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New gold price regime to curb leakages

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New gold price regime to curb leakages

Zimbabwe’s sole gold buyer and exporter Fidelity Printers and Refiners (FPR) has made major strides further in
unravelling issues of gold leakages by presenting an alluring gold purchasing price which miners have effectively
welcomed as just and long overdue.

By Rudairo Mapuranga

Recently, the Minister of Finance and Economic Development Prof Mthuli Ncube said that the country was losing close to 34 tonnes of gold through smuggling to South Africa.

The leakages of gold are credited to the previous price regimes that were unpopular to the miners which in turn led miners to sell the yellow metal to unlicenced buyers who would smuggle the metal to neighbouring South Africa.

Friday turned into jubilation for the miners when Fidelity at long last adjusted prices and changed their fixed value purchasing model to one that currently tracks the worldwide gold value developments.

According to Zimbabwe Artisanal and Small Scale Miners Council former President Engineer Chris Murove the move will affect gold conveyances to the sole gold purchaser and exporter if it is maintained.

“This is indeed commendable and will have a huge positive impact on the ASGM sector going forward, provided this new and fair pricing regime is maintained” Murove Said.

Zimbabwe Miners Federation President Ms Henrietta Rushwaya also endorsed the price regime saying it was going to deal with gold leakages and selling of gold on the parallel market. Rushwaya also said that the move is going to boost investment in the gold sector by attracting investors to trade in gold since the Zimbabwe Stock Exchange has been suspended by the government.

“The new gold price model is most welcome and was long overdue. The prices which will be changing daily inline with the floating world market prices will see a considerable increase in production as well as an increase in deliveries to Fidelity as there is now no real incentive to smuggle or to deal on the parallel market (hoping that
payments for deliveries are made out without delay). The decision has also come at a time whereby the ZSE has been suspended and most investors who are active on the bourse will be looking for alternative investment avenues. I’m assuming this will probably see more investment into the sector.” Ms. Rushwaya said.

Engineer Murove also encouraged Fidelity Printers and Refiners to set floor prices that will encourage miners to sell even when global gold prices are on the decrease.

“It would also be good and strategic if, in support of the ASGM sector, the RBZ were to set a floor price that even if the world price were to go below for whatever reason, loyal miners who consistently deposit their proceeds into Fidelity will be able to enjoy and can plan their investment projects upon. Such a move will build lasting relationships between Fidelity and gold miners which will weather all storms. Some food for thought.” Engineer Murove said.

Gold is currently Zimbabwe’s biggest foreign currency earner and economic experts have predicted that the yellow metal has a potential and muscle to resuscitate the economy of Zimbabwe through funding all Agricultural projects in the country.

This article first appeared in the Mining Zimbabwe weekly 20 July 2020 issue

Mining title allocation delays Mines Ministry speaks out

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Mining title allocation delays Mines Ministry speaks out

THE Ministry of Mines and Mining Development has deployed resources to provinces in a bid to clear title issuance backlog which is now making it difficult for one to get a licence on application submission.

By Dumisani Nyoni

The Ministry has been struggling to issue mining titles on time, a situation that was now breeding illegal miners, reducing the flow of gold through formal channels like the Fidelity Printers and Refiners.

The process was taking several years in some mining provinces, with torn and obscure maps causing several mining disputes.

It could be noted also that the lack of registration certificates causes miners to channel their gold through the black market, which is not good for the growth of the mining industry and the economy.

In an interview with this publication, Mines and Mining Development deputy minister Polite Kambamura said the ministry was working flat out to clear the title issuance backlog.

“The ministry is currently working to clear the title issuance backlog, which makes it difficult for one to get a licence on application submission. We are, however, putting resources to provinces to expedite the whole process,” Kambamura said.

Quizzed to reveal the type of resources he was talking about, Kambamura said: “We are talking of human resources, vehicles, fuel, maps etc.”

On corruption reports allegedly involving Mines Ministry officials, he said if there were “any specific corrupt allegations then reports should be brought forward.”

There have been several corruption reports whereby Provincial Mining Directors (PMDs), though armed with full knowledge on the ownership of mine claims in the country, deliberately re-allocate mine claim certificates to their loyal syndicates who either give them cash upfront or a percentage of the loot.

The small scale miners in Midlands Province accused the Midlands PMD Nelson Munyanduri and the national office of operating a well-orchestrated conspiracy of deceit, fraud, misrepresentations, chicanery and double-dealing after he double allocated a mining certificate on disputed land, according to Zim Morning Post, an online publication.

Corruption, if not addressed, will cost the nation millions of dollars.

It also undermines President Emmerson Mnangagwa’s vision of building a US$12-billion mining sector by 2023.

Under the US$12 billion mining roadmap, gold is expected to contribute US$4 billion, platinum US$3 billion while chrome, iron, steel diamonds and coal will contribute US$1 billion.

Mining sector generates over 60% of Zimbabwe’s export earnings and accounts for between 12% and 16% of the GDP as of October 2018.

This article first appeared in the Mining Newsweek 20 July 2020 issue

Ncube emphasises on mining legislative reforms to curb leakages

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Ncube emphasises on mining legislative reforms to curb leakages

FINANCE Minister Mthuli Ncube has said mining legislation needs to be reviewed in order to ensure transparency and curb leakages in the mining sector, enhance exploration of the country’s minerals, and computerisation of mining which is expected to solve issues of mining titles.

Ncube said this in the National Assembly last week during his midterm budget and economic review statement where he also said that the mining sector in Zimbabwe is now the biggest foreign currency earner at 60% of total foreign currency received.

While Ncube has emphasized on mineral legislative reforms, the stumbling block to a new Mines and Minerals Amendment Bill has been the slow pace in its drafting by the Attorney General’s office so that it can be crafted by Parliament.

The mining sector is said to currently contribute about 8% of total Gross Domestic Product and is expected to experience a boom of S$12 billion by 2023 from US$2, 7 billion in 2017.

However, he said mining currently faces a myriad of problems that include low production levels due to COVID 19, gold leakages due to pricing issues, closure of international ports, power and fuel shortages.

“Priority policy areas to attain this target and other Transitional Stabilisation Programme benchmarks include reviewing and updating mining legislation, enhancing exploration and investment in mining, modernisation, and computerisation of the mining title administration (mining cadastre), improving transparency in the mining sector and value addition of minerals to create more jobs and earn more foreign currency are priorities for the sector,” Ncube said.

He said due to COVID 19 impacts, and other challenges such as energy, the mining sector is projected to slow down by -4, 1%.

“Therefore, growth for the mining sector is now projected to slow down to -4.1% in 2020, reflecting the impact of COVID 19 and other challenges including perceptions around retentions, erratic power supply, and loss of skills in the mining sector.”

Ncube said the government will also deal with issues of mineral leakages that continue to deprive the country of substantial foreign currency inflows.

“Therefore, during half of the year and going forward, the budget will expend more resources on capacitating security institutions engaged in monitoring and curbing mineral leakages.  This will also prioritise the Minerals and Border Control Unit,” he said.

For most minerals like chrome, coal, and nickel, Ncube said their production was affected by COVID 19, but coupled with other challenges such as power and fuel shortages.

“Chrome was affected by logistical challenges in South Africa under lockdown and closure of some docking ports considered unsafe in China due to the pandemic weighed down on raw chrome exports to China.  Disruption of supply components and spare parts forced most smelters to gradually scale down operations and put plants on care and maintenance.

“Other challenges that include power and fuel shortages, high operational costs due to surging inflation also continued to weigh down chrome output,” Ncube said.

For coal, he said the 2020 output is projected at 3 million tonnes, constrained by reduced investment in exploration, shortages of fuel and foreign currency challenges.

“In addition, the (coal) industry players contend that low foreign currency retention thresholds (45%) for an industry which exports only 10% of the produce, is making it difficult for the industry to procure production inputs.  This is in addition to other challenges that include fuel shortages and high operation costs induced by rising inflation, among others.”

The Finance Minister said coal output was about 417 000 tonnes in the first quarter of 2020 from two major producers and about 16, 6% more than production realized during the same period in 2019.

But he said the price of coal of about US$30, 30 per tonne was unviable and below the average cost of mining.

For chrome, he said the output in the first quarter of 2020 stood at 293 000 tonnes, about 30% lower than in the same period last year due to a steep decline in ferrochrome prices.

Ncube said diamond output in the first quarter of 2020 surpassed the same period last year by about 17% due to increased production at the Zimbabwe Consolidated Diamond Company (ZCDC).

“However, the subsector faces challenges on power supply, COVID 19 impact on production, demand, and hence depressed prices.”

For Gold, Ncube said gold prices underperformed due to increased leakages amid high production through smuggling and diversion of gold to the informal market arising from issues around retentions that have since been revised.

“Against this background, gold deliveries are projected at 27 958 kilograms for the year 2020, which is lower than the 2019 levels despite the favourable international prices obtaining compared to the previous year,” he said.

Ncube said the government will continue to engage mining companies including small scale miners on pricing and viability issues.

This article first appeared in the Mining Newsweek 20 July 2020 issue

Nine ways Zimbabwe can increase gold submissions

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Nine ways Zimbabwe can increase gold submissions

The government last year launched a strategic roadmap to the achievement of a US$12 billion mining industry by 2023 as it ramps up efforts to increase the sector’s contribution to the economy.

By Dumisani Nyoni

Under the US$12 billion mining roadmap, gold is expected to contribute US$4 billion, platinum US$3 billion while chrome, iron, steel diamonds and coal will contribute US$1 billion.

Lithium is expected to contribute US$500 million while other minerals will contribute US$1,5 billion.

To achieve this target, the following should be improved to complement government efforts and increase gold submissions.

  1. Speed up mining title allocations

The Ministry of Mines and Mining Development has been struggling to allocate mining titles to prospective miners, breeding illegal miners, and reducing the flow of gold through formal channels like Fidelity Printers and Refiners (FRP) in the process.

Zimbabwe Prospectors Association president Samson Dzingwe recently told private media that the delays in the issuance of mining certificates create a conducive environment for red tape or corruption, which is an enemy of economic growth.

If the government, through the Ministry of Mines and Mining Development, could speed up mining title allocations, gold deliveries to FPR would increase significantly.

  1. Ease Gold Development Initiative Fund requirements

The Gold Development Initiative Fund (GDIF) which is administered by FPR was created by the Reserve Bank of Zimbabwe as part of its initiatives to enhance economic productivity through the promotion and development of the gold mining industry in Zimbabwe. The loan facility is primarily for the acquisition of gold mining plants and equipment to enhance gold production by miners. However, some of the fund requirements are deterrent to small scale miners, hence they should be eased.

For instance, for small scale miners to access it, they should produce a geological report, mine production history, life of mine plan, Environmental Impact Assessment (EIA Certificate), site of works plan/surface plans, due diligence report, bankable document, financial statements of the applicant for the previous 2 years, latest management accounts, asset register, tax clearance certificate, cash flow projections to cover the tenure of the loan & assumptions used, debtors & creditors age analysis and quotations.

We believe if some of the Fund requirements were eased, small-scale miners would be able to access it and use the money to break production records and deliver more gold to FPR.

  1. Introduce FPR employed gold buying agents

FPR should employ its own gold buying agents and have them deployed in all gold producing provinces across the country. This will go a long way in enhancing transparency and accountability in the buying of the yellow metal. Illegal buyers create relationships with ASM something the sole buyer needs to start doing. Currently, a permit to buy gold is only issued to large scale gold buying agents who own mining operations producing at least fifty kilograms of fine gold per month.

Small scale gold buying agents are supposed to enter an Agency Agreement with FPR before being issued with a permit with clearly spelt out terms and conditions.

  1. Increase buying centres (FPR to partner institutions like Zimpost)

Given, FPR has gold buying centres around the country but more are needed. The country’s sole gold buying unit should consider partnering institutions like Zimpost for convenience’s sake. This will make it easy for miners to sell their gold, improving gold deliveries in the process.

  1. Immediate payments on submission

Failure to pay miners on time is a recipe for disaster as it encourages miners, especially small-scale miners to sell their gold to the black market where payments are made instantly. Of late, FPR has been struggling to pay for gold delivered to it on submission due to foreign currency shortages. It blamed the COVID-19 pandemic which reportedly disrupted cash movement.

  1. Act on corruption allegations (investigate mines officials fingered)

With corruption continuing rearing its ugly head and threatening one of the country’s foreign currency earners—gold sector—Zimbabwe should forget achieving the US$12 billion mining industry by 2023. Serious corruption cases involving officials in the Ministry of Mines and Mining Development who are allegedly causing man-made disputes in mining towns occurring around the country due to deliberate double allocation of registration certificates have been reported but with little action on the part of the government.

  1. Speedup the cadastre system

The government has announced its plans to migrate from the current manual to the more efficient and computer-based cadastre system in the administration of mining title but the pace by which the process is taking is not encouraging. Hence, it should be speeded up.

A cadastre is normally a computer-based and up-to-date land information system containing a record of interests in land such as owners’ rights, restrictions, and responsibilities. The current manual system has an outdated ownership database and is blamed for widespread disputes over claim boundaries.

  1. Support local equipment suppliers

Recently, local mining equipment suppliers told this publication that they were facing serious viability challenges stemming from currency volatility, cheap imports from China, and forex shortages to import raw material among others. In their submission, they called upon the government to support them by protecting them from cheap imports from China. For instance, Yagden Engineering managing director Wayne Williams, whose company deals with steel fabrication, mining equipment, machining, and milling equipment, suggested imposition of higher duties on equipment supplied by the Chinese.

It could be noted that mining equipment suppliers are an important sector driving the mining sector. Therefore, the support given to this sector will go a long way in boosting gold production in the country.

  1. Have a committee that includes agriculture, councils, and Local Government Ministries to avoid land conflicts

There are many land disputes in Zimbabwe, some of them caused by a lack of coherence between various government ministries and departments. To avoid land conflicts, a committee including officials from the Agriculture Ministry, local councils as well as Local Government Ministry should be set up.

Zimbabwe losing millions from chrome smuggling

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Zimbabwe losing millions from chrome smuggling

• MMCZ intensifies monitoring and inspection

STAFF REPORTER

Zimbabwe is being robbed of millions worth of chrome through a complex smuggling syndicate involving Chinese who have been under-declaring volumes of chrome supported by a number of unscrupulous Zimbabwe Revenue Authority (Zimra) and Minerals Marketing Corporation of Zimbabwe (MMCZ) officials.

Information gathered points to the fact that the chrome that is being declared at various weighbridges owned by MMCZ across the country does not tally with the volumes of chrome exported through the borders.

A well-placed source with MMCZ said the state-owned minerals marketer has been receiving reports of possible rampant smuggling of chrome through under-declaration.

“The country has been losing millions through this cartel of chrome smugglers who are working with Zimra and MMCZ officials. This has been going on for some time but no concrete action has been made to monitor how much chrome goes through weighbridges and how much is then declared to the Reserve Bank of Zimbabwe through CD1 forms.

“MMCZ just recently received reports of chrome that was being smuggled through the border especially the Forbes Border Post. This carted has mainly been driven by Chinese that are into small scale chrome mining,” said the source.

The continued smuggling of chrome has pushed MMCZ to set up more weighbridges across the country to curb this scourge. Also involved in this smuggling scam are government top officials.

MMCZ general manager Tongai Muzenda told Mining Zimbabwe that the state minerals marketer has intensified its monitoring systems to bust any possible leakage of minerals, especially chrome.

This has seen MMCZ increasing the number of its monitoring team to physically man all mining sites across the country.

“We have heard about those reports but some just come as rumours but as MMCZ we have taken an initiative of intensifying our monitoring systems. This has seen us increase the number of people by six,” Muzenda said.

In February this year, a Mutare-based official was arrested on allegations of attempting to facilitate the smuggling of a truckload of chrome ore to Mozambique. The chrome intercepted had a value of roughly US$25 000.

On the side of Zimra, its officials are also accused of being complicit in carrying out export duties while issuing fraudulent bills of entry.

A World Bank report dubbed “The Changing Wealth of Nations 2018”, documents Africa’s impoverishment by the rampant extraction of minerals, oil and gas.

In the report, the bank concludes that sub-Saharan Africa loses about $100-billion worth of adjusted net savings annually through massive looting of minerals.

It is “the only region with periods of negative levels — averaging negative three per cent of gross national income over the past decade — suggesting that its development policies are not yet sufficiently promoting sustainable economic growth and clearly, natural resource depletion remains one of the key drivers of negative adjusted net savings in the region.”

This article first appeared in the Mining Newsweek 20 July 2020 issue

Caledonia sells shares

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Caledonia sells shares

Gwanda based Gold producer Caledonia Mining, the 49%-owner of the Blanket gold mine in Zimbabwe, has entered into a sales agreement which will allow the company to raise proceeds to fund the construction of a solar power plant to supply electricity to the mine.

The solar power plant will create a more stable and reliable power source for operations, which is an important step towards preventing the loss of downtime and further de-risking the project.

The proposed solar project will supply approximately 30% of the Blanket mine’s total electricity requirements across a 24 hour period, including the evenings. The company has received a generating licence and the necessary approvals from the Zimbabwe Investment Authority and has shortlisted contractors for the solar project.

Under the sales agreement with Cantor Fitzgerald & Co, Caledonia Mining may sell up to US$13 million worth of shares.

Any sales of shares would occur by means of ordinary brokers’ transactions or block trades, with sales only being made on the NYSE American at market prices.

Cantor, acting as a sales agent, may conduct sales for the benefit of Caledonia Mining should the company elect to initiate a transaction or transactions, dependent on market conditions and such other terms as the Company may specify.

It is possible, and indeed likely, that multiple transactions could be effected under the at-the-market sales agreement over time.

Mining Review Africa

Fidelity gold buying prices 22 July 2020

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Fidelity gold buying prices 22 July 2020

Fidelity Printers and Refiners official gold buying prices Wednesday 22 July 2020

SG 90% AND ABOVE $53.01/g
SG ABOVE 85% BUT BELOW 90% $52.13/g
SG ABOVE 80% BUT BELOW 85% $50.94/g
SG ABOVE 75% BUT BELOW 80% $50.35/g
SAMPLE BELOW 10g BUT ABOVE 5g $51.53/g

Cash available. Fidelity Printers and Refiners prices will be changing daily in relation to world market prices.

Contact FPR

No. 1 George Drive, Msasa, Harare

Email: [email protected]

Telephone

+263 242-486670
+263 242-486694
+263 242-487131
+263 242-447810-5

Fidelity gold buying prices 21 July 2020

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Fidelity gold buying prices 21 July 2020

Fidelity Printers and Refiners official gold buying prices Tuesday 21 July 2020

SG 90% AND ABOVE $52.24/g
SG ABOVE 85% BUT BELOW 90% $51.36/g
SG ABOVE 80% BUT BELOW 85% $50.20/g
SG ABOVE 75% BUT BELOW 80% $49.61/g
SAMPLE BELOW 10g BUT ABOVE 5g $50.78/g

Cash available. Fidelity Printers and Refiners prices will be changing daily in relation to world market prices.

Contact FPR

No. 1 George Drive, Msasa, Harare

Email: [email protected]

Telephone

+263 242-486670
+263 242-486694
+263 242-487131
+263 242-447810-5

ALROSA Zim begins diamond prospecting

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ALROSA Zim begins diamond prospecting

A joint venture between ALROSA and Zimbabwe Consolidated Diamond Company (ZCDC) ALROSA (Zimbabwe) Limited (ALROSA Zim), began prospecting and preliminary exploration works for primary diamond deposits.

After getting Special Grants from the Ministry of Mines and Mining Development, ALROSA Zim has the Environmental Impact Assessment (EIA) approved by the Environmental Management Agency (EMA) and is set to commence prospecting and exploration in Masvingo, Matebeleland South and Matebeleland North provinces of the Republic of Zimbabwe.

In July 2020, ALROSA Zim’s geologists to start geochemical sampling, trenching and pitting in Malipati zone, with ground geophysical surveys to follow. Towards the end of the year, the same prospecting operations, including airborne geophysical surveys to be conducted in the Maitengwe area.

Bulk sampling and drilling to commence in 2021.

‘Following the signing of a joint venture agreement with ZCDC to develop diamond deposits in Zimbabwe in December 2019, we are progressing well towards the initiation of the full-scale prospecting works this year. Being a member of Responsible Jewellery Council, World Diamond Council and Natural Diamond Council, ALROSA complies in full with all industry commitments on responsible business practices and its own corporate standards. ALROSA is committed to following these principles strictly while working in the Republic of Zimbabwe, minimizing adverse environmental impact in all areas of activities and using mineral resources comprehensively and rationally’, said Vladimir Marchenko, ALROSA Deputy CEO.

ALROSA’s investments in Zimbabwe for 2020-2022 are expected to reach $12 million.

According to the shareholder agreement and a JV establishment agreement, ALROSA has 70% of ALROSA (Zimbabwe) Limited JV, while Zimbabwean state-owned diamond mining company’s share is 30%. The joint venture focuses on prospecting, exploration and, in case of success, mining of primary diamond deposits in the Republic of Zimbabwe.

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ZDAMWU joins IndustriALL Global Union

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ZDAMWU joins IndustriALL Global Union

THE Zimbabwe Diamond and Allied Workers Union (ZDAMWU) has been admitted to the Switzerland-based IndustriALL Global Union (IndustriALL), becoming the seventh union from Zimbabwe to be affiliated there.

By Dumisani Nyoni

The decision to admit ZDAMWU to be part of the global union was reached at the organisation’s executive virtual meeting held in Geneva on the 17th of June this year.

In a statement following the admission of ZDAMWU, IndustriALL general secretary Valter Sanches said: “I am happy to inform you that the executive committee, at its virtual meeting, held in Geneva on the 17th of June 2020, approved your request for affiliation to IndustriALL Global Union.”

IndustriALL represents 50 million workers in the energy, mining, and manufacturing industries organized by 700 unions in more than 140 countries around the world.

The global union federation is taking up the fight for better working conditions and trade union rights around the globe challenging the power of multinational companies and negotiating with them at that level on a win-win situation.

“We are fighting for another model of globalisation and a new economic and social model that puts people first, based on democracy and social justice,” Sanches added.

He said his organisation was looking forward to working closely with ZDAMWU in their global struggle to build union power through organising and growth, defending trade union rights, confronting global capital, fighting against precarious work and ensuring sustainable industrial employment.

Accepting the admission to IndustriALL, ZDAMWU general secretary, Justice Chinhema said the union will use the opportunity to explore and share experiences with other unions under the IndustriALL banner to develop and strengthen its capacity to recruit and organise more members in the mining industry in Zimbabwe.

“Our union is currently seized with organising new members, who for a long time have been given a raw deal by predecessor unions. We are rolling our organising and education programmes as a way of strengthening union power,” he said.

“We seek to build solidarity and create networks with alike organisations at national, regional, and international levels,” Chinhema said.

ZDAMWU has become one of the fast-growing unions in the mining industry with a membership of over 6 000 and has established branches across the county’s mining districts.

According to its strategic plan, the union is aiming to organize 75% of the more than 60 000 workers in the mining industry excluding those in the small scale mining sector by 2025.

IndustriALL challenges the power of multinational companies and negotiates with them on a global level. It also fights for another model of globalisation and a new economic and social model that puts people first, based on democracy and social justice.

Founded on 19 June 2012, the organization brings together affiliates of the former global union federations: International Metalworkers’ Federation, International Federation of Chemical, Energy, Mine and General Workers’ Unions, and International Textiles Garment and Leather Workers’ Federation.

It represents workers in a wide range of sectors.

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