agent for marketing and selling of all minerals produced in Zimbabwe except silver and gold.

Figures obtained by The Sunday Mail Business last week from top mining industry sources, show that the country could have generated in excess of US$3,4 billion, up from $2,3 billion in 2017.

Preliminary figures show that Platinum Group of Metals (PGMS) matte rose 33 percent to 15 115 metric tonnes, and generated about US$625,9 million.

In monetary terms, PGMS matte recorded a 17 percent rise compared to 2017.

However, PGMS concentrates output declined 14 percent to 134 316mt from the prior year, and recorded a 10 percent decline in foreign currency generation to US$411,3 million.

Chrome concentrates output increased by 26 percent to 658 306mt and generated US$102,6 million with nickel output also rising by 9 percent to 61 073mt and raked US$59 million.

Output for chrome ore lumpy also jumped by 20 percent to 160 623mt and generated US$16,2 million, which was also an 18 percent surge from 2017.

High carbon ferrochrome (HCFC) declined 26 percent to 287 835mt and brought US$272 million into the country.

The above minerals alone generated just over US$1,4 billion.

Gold output hit a new high of 33,3 tonnes last year, mainly driven by small-scale miners who contributed 21,7 tonnes, and generated US$1,7 billion in foreign currency.

Gold is bought by Fidelity Printers and Refiners (FPR), a unit of the Reserve Bank of Zimbabwe.

The yellow metal’s performance represents more than 65 percent of Zimbabwe’s mineral export receipts last year.

Gold overshadowed tobacco, which raked US$882 million after 253 million kgs went under the hammer.

With diamond output surpassing the 2,4 million carats target to end the year on 2,8 million carats, more money is expected from that sector, and experts see mineral export receipts topping US$3,4 billion.

In the first eight months of last year, lithium posted a 45 percent rise from 34 110 tonnes to 49 359 tonnes; granite rose from 109 600 tonnes to 160 600 tonnes and coal increased by 4 percent from 2,3 million to 2,4 million tonnes.

Zimra gets US$95m from mining royalties

The national tax collector reported last week that the mining sector contributed US$95,67 million in royalties, spurred by a commendable rise in global mineral prices.

The impressive performance of the revenue head represented 6,3 percent jump from the US$73,11 million achieved in 2017.

Zimra’s 2018 revenue report released last week says: “The revenue head (mining royalties) contributed US$95,67 million against a target of US$90 million, translating to a positive variance of 6,30 percent.

“Revenue collections grew by US$30,86 million from the US$73,11 million collected in 2017. The performance of the revenue head was influenced by the movement of international commodity prices.” Mineral prices largely surged in the first and fourth quarters of 2018, thereby enhancing revenue collections.

Zimbabwe benefited from increased output for major minerals such as gold, platinum and diamonds.

Chamber of Mines of Zimbabwe chief executive officer Mr Isaac Kwesu, said the jump in mining royalties was indicative of the growth of the mining sector.

“I think that it’s a sign that when the sector grows, its contribution to royalties and fiscus and the economy at large, will also increase,” said Mr Kwesu.

“So it (increase in mining royalties) was on the back of improved performance of the industry and output growth relative to mineral prices.

“It was good news for the country. So when the mining sector is growing, its contribution would not be limited to royalties, it also means that it can contribute more to other tax heads such as corporate tax, payee (pay as you earn); its contribution expands. But the principal point remains that as long as the mining sector is in the growth trajectory, it also means it contributes to the fiscus and the economy at large and social being of people.”

2019 outlook

Mr Kwesu contends that mineral output will continue to rise this year, especially if Government addresses the cost of doing business in the country.

“The challenge remains the high cost structure in the industry but as long as we manage to produce cheaply, as long as we secure inputs cheaply, as long as we get capital cheaply, I think the sector is poised to expand output.

“We know that the authorities are doing something about the challenges we face as a sector and the industry continues to engage,” said Mr Kwesu.

He said the mining sector must take advantage of the rising global prices, “otherwise we miss the opportunity”, if the country does not increase output.

“So I think stakeholders, miners and Government, we must do everything possible so that we benefit from the expansion in the global economic output,” said Mr Kwesu.

Government wants the mining sector to generate US$12 billion revenue by 2025.

The Sunday Mail

India thermal coal imports rises

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India’s 2018 thermal coal imports rose at the fastest pace in four years, according to two industry sources, despite moves by Prime Minister Narendra Modi’s government to cut imports in a bid to reduce its trade deficit.

Coal is among the top five commodities imported by India, one of the world’s largest consumers of coal, and the rise in imports of the fuel after two consecutive years of decline adds to its trade deficit.That trade gap has been hurting the valuation of the rupee, the worst performing major Asian currency in 2018.

Thermal coal imports jumped 19 percent to 171.85 million tonnes in 2018, the highest since 2014, according to data from American Fuels & Natural Resources. Thermal coal is mainly used to produce electricity.

Imports of coking coal – which is mainly used in the manufacturing of steel – rose at the quickest rate since 2015 – according to consultancy firm Wood Mackenzie and American Fuels & Natural Resources, a trader of U.S. based coal.

India imported 52.26 million tonnes of coking coal in 2018, up 14 percent from 45.93 million tonnes in 2017, the data showed.

The value of all coal imports for the nine months ended December 31, 2018 was 31.4 percent higher at 1.38 trillion Indian rupees ($19.45 billion) than it was in the same period in 2017, according to government data reviewed by Reuters.

The value of India’s coal imports was 1.38 trillion in all of 2017.

Traders say coal imports grew largely due to restrictions on consumption of petroleum coke, a dirtier alternative to coal, in some parts of the country.

“2018 was a booming year for coal imports in India, mostly on the back of demand from cement and small and medium-scale industries in India,” said Puneet Gupta, founder of online coal and petcoke marketplace Coalshastra.

“Higher demand was also fuelled by restrictions on the use of petcoke,” he said. Petcoke consumption dropped about 15 percent in 2018, according to government data.

Imports of coking and non-coking coal totalled 176.65 million tonnes in the April-November period, compared with 156.92 million in the same period last year.

While higher coal imports may be bad news for India’s trade deficit, they are a boon for international miners such as Indonesia’s Adaro Energy, Australia’s Whitehaven Coal , U.S, coal miner Peabody Energy Corp and global commodity merchants such as Glencore.

Indonesia provided more than 61 percent of India’s thermal coal imports, while South Africa accounted for 22 percent and the United States more than 7 percent.

Imports of U.S. thermal coal, which burns better compared with Indonesian coal, almost doubled to 12.46 million tonnes in 2018, according to American Fuels.

The ports of Mundra, Krishnapatnam and Kandla handled about 37.5 percent of all of the the thermal coal imports, according to American Fuels.

The Adani Group, which handles about a third of India’s imported coal, said last year it expects a “reasonable rise in imports” till fiscal year 2021 due to “rail transportation challenges” affecting India’s domestic coal industry.

Analysts say they expect India to be a key market for global miners in 2019 as China’s “war on pollution” will lead to lower demand from that country.

Reuters

ZSE engages suspended Hwange Colliery

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THE Zimbabwe Stock Exchange (ZSE) says it will engage suspended Hwange Colliery Company Limited (HCCL) in an effort to set a new course for the troubled miner.

HCCL was suspended from the ZSE last November after it was placed under reconstruction by the government in terms of section 4 of the Reconstruction of State Indebted Insolvent Companies Act, although shareholders are contesting the legality of the move, given that the company is listed.

The coal miner is also listed on the London and Johannesburg stock exchanges.

“It is known that the suspension of the HCCL was a result of action that was taken by government to place the company under administration unilaterally without consulting other shareholders. We have since reached out to the HCCL, via the administrator, and requested an engagement with them,” ZSE chief executive Martin Matanda told NewsDay.

DBF Capital co-founder Bekithemba Moyo was appointed the chief administrator and is assisted by commercial lawyer Mutsa Remba and Great Dyke Investments chief operating officer Munashe Shava.

He revealed that the local bourse would seek clarity on a number of issues concerning the current state of affairs at the coal miner.

“Our engagement with Hwange Colliery will solely be to get to understand, from the perspective of the administrator, a number of issues around the company, which is part of our mandate as the ZSE. We suspended the company as per regulations and we are now following up to go deeper into how this situation obtained and what should be done going forward,” Matanda added.

The ZSE, Matanda said, was keen to understand how long the HCCL would be run by the administration team.

This, he said, would also help the bourse understand when the company would revert to being run by the board and management.

“The term of the administrator and when it will end is crucial for us because we would be able to determine whether there is a chance the company would return to normalcy and whether it (HCCL) can be re-admitted back to the exchange,” he said.

Other major shareholders in Hwange are the State-run pension fund, the National Social Security Authority (6,23%), and Mittal Steel of South Africa (9,68%).

The company, saddled with debts in excess of US$350 million and misappropriation of US$6,4 million, was beginning to show signs of recovery after creditors agreed to a scheme of arrangement in 2017, but it slipped back into distress as a messy fallout between management and the board reached catastrophic levels, prompting the government to place it under reconstruction.

NewsDay

ZCDC to carry exploration in Marondera

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STATE-RUN diamond firm, Zimbabwe Consolidated Diamond Company (ZCDC), says it will carry out exploration work for gems in Marondera district as part of its expansion scheme.

With alluvial diamonds fast running out in the Marange area, the company has been spreading out, with exploration work planned for Chimanimani, Kezi, Binga and Mwenezi.

Early this month, State media reported that the company would invest $32 million in exploration projects to support a resource definition and expansion programme with output forecast to reach an ambitious 4,1 million carats by year end from 1,7 million carats produced in 2018.

“Zimbabwe Consolidation Diamond Company intends to carry out mineral exploration in Chihota communal lands in Marondera district,” the notice reads.

“According to the Environmental Management Act, this development requires that an Environmental Impact Assessment (EIA) be carried out. As such, ZCDC contracted the Scientific and Industrial Research and Development Centre to conduct an EIA study for the diamond exploration project”.

ZCDC was established in 2016 after government kicked out firms mining in the Marange diamonds fields and nationalised their operations resulting in national diamond output falling to 961 000 carats.

At its peak in 2012, Zimbabwe’s diamond sector produced 12 million carats.

 

NewsDay

Unki Platinum reported a 15% production increase

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ANGLO American Platinum’s local unit, Unki Platinum, reported a 15% production increase to 85 900 ounces in the full year to December 2018 up from 74 600 ounces recorded in prior year driven by an improvement in operational efficiencies.

Quarter on quarter production was down 2% to 22 000 ounces from the 22 400 ounces recorded in the third quarter.

“Unki platinum production increased by 34% to 22 000 ounces and palladium production increased by 38% to 19 600 ounces due to a strong operational performance with a 20% increase in tonnes milled, 10% improvement in recovery and 3% improvement in built-up head grade,” Unki said in a production update.

Palladium production was up 38% to 19 600 ounces compared to 14 200 ounces recorded same period last year.

The company’s $62 million platinum processing plant is now complete and is envisaged to be commissioned this year.

Construction of the plant begun in 2016 after government threatened to shut down mines exporting unprocessed ores.

Government then introduced a 15% tax on the exportation of unbeneficiated platinum, with a view to compel mining companies to expeditiously transition towards beneficiation of the mineral.

In view of the progress and commitments made by platinum group of metals producers towards beneficiation, government, through the 2019 budget, postponed the export tax to January 1, 2022.

Previously, all three platinum miners which operate in Zimbabwe-Unki, the Impala Platinum owned Zimplats and Mimosa mine, a joint venture between Sibanye Gold and Impala, would send their mate for refining in South Africa.

According to the central bank, the country exported platinum valued $566,9 million during the first half of 2018.

 

NewsDay

Global aluminium production at weakest performance since 2009

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Global aluminium production grew at its slowest pace in a decade in 2018, and most of that was in the first half of the year.

It was the weakest production performance since 2009, when the industry was battered by the global financial crisis, a collapse in prices and multiple smelter closures.Output totalled 64,34 million tonnes, according to the International Aluminium Institute (IAI), up by just 1,5 percent on 2017. Production did no more than flat-line over the second half of 2018.

Even China, the world’s dominant producer, ran out of expansion steam last year with growth of 1,6 percent, while the rest of the world managed just 1,4 percent.

For the world outside China it was a year of unusually high disruption rates but for smelters everywhere the real problem is price.

As articulated by US producer Alcoa last week, at current prices some 30-40 percent of the world’s smelters are losing money.

The IAI’s assessment of Chinese production last year jars with the official figures from China’s National Bureau of Statistics (NBS).

The NBS figures suggest China’s output surged to a record high of 3,050 million tonnes in December with full-year output apparently up 7,4 percent.

This is a “record” only within the troubled parameters of the official count, which started losing credibility some time during Beijing’s “illegal” capacity closure campaign  of 2017.

The IAI now compiles its own estimate with inputs from three Chinese research companies — Aladdiny, Antaike and China Nonferrous Metals Industry Association — as well as international research house CRU Group.

The difference between the NBS figures and those published by the IAI is dramatic.

The IAI’s estimate of Chinese production in 2017 was 3,65 million tonnes higher than that of the NBS. The gap last year was a still significant 700 000 tonnes.

That’s a lot of aluminium to go statistically missing, creating an element of double vision in trying to figure out how much metal the world’s largest producer is actually producing.

The IAI’s version of Chinese smelting reality is more internally consistent and tallies better with the accumulating evidence of smelter curtailments towards the end of last year as Shanghai prices sank to two-year lows.

Smelter margin compression is proving a more powerful driver of short-term production trends than the winter heating season restrictions but these haven’t totally disappeared either, witness the expected 500 000-tonne hit to Hongqiao Group ordered by the city of Binzhou in Shandong province.

The fact that Chinese production grew at all last year is a reminder that new capacity is still being brought on line.

Outside of China production growth was dampened by an unusually high level of disruption.

Latin American output has been in long-term decline for a decade but dropped another 15 percent in 2018 due to a 50 percent curtailment of the 450 000-tonne per year Albras smelter in Brazil.

Hydro, which operates the plant, has trimmed operating rates to match lower supplies of alumina from its Alunorte refinery, currently operating at half capacity as mandated by a Brazilian court on environmental grounds.

In North America, capacity restarts by Alcoa, Century Aluminum and Magnitude 7 Metals (the old New Madrid smelter) were completely offset by the loss of production from the Becancour smelter in Canada.

A union lock-out has been running for more than a year and production at the smelter fell to 136 000 tonnes in 2018 from 438 000 tonnes in 2017, according to minority owner Rio Tinto.

Alcoa, majority owner and plant operator, said in December it would curtail half of the one line still operating at the plant to align it with the number of salaried employees remaining.

The Becancour impact translated into North American production falling for the fifth straight year, recording an annual drop of 4,5 percent.

There were smaller outages at the Dunkirk plant in France and Hillside in South Africa earlier in the year, both of which served to reduce marginally output in those regions.

The only area of significant geographical growth was the IAI’s non-China Asia region, which captures the continued build-out of capacity in India.

And despite grabbing many of the year’s headlines, US sanctions on Russia’s Rusal appear to have had no impact whatsoever on the company’s smelter operating rates.

Eastern European production last year came in at 4,05 million tonnes, up 1,25 percent on 2017.

Reuters.

Freeport profits less as copper prices drop

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Freeport McMoRan Inc shares slid 9 percent on Thursday after the world’s second-largest copper miner posted lower-than-expected quarterly profit and forecast a drop in 2019 production.

A 14 percent dive in copper prices slammed the company in the fourth quarter, yet the chief executive officer said U.S. demand remains strong and underpins Freeport’s plans for a major expansion in the United States.

The average price Freeport received for its copper fell 14 percent during the quarter to $2.75 per pound.

Still, the first quarterly results report from a global miner rattled investors at a time when customer confidence has been shaken by trade tension and shaky economies in many regions.

Rivals Rio Tinto Ltd and BHP Group Ltd are slated to report results next month.

Global demand for copper, a key material used in construction and manufacturing, has slipped in the past year on concerns about economic growth during the ongoing trade spat between the United States and China, Brexit, the U.S. government shutdown and other factors.

The average price Freeport received for its copper fell 14 percent during the fourth quarter to $2.75 per pound. That has unnerved Wall Street, with shares of Freeport down more than 30 percent in the past six months alone.

Longer term, demand for the red metal is expected to spike due to the electrification trend. Electric vehicle motors use twice as much copper as internal combustion engines.

“The fundamentals of the copper market point to a very positive future,” Freeport Chief Executive Richard Adkerson said on a Thursday conference call with investors. “Copper prices simply have to rise.”

In anticipation of that, Phoenix-based Freeport is spending $850 million to open a new U.S. copper mine.

Adkerson, CEO since 2003, has called the United States core to Freeport’s growth, noting that demand in the country has risen and the company has had to buy copper from rivals just to honor customer contracts.

“The market may be focused on the fourth-quarter miss today, but we do not believe these historic results are very meaningful to the investment case as Freeport is entering a transformational period,” said Jefferies analyst Christopher LaFemina.

Freeport posted fourth-quarter net income of $140 million, or 9 cents per share, compared to $1.04 billion, or 70 cents per share.

Excluding one-time Freeport earned 11 cents per share. By that measure, analysts expected earnings of 18 cents per share, according to IBES data from Refinitiv.

Copper production fell 17 percent to 841 million pounds during the quarter.

Freeport last month relinquished majority control of Grasberg, the world’s second-largest copper mine, under pressure from the Indonesian government even though it will remain the project’s operator.

Reuters

Jervois Mining expanding to Uganda

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Australian cobalt developer Jervois Mining said on Tuesday it has agreed to buy a Canadian cobalt explorer with operations in Uganda, as the hunt for quality mines in the battery materials sector gains pace.

Jervois, which is backed by ex-Glencore executives, is offering one of its shares for every share in M2 Cobalt, valuing the Canadian company at C$16.6 million ($12.5 million), a 4.5 percent premium at current share prices.

M2 Cobalt has tenements across a region that includes a former copper and cobalt mine run that was closed after being sold to the Ugandan government.

Jervois, which has applied for a prospecting licence in Tanzania, said the deal would complement its efforts to establish a presence in east Africa.

M2 shareholders would make up about 22 percent of the expanded company, and Jervois hoped to maintain a listing on Toronto’s TSX Venture Exchange, giving it access to North American capital markets.

Jervois Chief Executive Bryce Crocker and Chairman Peter Johnston, both former executives of London-listed miner Glencore , will continue in their current roles.

Jervois is developing the Nico Young cobalt-nickel deposit in the Australian state of New South Wales.

($1 = 1.3316 Canadian dollars)

Reuters

Gold held steady

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Gold held steady yesterday after posting its best daily gain in two weeks in the previous session, with investors drawn to bullion as global equities slipped on economic growth fears and the U.S.-China trade dispute.

Spot gold was little changed at $1,285.10 an ounce by 1253 GMT, while U.S. gold futures were up 0.1 percent at $1,284.70.

“Any weakness in stocks is likely to attract a bid because the market is looking towards gold as a safe haven at this stage,” said Saxo Bank analyst Ole Hansen.

“We have seen demand for exchange-traded funds (ETFs) continue to pick up despite the strong recovery in stocks this month. This indicates the market does not believe we are out of the woods just yet and that growth worries remain.”

Reflecting investor appetite for gold, holdings of SPDR Gold , the largest gold-based ETF, was at its highest since June 2018.

Renewed fears about a slowdown, exacerbated by economic data from the United States and Japan and the International Monetary Fund’s latest downgrade to global growth projections, sapped appetite for risky assets, dragging on shares and bond yields.

Reuters.

Economic development rests in the mining industry

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The economy of Zimbabwe which was previously believed to be dominated and sustained by the Agriculture sector is slowly becoming ignited by the mining sector despite the sector’s short fall in tax paying and value addition mechanics.

Dickson Rudairo Mapuranga

The mining industry which is rumored to have produced a revenue of over 3 billion USD have the aptitude and capability to transform Zimbabwe into the most thrilling economy on earth. Almost all minerals under the sun are largely available in Zimbabwe.

Zimbabwe is on a path towards development and revitalization of the socio-economic as well as political spheres in order to create a strong, vibrant and powerful nation on earth. The mining industry have all it takes to get Zimbabwe towards an amazing investment destination.

How mining can transform Zimbabwe?

The mining sector for a record have been able to transform nations into powerful economic house of the world, for example the United States dollar rose into becoming one of the strongest currency on earth due to the fact that it was backed by gold.

The mining sector in Zimbabwe will not be transformed by the government but will rather will be transformed by mining players through their tireless working with the ground and as well negotiating with the government for clear and fair mining laws.

The mining industry has all it takes when it comes to industrial growth, maintenance and development. Most industries operate under the grace of the mining sector, it is the will of the mining sector to establish a strong economy and the creation of industries in Zimbabwe. Many industries closed in Zimbabwe after the exodus fall of mining giants like the African Associated mines of Gaths mine, Mashaba and Shabani.

It is high time mining players create a formidable coalition for the growth of the sector, the mining sector needs to create at least one mine or mineral polishing plant or better a large factory once every year rather than waiting for government intervention, we have tested that, it usually will not work as anticipated.

In order to transform Zimbabwe the mining industry also need to start creating or emerging with the Agriculture sector for mutual relations backup and funding. After all the two sectors will in many ways work hand in glove. The two sectors are largely responsible for the creation of industries that processes of raw materials into finished products.

The mining sector in Zimbabwe due to the fact that it can fund handsomely the agricultural industry, it is another way miners need to look so as to transform Zimbabwe.

Challenges that can be faced and possible solutions.

One writer once said that, “Politics is bad for business”. Politics in Zimbabwe have been accused to have single handedly destroyed the economy of Zimbabwe which was essentially the bread basket of Africa to a begging bowel. It is high time miners place a further distance from politics and focus on building the industry. Politics in Zimbabwe have become a parasite that weakens the mining sector. The industry need to be directly independent from politics in order to become relevant when it comes to economics delectation in Zimbabwe.

Rivalries are good for business growth and expansion but without mutual understanding and engagement, that competition becomes hostility and unproductive. Mining players need to set competition upon themselves, however, they should be working together in making the mining industry an attractive and look after sector.

What the mining industry instantly need to do?

The growth of the mining sector is sorely in the indicators of mining players themselves rather than any outside force. The mining industry should focus rapidly on creating mineral polishing plants in Zimbabwe like what platinum miners have done. The industry need to move from individualism to modern communalism if the country or the industry need to be ranked among the most noticeable industry in the world.

The future of the mining industry lays in mining players working together creating an industry that is well united in growth and development.

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