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RioZim seeks solar plant licences

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RioZim seeks solar plant licences

RIOZIM Limited has applied to the Zimbabwe Energy Regulatory Authority (ZERA) for licences to build four solar power plants with a combined output of 178 megawatts (MW) to avoid costly and frequent disruptions to operations from power cuts.

The Zimbabwe Stock Exchange (ZSE) listed diversified mining company said it wants to build, own and operate solar photovoltaic (PV) power plants for its mining operations namely Cam and Motor (gold), Renco (gold), Murowa (diamond) and Dalny (gold).

Early last year, RioZim signed a US$200 million agreement with Chinese firm, China Gezhouba Group International Engineering Corporation (CGGC) for the construction of three solar power plants at Cam and Motor, Renco and Dalny mines.

Term sheets have also reportedly been signed already with the Industrial and Commercial Bank (ICB) of China to provide 85 percent of the funding while Standard Bank will also make 15 percent contribution to the requisite project finance.

This comes as Zimbabwe is battling a debilitating power crisis, resulting in power cuts that last hours on end disrupting smooth flow of production and forces firms like RioZim to use expensive alternatives.

Gold and diamond are some of the key and strategic minerals expected to anchor the country’s vision of growing the mining sector into a US$12 billion industry by 2023.

Zimbabwe needs about 1 800 megawatts at peak periods of demand for electricity, but is currently only able to generate up to about 600MW, at best, and the balance is covered either by imports or hours of load shedding.

Once RioZim has built the power stations, it will have adequate electricity for its mines and also earn revenue from feeding excess power to the national grid where there is a huge demand supply mismatch.

In an application to ZERA RioZim said it requires a licence to construct a 54MW solar power station at its Cam and Motor gold mine near Kadoma.

“Cam & Motor Solar (Private) Limited intends to utilise part of the power generated for own consumption by the mine while the balance will be sold to Zimbabwe Electricity Transmission and Distribution Company (ZETDC),” RioZim said.

The project will also include the construction of approximately 1,5 kilometres of a single panther 132 kilo-Volt transmission line from the proposed Cam and Motor Solar Plant to existing Eiffel Flats T–Eiffel Flats–Maranatha 88kV 132/33kV Substation.

At Murowa Diamond Mine, Zvishavane District, in the Midlands Province, RioZim wants to construct, own, operate and maintain a 68,4 MW solar power plant. It will also construct approximately 45 kilometres of a single Lynx 88(132) kV transmission line from the proposed solar plant to Zvishavane’s 132/33kV Substation.

For Dalny Mine, in Mashonaland West Province, RioZim said it was looking to build a 54 MW solar PV power plant.

“The project will also include the construction of approximately 60 kilometres of a single Lynx 132 kV transmission line from the proposed Dalny Solar Plant to Selous 330/132kV Substation,” RioZim said.

The mining company will build the smallest of all its solar power plants, 38,04 MW, at Renco Mine, in the Nyajena communal lands, Masvingo Province.

As with all other projects, Riozim will also construct a new electricity transmission line, 55 kilometres of a single Wolf 132 kV, from the proposed Renco plant to Triangle’s 132/33kV substation.

Measures by independent producers to generate their own power comes as Zimbabwe is battling generation constraints that include effects of drought on Kariba Hydro Power Station and antiquated equipment at Hwange Power Station, the country’s second biggest plant after Kariba_Business Weekly

Is dollarisation creeping back?

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Is dollarisation creeping back?

When Zimbabwe dollarised in early 2009, it was a case of the Government formalising what was already in play.

It effectively “dollarised” the economy by allowing the United States (US) dollar and other foreign currencies to be used as legal tender in the country after hyperinflation had devastated the value of the local currency.

Recent developments are showing similar trends to events just before the economy dollarised; including extensive use of the US dollar in the informal sector, and for huge transactions outside the formal system. It is arguable that the single biggest reason that formal businesses are not using the US dollar is Statutory Instrument 142 of 2019.

SI-142 of 2019, which was promulgated last June effectively ended the long-standing multi currency system (or dollarisation) and determined the “Zimbabwe dollar” as the sole legal trading currency in the country. Last week, the Zimbabwe Revenue Authority (Zimra), having noted the continued use of the US dollar, said firms charging for goods and services and paying their employees in foreign currency, should remit taxes in similar currency.

“It has come to the attention of the commissioner general of the Zimbabwe Revenue Authority that some businesses are trading in both RTGS dollars and foreign currencies. Following this observation, Zimra has found it necessary to clarify that in accordance with section 4A of the Finance Act (Chapter,23:04) and section 38 of the Value Added Tax Act (Chapter, 23:12) these businesses should remit taxes in foreign currencies,” said Zimra in a notice.

“All employers who are paying remuneration in foreign currency should remit the employee’s tax in foreign currency.

If part of the remuneration is paid partly in foreign currency and partly in RTGS dollar, the employers shall apportion the employee’s tax accordingly and remit both the foreign currency and RTGS dollar to the commissioner on or before the due date.

“All specific assets sold in foreign currency shall pay CGT in foreign currency.

“With effect from January 1, 2020 all specified assets purported to have been disposed of in Zimbabwean dollars shall be deemed to have been sold in US dollar at the market value unless the seller provides documentary proof that the asset in question has been sold in Zimbabweans dollars.”

Effectively, this means that Zimra is now demanding as Pay As You Earn, Value Added Tax (VAT), Income Tax, Capital Gains Tax (CGT) and mining royalties in foreign currency from firms trading in such. It seems like an indictment of the de-dollarisation efforts that Government has been seeking to implement, which began with the removal of the 1:1 peg between the RTGS dollar and the US dollar last February.

Experts say a successful de-dollarisation strategy should comprise a comprehensive mix of structural reforms that address the macroeconomic environment to ensure a positive fiscal balance, positive current account balance and improvement on the global debt position.

In a research note dated October 2019, Imara Asset Management ‘predicted’ a relapse to use of the US dollar.

“We have been researching the whole concept of de-dollarisation. Fortunately, there is an IMF Working Paper authored by Kokenye, Ley and Veyrune dated August 2010 on the subject.

“For de-dollarisation to work they argue that a number of economic ingredients are essential and most are market-based as legislation on its own tends to fail. There should be a credible macroeconomic stabilisation policy that leads to low inflation, two-way exchange rate flexibility and a functioning foreign exchange market (Zimbabwe does not have these).

Second there should be Efficient Liquidity Management which leads to market-based interest rates (Zimbabwe does not allow this).

“Third there should be fiscal consolidation to stabilise inflation (Zimbabwe fails again). Fourth there should be Biased Taxation that allows the Zimbabwe dollar to be treated favourably vs foreign currencies (Zimbabwe fails this test too). Fifth the market needs instruments to hedge foreign exchange risk and inflation risk such as inflation linked bonds (Zimbabwe has none). Six, there should be Financial Liberalisation whereby banks can set their own interest rates to achieve real returns (Fails again),” explained Imara Asset Management CEO John Legat.

“Seven, all Government operations should be in local currency such as tax collection (Zimbabwe taxes in US dollar in certain sectors so fail). Eight the local payments system must be biased to the local currency but in Zimbabwe the lack of cash makes it easier to use US dollar cash. Nine, foreign exchange regulations should favour domestic users of foreign exchange but in Zimbabwe foreign medical expenses and foreign school fees are allowable for example.

“Bottom line, Zimbabwe fails on most requirements to de-dollarise and if anything continues to bias policy that favours dollarisation. Even then, we can find few cases in economic history where de-dollarisation has worked. In the few cases where it has, it has done so thanks to an internationally backed economic reform programme that prompted large capital inflows. Zimbabwe has no capital inflows and is unlikely to get them anytime soon. Our base case scenario, that determines our strategy going forwards, therefore remains the same; de-dollarisation will fail and dollarisation in some form is inevitable.”

In an earlier interview with Business Weekly, University of Zimbabwe (UZ) economics professor Dr Clever Mumbengegwi, hinted that the de-dollarisation effort was not complete as Zimbabweans were still ‘psychologically connected’ to the US dollar.

“The disconnect is where you have the US dollar being the store of value for most people, as well as being the anchor for prices yet on the consumption side wages and transactions being based on the Zimbabwe dollar.

“So there is a disconnect there, and the issue is the exchange rate, and as long as we have shortages of foreign currency it will be very difficult to connect the two,” he said.

When Zimbabwe “dollarised” around 2009, some experts claimed that the country’s monetary authorities missed a beat on full dollarisation — whose preconditions include permission from US monetary authorities as well as commitment by Zimbabwean authorities to non-reversal; in effect a forfeiture of monetary sovereignty — that is why the dollarisation phase was a struggle.

Is the country again struggling to cope with the consequences of half-baked monetary solutions?

 

Business Weekly

Gvt set aside $8,5 billion to support electricity generation

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Gvt set aside $8,5 billion to support electricity generation

GOVERNMENT has set aside $8,5 billion to support electricity generation and imports this year as part of efforts to improve power supply and ease load shedding.

A further $500 million will be injected into the economy in the first six months of this year to reduce demand for cash, which has seen some citizens turning to illegal cash traders where they are charged premiums of up to 40 percent.

This was said by Finance and Economic Development Minister Professor Mthuli Ncube, yesterday as he unveiled Government’s key plans for the year.

Prof Ncube said it was the Government’s desire this year to ensure the stability of the local currency, maintain low prices on basic goods and services, create jobs for young people and improve household food security.

He conceded that 2019 was difficult and characterised by price increases in fuel, basic commodities, and electricity.

However, the price increases did not match salary increments, leaving many employees, both in the public and private sectors, living below the poverty datum line.

Said Prof Ncube: “An additional $500 million in notes and coins will be put into the economy in the first six months of 2020. We expect this to ease the demand for physical cash and you won’t be ripped off by money dealers who sell cash at various percentage mark up prices.”

Mobile money agents and those connected to people who have access to money, sell physical cash at premiums of between 30 percent and 40 percent, robbing citizens of their hard-earned money.

The Reserve Bank of Zimbabwe (RBZ) introduced new $5 and $2 notes and $2 coins in a bid to alleviate shortages of physical cash, but access to the money in banks remains a challenge amid reports that some bank employees were diverting it to street dealers who sell at premiums.

But as more cash is pumped into circulation, Prof Ncube said maintaining the value of the Zimbabwe dollar’s exchange rate is important to ensure prices of basic commodities remain stable. 

He said the central Government was living within its means and has put in place deliverables to stimulate production and exports. 

Increased production is one of the Government’s primary targets this year, to generate more foreign currency, product availability, and job creation.

Prof Ncube said youth employment also tops Government priorities, and the establishment of the $500 Youth Employment Tax Incentive to support employers who generate jobs for youths.

Any additional job created will attract a percentage tax credit to the employer. 

YETI is designed to reduce the employers’ cost of hiring young people through a cost-sharing mechanism with the government.

To increase economic opportunities and participation by youths in national development, the National Venture Capital Fund has been created and will be capitalised in both local and foreign currency, to incorporate financing start-up projects of youth with preference being given to targeted areas in the context of the Local Content Strategy.

Turning to electricity security, Prof Ncube said $8,5 billion had been set aside to improve Zesa’s output.

Some of the money would be channelled towards electricity imports mainly from South Africa and Mozambique.

“Availability of power is expected to increase as more independent power producers (IPPs) come on line,” said Prof Ncube.

The government also plans to give incentives to companies that decide to go off-grid and install solar.

Many companies are now deploying solar power for their operations on the back of erratic supplies from Zesa.

Yesterday, the Zimbabwe Energy Regulatory Authority (Zera) announced it had received applications from RioZim Limited to construct, own, operate and maintain a 68,4MW solar plant at Murowa Diamond Mine in Mazvihwa Communal Lands in Zvishavane District.

RioZim also wants to set up another 38,04MW solar plant at Renco Mine in Nyajena Communal Lands, Masvingo Province, and two 54MW solar plants at Cam & Motor Mine; and Dalny Mine, both in Kadoma, Mashonaland West Province.

The Standards Association of Zimbabwe (SAZ)’s head offices are already powered by solar after it invested in a 194kW solar car park.

Declining water levels in Lake Kariba and failure to refurbish thermal power stations when they fall due, has seen power generation declining, resulting in massive load shedding.

The mining and manufacturing sectors have been negatively affected by load shedding. 

Turning to food security, Prof Ncube said no Zimbabwean should go hungry, as imports of maize, wheat and soya beans will be stepped up this year.

This year, the Second Republic wants to embark on massive infrastructure projects targeting schools, roads, and schools, among others, in the drive to achieving Vision 2030, of an upper-middle-income economy.

Prof Ncube said Zimbabwe was destined for prosperity in line with President Mnangagwa’s aspirations.

 

The Chronicle

Fired diamond boss eyes RBZ post

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Fired diamond boss eyes RBZ post

Former Zimbabwe Consolidated Diamond Company (ZCDC) chief executive Moris Mpofu is reportedly eyeing a comeback at the Reserve Bank of Zimbabwe following the termination of his contract after unsuccessful secondment tenure at the diamond miner.

Mpofu, who was seconded to the diamond miner in 2015, saw his contract with ZCDC terminated following his arrest on allegations of abuse of office.

He was accused of approving diamond sales to a blacklisted dealer, Hussein Robai.

But Mpofu has since been acquitted over the charges.

According to a communication seen by Business Times, Mpofu’s legal team is proposing his reinstatement at the apex bank considering that his contract there was still in existence.

Mpofu has a five-year contract with ZCDC lapsing in 2020.

“The client’s contract of employment with RBZ was not terminated. He was merely seconded to ZCDC. Secondment refers to the temporary transfer of an employee from one entity to another.

Secondment does not terminate the contract of employment between the seconded employee and the seconding employer,” read part of the legal documents seen by Business Times.

“Where the employer to whom the employee has been seconded terminates the relationship with the seconded employee, the relationship between the seconding employer and the seconded employee is not thereby terminated.

This position has been affirmed in several judgments of our courts.”

Mpofu’s legal team noted that secondment of their client to ZCDC did not terminate the employment relationship between the client and the RBZ.

Information at hand also suggests the RBZ paid part of Mpofu’s legal fees for his battle with ZCDC.

In terms of the secondment letter, Mpofu was to resume his duties at the RBZ upon his return to the RBZ and it was envisaged at the time that he would serve ZCDC for five years.

With the termination of his contract with ZCDC, it was no longer possible for Mpofu to serve ZCDC for five years and in other words, the secondment ended earlier than envisaged by the parties.

The issue that has now arisen is whether Mpofu can resume his duties at the RBZ following his acquittal.

“It is our view that what the RBZ and Mpofu envisaged was that he would be away from the RBZ for as long as his relationship with ZCDC existed.

With the termination of the relationship between the employee and ZCDC, the employee should approach the RBZ and indicate his availability to resume duties immediately or subject to terms to be agreed on by the parties,” reads part of the communication_Business Times

Dispute over 2020 minimum wage

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Dispute over 2020 minimum wage

DISCUSSIONS to increase the minimum wage for 2020 between the Associated Mineworkers’ Union of Zimbabwe (Amwuz) and employers under the Chamber of Mines began this week with the two parties poles apart, a local business publication has learnt.

The negotiations come at a time the country is facing its worst economic crisis in a decade punctuated by a debilitating liquidity crunch, an acute foreign currency shortage, prolonged power cuts lasting up to 18 hours daily, capacity utilisation of less than 40% and runaway year-on-year inflation of more than 500%.

Sources who attended the meeting on Tuesday this week revealed that the mineworkers initially demanded a minimum wage of ZW$8 500 while the Chamber of Mines offered a 67% increase on the minimum wage of ZW$1 200.

“After further discussions, the mine workers reduced their minimum wage figure to ZW$4 600 and the chamber upped its offer to ZW$2 800. We will meet again on February 11 when we expect to come to an agreement,” the source revealed.

Amwuz president Tinago Ruzive told businessdigest on Wednesday that the meeting between the two parties had been cordial and expected to reach an agreement on the minimum wage for 2020.

“The meeting went on very well with the chamber showing a willingness to alleviate the suffering of workers in the mining sector,” Ruzive said.“The figures we put on the table were not tallying with those of the chamber. The figure we put on the table is taking into consideration several issues including the current consumer basket. We, however, are confident that we will soon cobble out an agreement.”

Ruzive, however, refused to divulge the figures they had tabled at the meeting. Negotiations over the minimum wage for the year are usually held in the last quarter of the previous year.

However, this has not been the case for this year’s negotiation due to the deepening economic decline, characterised by quickening inflation that has decimated wages.

Late last year, the two parties agreed a 90% increase in the minimum wage, the third time an increment would be effected in 2019 as a result of the inflationary environment.

The two parties agreed a 35% cost of living adjustment to cushion mine workers from the current inflationary environment in July last year. The workers had demanded a 50% increment with the employers’ body initially offering a 26% raise before settling for a cost-of-living adjustment of 35%.

This is on top of the 80% increment they had agreed upon in March as the initial minimum wage for 2019. Mineworkers had demanded US dollar-denominated salaries, arguing it was the only way they could cushion their incomes from the vagaries of inflation.

The Chamber of Mines pointed out that it was not feasible unless mining companies were allowed to retain at least 80% of their foreign currency receipts by the Reserve Bank of Zimbabwe (RBZ).

However, Freda Rebecca Gold Mine recently began paying salaries in United States dollars as the local currency continues to lose value. Labour has been one of the major cost drivers for the mining sector which has battled a myriad of challenges which include foreign currency shortages and prolonged power outages. Business Digest

Coal producers, Zesa in showdown

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Coal producers, Zesa in showdown

Coal producers and Zesa Holdings come face-to-face at a crunch meeting next week to thaw frosty relations amid revelations the power utility is struggling to pay for coal deliveries with its debt growing by more than half to ZWL$103m.

The debt was ZWL$68m in November and there are fears the failure by Zesa to honour its obligations threatens the generation of electricity. Hwange Power Station is a key generator as low water levels at Kariba have affected generation capacity.

Coal Producers Association chairman, Raymond Mutokonyi, told Business Times that a crunch meeting convened by the ministry of energy and that of mines is expected to bring finality to the deadlock.

“The reason why the debt is ballooning is that Zesa only pays ZWL$2.5m weekly instead of ZWL$10m we have agreed upon,” Mutokonyi said.

“Instead of honouring its obligation, Zesa executive chairman Sydney Gata is dismissing our coal as useless, a move which we are not taking lightly as coal producers.”

Last week, Gata told state media the power utility was paying coal producers notwithstanding that some of the supplies were sub-standard and damaging equipment.

“I was in Hwange and everyone is complaining about the quality of coal.

Only Hwange can complain, not all those makorokozas,” Gata was quoted as saying. When asked if the coal producers can cut supply to Zesa,

Mutokonyi said dialogue between coal producers and Zesa is the only solution to the problem.

Zesa is owed over ZWL$1.2bn by its customers including mining companies that owe the power utility over $200m.

The country is grappling with serious power outages after Kariba downed production to 360MW from the installed capacity of 1050MW, leaving the country to be dependent on thermal power stations and imports.

Zimbabwe, which is generating 464MW, requires 1,400MW daily with the rest of the megawatts coming from imports from South Africa and Mozambique.

Thermal power stations, which are powered by coal, are not producing enough due to lack of diesel for the excavators for coal mining.

As of January 20, Hwange was generating 64MW due to flash floods that have affected the area but the thermal power stations returned to normalcy on Tuesday.

Mutokonyi said since Zesa is ordering mining companies to pay in foreign currency, it should also pay them in forex the equivalent of ZWL$103m at the interbank rate.

However, according to coal producers, Zesa is not willing to pay anything, later alone in forex. Mutokonyi said although Treasury has allocated fuel to the mining companies, the diesel is not enough for the extraction of coal.

Resultantly, production has gone down by a big margin making it difficult to generate electricity for other thermal stations besides Hwange.

Most of the coal extracting machines including excavators require diesel to function and in the absence of the precious liquid commodity some mines are operating at a very low level.

When contacted for comment, Gata said he does not do interviews over the phone instead he referred this reporter to the public relations department for interview booking.

 

Business Times

Gold rises

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Gold rises

Gold prices rose on Thursday as worries about the economic impact from a fast-spreading coronavirus in China improved the metal’s safe-haven appeal.

Spot gold rose 0,3 percent to $1 581,75 per ounce by 0744 GMT and US gold futures gained 0,7 percent to $1 580,90.

Gold gained 0,7 percent on Wednesday after the US Federal Reserve held interest rates steady and Chair Jerome Powell said the central bank was not satisfied with inflation running below 2 percent. Powell acknowledged the risks of any short-term slowdown in China due to the virus, which has claimed 170 lives so far. The World Health Organisation (WHO) will reconvene on Thursday to decide whether the epidemic constitutes a global emergency. — Reuters.

Machete gangs disappear

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Machete gangs disappear

MACHETE gangs, otherwise known as MaShurugwi, have reportedly gone underground following a nationwide police blitz which has seen nearly 2 000 illegal gold miners caged for terrorising communities in gold-rich parts of the country.

A source close to the Zimbabwe Republic Police’s crack team tasked to flush out the rogue miners yesterday said they had managed to restore sanity in most mining areas although there were isolated cases being reported.

“It’s quiet now. We have not encountered the machete gangs since the arrest of some of the gang leaders. Most of them have run away from the mining areas,” a source close to the crack team said.

“Yes, there could be some isolated cases, but the menace has since gone. We will remain on the ground so that we totally comb the mining areas and rid them of the machete gangs even those isolated reports.”

National police spokesperson Assistant Commissioner Paul Nyathi said the police will continue to maintain a heavy presence in the identified hotspots to ensure all trouble causers are accounted for.

“We are going to continue working with stakeholders to see that the peace which we have established is maintained. We will continue being on the ground to combat crime in the long run,” Nyathi said.

Over 1 800 illegal miners and gang members have so far been nabbed under operation Chikorokoza Ngachipere/No to Machete Gangs.

Last week, the crack teams arrested the Ziga gang members and Macheto brothers who had terrorised miners in Kadoma and Kwekwe.

The leader of the Ziga gang, which is believed to be behind the murder of Constable Wonder Hokoyo in December, Phelandaba Tshuma was arrested in Mt Darwin while trying to jump the border into Mozambique.

His vehicle, a Toyota Hiace, was found laden with an assortment of machetes and explosives.

The police have also raided underground machete suppliers in Mbare, Harare leading to the arrest of seven suspects and recovery of 31 machetes.

The Judiciary Service Commission has also set up special courts to specifically deal with machete gangs amid calls for the imposition of stiffer and mandatory jail sentences. Source: Newsday

Perfomance of the Zimbabwe mining sector in 2019

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Perfomance of the Zimbabwe mining sector in 2019

Total output figures of the major contributors to Zimbabwe’s mining sector revenue are definitely going to be lower by year-end (31 December 2019) than they were in 2018. That includes gold, platinum, chrome, diamond, coal, and nickel. These minerals also happen to be the key anchors of the US$12 billion Mining Target by 2023.

By Lyman Mlambo

For gold, this is very unfortunate given that the general international price trend for gold for the past 5 years has been upwards. But then, it has been shown by empirical studies that the international price trend is not a significant explanatory variable for gold production in Zimbabwe; implying that there are other more preponderant factors that overshadow the international price effect. However, in terms of relative contribution to the economy gold has maintained its key role. By November it had contributed 43% of mineral exports, employed 30% of total formal mining labour, apart from the more than half a million artisanal and small-scale gold miners spread throughout the country.

Platinum prices have also remained generally subdued for the year as they have been for the past few years now. Output by year-end will be lower than last year’s 14.7 tons. This is despite the fact that the three primary producers continued to operate at full capacity. The price of palladium is excellent, as it is hovering around US$1,700 per ounce, even exceeding that for the booming gold sector and around double that for platinum. However, palladium is not yet counted among significant products because it is jointly produced with platinum and has generally been viewed as a by-product, rather than a co-product of the latter. This is despite a high level of production for last year at 12.1 tons. By any measure (output or revenue) it is probably time that the PGM sector stops being referred to as the platinum sector. The production levels for other PGMs which include rhodium, ruthenium, and iridium has remained insignificant in 2019. One of the key challenges, among others, in the sector, is the outstanding formal clarity of the sector’s exemption from meeting the requirements of the Indigenization and Economic Act, which exemption has only been pronounced verbally and in other documents, with the Act itself not yet repealed.

Chrome output during the year has been lower than for 2018 mainly on the back of a 10% decline in capacity utilization in the sector from 80% in 2018, low ferrochrome prices and dilapidated transport infrastructure for movement of all chrome products (chrome ore, lumpy ore, and High Carbon Ferrochrome). The local pricing of raw chrome by the Minerals Marketing Corporation of Zimbabwe has also remained a sticking point in the development of the sector and agreement on this issue should be reached to enhance production in the sector. Artisanal and small-scale chrome miners have also not enjoyed as much support from institutions like RBZ as has their counterpart in the gold sector who have been supported technically and financially by the Fidelity Printers and Refineries (a subsidiary of the RBZ).

While there are four registered diamond companies in the country including Zimbabwe Consolidated Diamond Company, Murowa Diamonds, Anjin and Alrosa, only the first two were active in 2019, with the latter two still to commence production operations. Diamond production by year-end will be lower than last year’s 3.3 million carats, as it is projected to be 2.1 million carats (a 36% decline). This is on the back of a decline in capacity utilization from 90% to 74% in 2019 as well as the persistent high royalty rate of 15 %, which remained the highest for all the minerals and in the Southern African Region. It is commendable that the Minister of Finance and Economic Development announced a downward revision of the rate to 10% in the recent Budget Statement.

Like the four major minerals alluded to above, the rest of the minerals have recorded generally lower performance compared to 2018, including coal and nickel sectors. The average capacity utilization in the coal and nickel sectors has gone down by 32% and 30% respectively. Specific factors explaining the lower levels of capacity utilization include the low prices offered by the Zimbabwe Power Company for coal and antiquated equipment which is common to both sectors.

Generally the mining industry as a whole (including the six mentioned above and several other base metals, industrial minerals and dimension stones) faced several challenges during 2019. Major among these include: regular and prolonged power outages, inadequate foreign exchange retentions, high costs of production due to domestic inflation (which is fuelled by depreciation of the local currency) and high import costs, lower prices (for most of the minerals), low access to and high costs of finance (both operating and investment), a sub-optimal fiscal regime, lack of policy consistency and predictability and perceptions of political instability due to serious national political polarization. We need to address these issues to realize a better performance in 2020 and to achieve our US$12 billion Mining Industry Target by 2023.

Lyman Mlambo is the Chairman of the Institute of Mining Research at the University of Zimbabwe he writes in his personal capacity.

Invest In Renewable Energy, ZCDC Urged

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Invest In Renewable Energy, ZCDC Urged

Zimbabwe Consolidated Diamond Company has been urged to upscale investments in renewable energy as a solution to power shortages that has depressed its productivity.

This is contained in a recent study released by the Chamber of Mines which highlighted that mining executives were wary of the recurrent and prolonged power outages.

“Executives of mining companies operating below full capacity mentioned acute power outages, inadequate foreign exchange allocations, capital shortages, high-cost structure and obsolete equipment as the major constrains weighing down capacity utilization in the mining industry.

“The majority of respondent (80%) mining executives indicated that mining companies are facing regular and prolonged power outages resulting in production stoppages….” reads part of the report.

Such regular and prolonged power outages have resulted in depressed productivity in the mining sector, as it is heavily reliant on the availability of electricity to power machines used in processing minerals.

Minister of state for Manicaland Dr. Ellen Gwaradzimba is on record chiding the Zimbabwe Consolidated Diamond Company (ZCDC) for being subject to power rationing saying this was a manifestation of failure to invest in renewable energy.

“It is surprising to hear that ZCDC is also not operating at full capacity because it is subjected to power rationing and it cannot meet the cost of fuel to run the plant when there is no electricity.

“This is an anomaly the mine should run without a stop and they should consider investing in renewable energy to solve the problem of power, this would be a long-lasting solution because mining should not stop,” said Gwaradzimba.

Zimbabwe Environmental Law Association (ZELA) deputy director Shamiso Mutisi says big mining concerns should make tangible investment which can not only benet the sector but the community at large.

“ZCDC should invest in national project which a can leave a legacy, like setting up a solar power plant or farm for renewable energy that can also feed into other sectors besides mining,” said Mutisi.

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