Mining ZimbabweLatest Mining News, Policy and Industry Updates

THE Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) has called on the government to close mines in the wake of a surge in Covid-19 cases in mining communities across the country.

ZDAMWU general secretary Justice Chinhema said the government must move in to enforce a temporary shutdown of mines to allow testing of all workers.

“Statements from Bulawayo Mine, How Mine, Unki Mine, Hwange Colliery indicate that the mines have been hit by the wave,” Chinhema said.

How Mine is reported to have the highest number with 10 infections as of Sunday.

“In light with this, ZDAMWU is calling the government to enforce a temporary shutdown of all mines to allow testing of all workers and everyone staying in compounds as well as carrying out proper disinfection against Covid-19 to safeguard workers and their families,” Chinhema said Sunday.

The veteran trade unionist insisted, “lives matter ahead of profits”.

The union, Chinhema said, is calling on all mines to start putting in place strict measures by proving adequate Personal Protective Equipment to their workers and families who stay within compounds as a matter of urgency, especially Chinese employers.

“It is sad to note that the government allowed mines to operate against our advice without putting strict measures to protect their workers at the onset of the lockdown in April this year,” he added.

Chinhema further said the continued influx of imported cases especially from Botswana and South Africa has affected communities in the Southern parts of the country as returnees are reported to be crossing the borders using undesignated points.

“We are calling on the government to move fast and curtail this crisis before it continues to spread in the mines which are closed communities,” he said.

New Zimbabwe

Prospects of Zimbabwe’s economic recovery in the short to medium appears gloom after local mining firms continued battling rising costs, narrowing margins, and subdued commodity prices on the international market, analysts and experts have said.

Mining is the country’s largest foreign currency earner, accounting for over 60% of export receipts.

The outbreak of the coronavirus pandemic and low business activity, analysts project will result in the economy contracting 10% this year.

Some of the miners who spoke to Business Times this week said the sector was facing an uncertain future.

The terrible prospects will make it difficult to continue operating, they indicated.

Most players, especially coal mining companies, indicated that they are selling the resource at a price below cost, resulting in unprecedented impact on earnings, balance sheets, and investor perceptions of the sub-sector.

Industry players, this week made a distress call saying the sub-sector has literally dug itself into a hole and there is still a terrible prospect for miners in Zimbabwe.

The price for coal delivered to ZESA’s thermal power stations at Hwange, Bulawayo, Munyati, and Harare, has been fixed at US$26.50 per tonne since July 2011.

There was little impact between 2011 and June 2019 because the local currency and the United States dollar was trading at parties.

Now, the price is being paid in Zimbabwe dollars-following its re-introduction last year in June- at the prevailing foreign auction exchange rate.

This translates to as little as ZWL$2,035.20 per tonne using this week’s auction rate of ZWL$76.8:US$1. This is said to be below the cost of production.

Consequently, many projects in the sub-sector, players told Business Times, continue to be delayed or shelved completely because the price is inadequate to fund capital projects.

“It is difficult to continue operating. It is actually crunch time for coal miners because it (coal) has been fetching a price lower than the cost of production, leaving us on the margins.

We hope current negotiations with the Zimbabwe Power Company(a power generation subsidiary of ZESA) will bring a new price regime, which will be cost-reflective,” an executive with Hwange Colliery Company Limited, which is under administration, who preferred anonymity because is not authorised to speak to the press told Business Times on Tuesday.

Raymond Mutokonyi, the Makomo Resources boss and chairman of Coal Producers Association, had not responded to enquiries sent to him on Tuesday by the time of going to print. Information gathered by the Business Times shows that the price coal miners are fetching from ZESA is the lowest in the region.

Coal miners in Botswana and Zambia are getting an average of US$40 per tonne while those in South Africa are getting about US$50 per tonne.

The crisis confronting Zimbabwe coal miners has been compounded by a slowdown in China and India consumption, which have wreaked havoc in the sector. China and India are the world’s biggest consumers of the mineral.

There has also been a steep fall in prices for top-quality thermal and coking coal on the international market in recent months, meaning sellers at several international mineral exchanges, including the famous London Metal Exchange, have lost faith in the fossil fuel resulting in prices falling this week.

The prices have remained under heavy pressure amid oversupply concerns as production remained strong at major producers especially those in Australia and Indonesia in the face of weaker demand from China and India, the world’s largest consumers of the product.

Apart from that, coronavirus lockdowns have severely dented demand for coal. The price of the fossil fuel used to generate electricity in power stations is tumbling at the international market in the past few months due to the coronavirus pandemic.

According to Argus, a data provider, the overall fall in consumption has also been well pronounced in Europe as well, resulting in the price of thermal coal shipped to that continent this week falling to its lowest level since 2003 to sell at below US$40 a tonne. Zimbabwe miners are not alone in this predicament.

Even the price of high-quality Australian coal, which is the benchmark for the vast Asian market, sold to Europe, has dropped to a four-year low to US$51 per tonne this week, down from about US$68 a month ago, according to the latest assessment from Argus.

Prices of coal at international markets have been hovering around US$55 per tonne in April this year but it continues with its downward trend to sit at about US$49 per tonne this week.

It’s expected to continue southwards pressured by the rise of cleaner energy sources especially solar.

Local gold and platinum miners also battle the same fate. One of Zimbabwe’s largest gold producers, Rio Zim, recently put its mines under care and maintenance due to viability problems.

The price of gold has this week gone down by US$4.50 per ounce to US$1,938 per ounce, according to New York Mercantile Exchange.

Platinum also fell by US$6.63 to US$938.71 per ounce. At its peak, platinum, reached its highest price early 2008 at US$2,252 per ounce but after the collapse of Lehman Brothers-once United States’ fourth-largest bank, in 2008, and the start of the global crisis, there was panic over the industrial outlook of metals such as platinum.

Zimbabwe has the world’s second-largest proven platinum resources after South Africa, estimated at 2,8 billion tonnes of platinum group metals (PGMs) ore.

Three mines are engaged in the production of PGMs and associated metals from the Great Dyke.

These are Zimbabwe Platinum Mines (Zimplats), Mimosa and Unki Platinum Mine.

There are several others which are however still under development.

The Chamber of Mines of Zimbabwe (CMoZ) which represents major mining companies in the country, expect mineral production to fall by 60% in the second half of this year due to the impact of COVID-19, hurting Zimbabwe, which heavily relies on the sector for scarce greenback.

Local platinum and nickel miners which sell unprocessed products to South African refineries could be hard hit by the COVID-19 lockdown in South Africa due to logistical complications in transporting minerals to that country.

“It is estimated that mineral production may decline by about 60% with revenue losses exceeding US$400 million,” CMoZ said in a note to members, which was seen by Business Times.

Zimbabwe’s ferrochrome producers are also feeling the pinch. Zimbabwe’s largest producer ZIMASCO was recently put under care and maintenance due to COVID-19 and falling prices of the mineral. Zimasco is owned by China’s Sino Steel Corporation.

The fall in commodity prices comes at a time when the Government of Zimbabwe has identified mining as the pillar of economic revival.

Several experts said metal prices were likely to fall further this year.

Analysts say the outlook could be bleaker for the mining industry which is strategic to the Zimbabwean economy.

Despite this, mining remains the highest foreign currency earner, accounting for about 60% of the country’s export earnings.

It contributes to about US$3bn to the gross domestic product.

But, most miners’ average capacity utilisation is now below 60%, compared to 75% this time in 2019, due to acute power outages, inadequate foreign exchange allocations, capital shortages, high-cost structure, and absolute equipment, according to the CMoZ.

The platinum group metals (PGMs),however, were operating at close to 100% capacity utilisation. Gold miners expect a negative output change of between -5%, to -35%, platinum 0%, to -7% , diamond -30%, to -40%, chrome ore -10%, to -20%,nickel -2%, to -10% and coal -10%, to -40%.

Zimbabwe miners are also battling low ore grades and shafts are getting deeper, stretching more than a kilometre , something which is costly, according to mining sector players_Business Times

Karo Resources, one of the biggest investors in the new dispensation, will soon start mine construction work at one of its envisaged four mining portals in Mashonaland West, The Sunday Mail Business has learnt.

The miner inked a US$4,2 billion investment deal with Government in 2018.

The deal is three-pronged — platinum mining, chrome mining, and power generation.

It is believed that the area surrounding the Karo Resource Special Grant has huge chrome mineralisation.

Two solar power generating plants will also be established.

Mines and Mining Development Minister Winston Chitando said in an interview that Government expects chrome mining by Karo to start this year, while mine construction work on the platinum project would be the next step, especially after finishing drilling and sample analysis on the first portal.

The envisaged portal is poised to contribute to the targeted milestone of growing exports in the mining sector from the current US$2,7 billion to US$12 billion by 2023.

Platinum mining alone is expected to contribute US$3 billion.

“The platinum project is centred on four portals or shafts.

“The first portal has been fully drilled, analysed and ready to move to the next phase, which is construction,” said Minister Chitando.

“We expect that by the end of the year we will start to see extensive construction work on the ground.

“From there they will then move to the second, then the third and fourth portal. In terms of the US$12 billion (target), the fourth portal is not within the 2023 target; it is earmarked for 2024,” he said.

Minister Chitando said Karo has already identified sites for the construction of two solar power plants instead of one as initially agreed.

Government has signed deals with other mining houses that will see up to 500 megawatts (MW) being fed into the national grid.

He said some of the mining companies like Caledonia Mining Corporation had already made pronouncements to this effect, while the other miners would make their announcements in line with their stock exchange rules.

“They (Karo Resources) have already identified two sites on which they will establish their solar power stations and work is quite advanced on that front,” said Minister Chitando.

The energy investment would likely augment the coal-backed power projects in Hwange which were recently visited by President Mnangagwa last month.

Overall, the projects in Matabeleland North would cumulatively contribute 2 480MW into the national grid, with the first set to start operating next year.

The power projects will alleviate the country’s power deficit and will see Zimbabwe moving from being a net importer into a net exporter of power.

Overall, the region is forecast to have huge energy potential in the medium to long term.

According to a 2017 report by the International Energy Agency (IEA), Africa needs energy investments in excess of US$1,5 trillion without which Sub-Saharan Africa will be home to about 89 percent of the world’s energy poor by 2030.

The Sunday Mail

Mining companies are being forced to adjust their operations so as to remain afloat despite the threat of Covid-19, as well as keeping focused towards attaining the US$12 billion mining economy by 2023.

In launching the strategic road map to achieve the US$12 billion goal, Government expects growth to be driven mainly by gold, platinum and diamonds, among others.

Speaking during a virtual meeting last Thursday on the future of the mining industry, Chamber of Mines of Zimbabwe president Mrs Elizabeth Nerwande-Chibanda said the sector was playing a “delicate” balancing act given the outbreak of the Covid-19 pandemic.

The deadly virus was first detected in China last December and has spread across the world posing a serious health threat and economic crisis with countries embarking on national lockdown measures to contain it. Mrs Nerwande-Chibanda said the mining sector was battling with the new normal and that for the past six months, the business enviroment has been altered by Covid-19.

“We have to re-arrange ourselves to remain in business and relevant to our operations. As mining industry, one of the challenges we had was that we had to play a delicate balancing act in light of the Covid-19,” she said.

“On one hand we wanted to continue with operations and to sustain national forex inflows on the other hand, and we are happy to say we were allowed to continue carry on with operations.”

Mrs Nerwande-Chibanda, however, bemoaned the slowdown in the economic activity, which has crippled business viability across the globe, including local mines.

“We have recorded significant declines during the last six months, mostly on ferrochrome smelters that have gone under care and maintanance.

“There has been supply chain disruption; most companies depend on raw materials imports and there has been delays in deliveries,” she said.

“We all know that and borders have closed here and there, factories have closed and there has also been a weak demand for some base metals. Copper, nickel and ferro-alloys and platinum and gold have experienced price and production boom,” said Mrs Nerwande-Chibanda.

Since the outbreak of Covid-19, a number of expansion projects have been put on hold owing to working capital shortages.

“We are all aware of the inadequate foreign exchange retentions, uncompetitive prices for the surrender portion and gold has suffered quite a lot,” she said.

“And on fragile power supply, because of the little demand given that most factories have closed, we saw quite a gap of recovery but this problem hasn’t been quite solved totally.”

The large-scale miners representative body remains optimistic that despite the prevailing challenges, the sector is still key to the long-term sustainable growth of the economy.

“We continue engaging the Government on supporting legal and regulatory environment that is predictable for business,” she said.

Speaking on the same platform, Fidelity Printers and Refiners head of the Gold Development Initiative Fund Mr Matthew Chidavaenzi said:

“Covid-19 is a new reality that we have got to live with it. And because of that thinking and reasoning, it (Covid-19) came in and added onto the existing challenges. There is need for people to also understand the pre-Covid challenges.”

Mr Chidavaenzi said the future of mining in Zimbabwe was espoused by the Ministry of Mines and Mining Development through the US$12 billion mining economy by 2023.

“In this regard, the thrust of the Government is to use mining as an engine for economic growth and the gold sector has to play a significant role in the attainment of the vision by achieving an annual gold target of 100 tonnes. To achieve the 100 tonnes target, the country needs to increase installed capacity in mines, we need to develop new mines,” he said.

The Chronicle

LOCAL nickel producer, Bindura Nickel Corporation (BNC), has announced a further extension regarding publication of financial results for the year ended March 31, 2020 by two weeks.

The company was expected to have published the financial statement on July 31 having failed to do so on June 30. BNC is now expected to do so by the 14th of August.

In a notice to shareholders, the nickel miner said failure to publish the results within the set timeframe had been caused by the Covid-19 lockdown and revaluation of the company’s smelter.

“The year-end audit work had been delayed by the lockdowns, which were enacted into law by the Government in March 2020 as a national response to the Covid-19 pandemic.

“As part of the year-end procedures, BNC had to appoint an independent third party to carry out a valuation of the company’s smelter complex,” said the firm.

It said this process could not be completed within the set year-end timelines.

“The company was granted a 30-day extension by the ZSE for the publication of its audited financial results for the year ended 31 March 2020, with the deadline being extended from 30th June to 31st July 2020.

“Subsequent to the foregoing, BNC realised that it would not be able to meet the extended deadline of 31st July 2020. The company then approached the ZSE once more with an application for the extension of time by a further 14 days, to enable it to publish the results by not later than 14th August 2020. The extension was granted,” it said.

Last year, BNC announced the intention to complete its smelter in the 2020 financial year as it shifts focus from shaft deepening project it has commenced.

The nickel miner had halted smelter construction to focus on shaft deepening project to boost production in anticipation of increased global nickel prices.

BNC developed a wait-and-see attitude on the smelter project, mainly hinged on the price of the commodity, a move that made the firm’s management to decelerate the project waiting for higher nickel price levels.

The company’s management has indicated that depressed nickel prices had led to a revision of project priorities as it would not make economic sense to continue injecting huge capital into a smelter whose operations require more capital at hand.

The Chronicle

AN umalayitsha allegedly ganged up with two accomplices and pulled down 640kgs of overhead copper conductors worth more than $200 000 from a Zesa line in Binga resulting in a power blackout in some parts of the district.

They loaded the copper cables into their South African registered Toyota Quantum before the vehicle was intercepted the following day at a fuel queue at Cross Dete leading to the recovery of the loot.

This emerged when Lenos Sithole (41) of Magwegwe North suburb approached the High Court seeking bail pending trial. He is facing charges of cutting and interfering with apparatus for generation, transmission, distribution or supply of electricity in violation of the Electricity Act.

Sithole, through his lawyers Tanaka Law Chambers, filed an application for bail pending trial at the Bulawayo High Court citing the State as respondent.

In his bail statement, Sithole is denying the charges, arguing that there was no evidence linking him to the alleged offence.

Sithole said he was only implicated by one Insurance Nhongo who was arrested at the scene by virtue of being the authorised driver as shown on the vehicle’s temporary import permit (TIP).

“There is no eye witness to state that indeed I travelled to and from Binga in the vehicle in question. I was heavily assaulted by police officers who arrested me while at my home,” he said.

“I met one Insurance Nhongo for the first time in prison and police are misleading the court by stating that I was at Cross Dete and also participated in the alleged crime which took place in Binga as I was never there.”

Sithole said the only thing that links him to the offence is the TIP which is always in his passport as per Zimbabwe Revenue Authority (Zimra) requirements.

“Police officers are only assuming that I was in the vehicle because of the TIP and my passport and nothing else. There was no identification parade, not even a single witness who can safely say I was present at the crime scene save for inadmissible confession from Nhongo,” he argued.

Sithole said there were no compelling reasons warranting his continued detention pending trial.

He said fears by the State that if released on bail, he was likely to abscond due to the gravity of the offence, which attracts a mandatory 10-year prison term upon conviction, were unfounded.

“I was born in this country and have lived in this country for the better part of my life. I do not have the means and ability to escape the jurisdiction beyond the reach of law enforcement agents, and I am of fixed abode,” said Sithole.

He said he is a proper candidate for bail, arguing that the State has no strong case.

Sithole offered to pay $1 000 bail and to report once a week at Bulawayo Central Police Station as well as reside at his given address until the matter is finalised.

Mrs Sifiso Ndlovu-Sibanda who is representing the State, opposed the application, arguing there was overwhelming evidence against Sithole.

She said if released on bail, the applicant was likely to abscond trial.

“In casu, applicant has shown propensity to abscond. He was implicated by his co-accused who has since been convicted. As an indication that applicant is a flight risk upon arrest he fled and was only caught in Bulawayo after several raids,” said Mrs Ndlovu-Sibanda. “Hence it is not bald assertion that applicant will flee as he had already given indications of his intentions. Wherefore, the respondent prays that the application be dismissed.”

According to court papers, on January 10 this year shortly after 7.30pm, Sithole, Nhongo and their accomplices still at large, drove to Binga in a South Africa registered Toyota Quantum. Upon arrival, they allegedly cut overhead copper conductors using a bolt cutter and loaded the cables into their vehicle and drove off.

The following day at around 7.30am, Zesa employees discovered that there was a power outage around Binga area. Upon investigations they discovered that part of the overhead copper conductors had been cut off along a turn off leading to the Binga District Development Fund (DDF) depot.

A report was made to the police and investigations were conducted.

Police intercepted the vehicle at a service station at Cross Dete and Sithole and his other accomplices managed to run away. Nhongo was however, arrested at the scene and 33 rolls of the stolen cables worth $209 717,10 were found in the vehicle.

Nhongo implicated Sithole leading to his arrest at his house in Bulawayo.

The Chronicle

SIX miners, among them a woman, have been arrested for allegedly attacking three police officers and damaging a vehicle they were using in protest to the arrest of their workmate.

Tawanda Msimanga (27), Diana Shoko (37), Muzi Moyo (33), Mehleli Dube (28), Thamsanqa Ndlovu (31) and Lloyd Sithole (28) all from Gwanda were not asked to plead when they appeared before Gwanda magistrate Miss Lerato Nyathi facing a public violence charge. They were remanded in custody to 7 August for trial.

Prosecuting, Miss Faith Mutukwa said the gang blocked the vehicle which the police were using and one of them forcibly took handcuff keys from a police officer and released their workmate who had been arrested in connection with an assault case.

“On 14 June at around 2 pm the accused persons were at Geelong Mine where they work when one of them Tawanda Msimanga proposed love to Ms. Ntokozo Moyo and she turned him down. Msimanga went on to assault Ms Moyo several times and also threatened to kill her. Ms

Moyo then reported the matter to the police who came to attend the scene.

“Constables Mehluli Ncube, Emmanuel Moyo and Ebeny Bhonda proceeded to attend the scene in a vehicle which belongs to a civilian who offered to assist them with transport.

“The cops then apprehended Msimanga and when they were about to leave the rest of the accused persons started shouting at the police officers and ordered them to release Msimanga,” she said.

Miss Mutukwa said the accused persons then blocked the vehicle in order to prevent it from leaving. She said in the process one of the accused persons smashed the rear window of the vehicle and punched Constable Mehluli Moyo who was seated with the accused.

Miss Mutukwa said one of the accused persons forcibly took handcuff keys from Constable Moyo’s shirt and released Msimanga. He went on to smash the windscreen of the car using the pair of handcuffs which had been used on Msimanga.

“Seeing that they couldn’t contain the accused persons the police fled from the scene and hid in the bush and called for backup. A reinforcement team comprising Support Unit members from the West Nicholson Police Station attended the scene and the accused persons were arrested at Colleen Bawn tollgate while travelling in a vehicle they had hired,” she said.

Miss Mutukwa said the value of damaged property is US$387.

Meanwhile, two men have been arrested while their three accomplices are still at large after they ganged up on a man and beat him to death after accusing him of stealing gold ore.

Mpho Moyo (36) and Qhubekani Ndlovu (40) both from Colleen Bawn and their accomplices assaulted Morgan Sibanda before they drowned him in a saline pond while they had tied his hands and legs with a wire.

Moyo and Ndlovu were not asked to plead when they appeared before Gwanda magistrate, Miss Lerato Nyathi facing a murder charge. They were remanded in custody to 7 August.

Prosecuting, Mr Noel Mandebvu said the gang attacked Sibanda on 23 July.

“On 23 July at around 9pm at Sally 22 Mine in Collen Bawn Moyo and Ndlovu together with three other people who are still at large confronted Morgan Sibanda.

“They assaulted him with a hammer mill, fan belts, horse pipe and also punched and kicked him several times.

“They then tied his hands together to the back with a wire and also tied his feet together with a wire. They then drowned him in a saline pond.

“Upon realising that he had passed out the gang dumped Sibanda’s body in a makeshift plastic tent at the mine and fled. Sibanda’s body was later found by some mine workers who reported the matter to the police resulting in the arrest of the accused persons,” he said.

The Chronicle

Some Zimbabwean mining companies have halted expansion projects due to lack of capital with most financiers now demanding offshore collection accounts as guarantor for funding citing high country risk profile, the Chamber of Mines has said.

In the gold sector, investors are insisting on gold output as security for capital, the industry lobby group said in the report, prepared for Government earlier this month.

The sector, expected to underpin Zimbabwe’s economic turnaround, generates about 70 percent of its foreign currency from exports mainly from gold, platinum group metals and ferrochrome.

Zimbabwe owes various international creditors about US$8,3 billion and recently had its appeal for an emergency bailout to the Paris Club rejected for lack of policy reforms.

This week, the Government agreed to pay former white commercial farmers about US$3,5 billion for land improvements, in a move some analysts say may help mend relations between Zimbabwe and the international community.

“Mining companies are struggling to raise capital due to increased country risk,” the Chamber of Mines said.

“This has seen most expansion mining projects put on hold as financiers are demanding offshore collection accounts as guarantor for capital.”

Last year, Zimbabwe launched a roadmap expected to grow the mining industry to US$12
billion by 2023, but critics say the target is unrealistic.

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

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

Mining firms are allowed to keep up to 55 percent of their foreign currency earnings and the remainder is liquidated in local currency at the official rate.

However, with the introduction of the auction system, companies can voluntarily liquidate their forex.

“Foreign exchange retentions for the mining sector are inadequate to meet regular operational requirements including importation of critical raw material supplies,” said the Chamber of Mines.

“The situation has been exacerbated by requirement to pay for electricity bills, royalty and other taxes in foreign currency which have significantly reduced the effective retention from around 50 percent to around 30 percent.”

The mining board said there was a misalignment between compulsory liquidation of unutilised foreign currency and production cycles of mining companies.

It said the working capital cycle for mining companies average between 60 to 90 days, ordinarily implying that mining companies may require excess balances in their nostro accounts beyond 30-days.

Some mining companies that experienced production disruptions caused by Covid-19 might have seen increase in excess balances in their nostro accounts.

“These balances remain strategic as decoupling cash reserves to augment working capital requirements to meet expansion in capacity utilisation in line with improvement in the Covid-19 situation.

“It is against the above that mining companies are appealing for an upward review in time limit in line with production cycle.

“While we appreciate that the reintroduced auction system may see some mining companies to voluntarily offloading their excess balances, we appeal to the Government to guarantee minimum working capital cycle for sustenance and expansion projects,” said the industry lobby group.

It said gold producers continue facing payment delays for deliveries to Fidelity Printers and Refiners, the sole buyer of the commodity, of up to eight weeks.

This has resulted in working capital shortages and production disruptions, weighing down potential gold output to as much as 25 percent.

Miners are also worried about the “fragile” and “unstable” power supply situation. With production levels expected to increase, demand for power may result in power cuts_Business Weekly