Mining ZimbabweLatest Mining News, Policy and Industry Updates

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

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

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

Works at some of the projects have begun.

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

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

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

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

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

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

It was acquired by ZMDC in 1984.

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

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

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

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

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

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

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

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

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

“The commitment is there.”

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

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

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

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

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

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

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

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

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

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

It was heavily criticised for denting investor confidence.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Chronicle

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Chronicle

ZIMBABWE is targeting to grow diamond production from 3,5 million to 12 million carats by 2025, Mines Minister Winston Chitando has said.

Before Zimbabwe attains such lofty output it has to achieve an ambitious but achievable target of growing the diamond sector to a US$1 billion industry.

Government has grand vision of expanding the mining industry from being a US$3,4 billion sector presently to a US$12 billion industry by 2023, of which diamond should account for nearly a tenth.

In terms the grand plan, gold, Zimbabwe’s single biggest mineral export, will generate US$4 billion in four years (2023) time while platinum would bring in another US$3 billion as a raft of projects come on stream.

Minister Chitando was speaking during the official reopening of Anjin Diamond Mine in Chiadzwa, Manicaland Province, in the eastern highlands of Zimbabwe a few days.

The visit and tour of the diamond mine included several high ranking Government officials chief among them President Mnangagwa and his second in command; Vice-President Constantino Chiwenga.

In his official remarks, President Mnangagwa exhorted management and workers in diamond mining, through Minister Chitando, to shun corruption and unhealthy corruption, which he said will not be tolerated regardless of the culprit. “Diamonds are not heavy; one does not shed any sweat if carrying some, they just walk freely as if they are not carrying anything.

“I told Minister Chitando and VP Chiwenga, who is in charge of economic ministries, to say please no tolerance to corruption.

“It does not matter who it is; from managers to general workers, we say no tolerance to incidents of corruption,” he said.

VP Chiwenga said diamond mining will play a key role in national economic transformation through jobs, local sales and exports.

Anjin has resumed operations following nearly 5 year-long hiatus that came after consolidation of all diamond firms in the sector, including private entities, into a single state company over lack of transparency.

The Mines Minister said diamond production was part of four key pillars meant to support growth of diamond mining in Zimbabwe, as Zimbabwe bids to achieve middle-income status by 2030.

“And this official reopening of Anjin operations in Chiadzwa are part of that journey, to achieve 10 million carats in 2023, peaking at 12 million carats 2025,” Minister Chitando said.

Minister Chitando said the third important pillar of the diamond policy was the marketing, which envisages setting up of diamond cleaning and sorting facility.

The last and fourth key pillar of the diamond policy, Minister Chitando said, was value addition and entails establishment of a gemmology centre in Mutare.

As of February 2014, the Chiadzwa diamond fields were operated by seven private entities all of which entered 50-50 partnership with the Zimbabwe government under the umbrella of Zimbabwe Mining Development Corporation (ZMDC).

The Chronicle

…as the company eyes premium glass, ceramic markets

African lithium developer, Prospect Resources, has said its lithium to iron ratio is suitable for the premium glass and ceramics market, in a major boost for the company.

There are few mines in the world able to supply the premium-priced, ultra-low iron, and the technical market for spodumene or petalite, the company said.

Prospect said the result places Arcadia’s spodumene as one of the lowest iron products in the world comparable to Talison Lithium’s Greenbushes mine.

This not only places Arcadia’s spodumene as a premium product for the chemical market but presents an opportunity to sell an ultra-low iron spodumene and petalite blended product into the glass and ceramics market, the company said.

“We expect this blended product will achieve a premium price in the market because we can design the blend for each customer depending on their required lithium to iron ratio and therefore supply a finished product,” Prospect Resources managing director Sam Hosack said.

“The opportunity for Prospect to produce a technical grade ultra-low iron blended product of Arcadia spodumene and petalite has the potential to deliver a fit for purpose product for glass ceramics customers and achieve higher sales prices across.”

Hosack said the company expects such a move should provide a positive economic uplift, compared to simply selling the Arcadia spodumene to the chemical market.

He said Arcadia is unique in having the only joint ore reserve committee compliant lithium pegmatite in the world able to produce ultra-low iron spodumene, petalite and tantalum products.

In the outlook, Hosack said the focus will now be on understanding the positive impact on the mine’s economics, the subsequent increase in revenue, upgrade to the ore reserve and a potential increase in mine life.

A metallurgical test work programme involving preflotation of Spodumene ahead of Petalite flotation was carried out in June 2020 by an independent specialist company in Germany.

The petalite and spodumene concentrates generated from this test work were subsequently subjected to a magnetic separation step in order to reduce the residual consistent with Arcadia flow sheet, the company said.

Prospect Resources is a battery minerals company with a focus on lithium in and around Zimbabwe, with the flagship project being the 87% owned Arcadia Lithium project, located on the outskirts of Harare in Zimbabwe_Business Times

Zimbabwe’s gold export earnings were US$476.2m during the first half-year of 2020 from US$464m earned during the same period last year after deliveries improved on the back of increased foreign currency retention to 70%.

The retention was 55%. The increased exports come at a time when the economy is grappling with foreign currency challenges and is banking on gold and tobacco receipts.

This comes as Zimbabwe’s golden leaf’s export receipts have gone up 4% to US$261m after selling 78.3m kg as on July 8, 2020, from US$250m earned during the same period last year.

Cumulatively the country’s gold and tobacco export receipts were 3% up to US$737.2m during the first half of 2020 from US$714m grossed during the first six months of 2019.

These are the country’s highestforeign earners and account close to 50% of the country’s earnings.

Tobacco exports usually peak after the tobacco selling season has ended. Zimbabwe’s gold exports were up in January, May, and June with the rest of the months down during February, March, and April due to lockdown restrictions which limited artisanal miners to operate.

The government has increased fuel allocations to gold miners from last year but the lockdown and the effects of coronavirus have thwarted miners to get useful consumables from China.

Experts say gold mining especially, especially small scale, was greatly affected by lockdown regulations as social distancing needs to be observed.

The yellow metal is now the highest forex earner and contributes 38% of the country’s total earnings and more than 60% to themining sector which is the highest forex earning sector in the country.

In an emailed response Reserve Bank of Zimbabwe governor, John Mangudya, told this publication that the country’s gold export earnings were pushed by May and June earnings thanks to 70% forex retention threshold.

“The country’s export earnings have gone up 2,6% to US$476.2m from January 2020 to June 2020 from US$464m earned during the same period last year due to the review of foreign currency retention threshold and increased fuel allocations this year,” Mangudya said.

In January, export earnings were US$98m from US$70.4m last year, while in February export earnings were US$56.1m from US$77.8m.

In March, the yellow metal export receipts were US$71.9m from US$88m in the same period last year.

April exports were down to US$63.4m from US$76.4m. In May, gold export receipts were up to US$120m from US$85.8m realised in the same month last year.

Receipts in June were US$66.4m up from US$65.4m in the same period last year. Gold deliveries were down 13% to 10.597 tonnes in the first six months of 2020 from 12,294 tonnes achieved in the same period last year as the sector takes a hit from foreign currency constraints and Covid-19 restrictions which affected small scale producers.

Mines and Mining Development minister Winston Chitando said Covid-19 has affected the operations and a plan needs to be worked out to ensure miners recover from the big slump.

Last year, gold export receipts slumped 28% to US$946m in 2019 from US$1,33bn in 2018, leaving the country with no alternatives for foreign currency as the second-highest forex earner tobacco also tumbled 7% to US$846.7m from US$907.8m due to prolonged droughts and unfavourable payment policies.

Cumulative gold deliveries fell 16% to 27.6 tonnes in 2019 from 33.2 tonnes in 2018 due to suspected smuggling and hostile mining policies.

Experts said the underperforming of the small scale sector was due to unfavourable mining policies where the retention threshold was 55% against 70% in 2018.

Since 2017, the economy has been grappling with foreign shortages, inefficient mining and processing technologies but the reduction of the forex retention levels by the Reserve Bank of Zimbabwe is believed to have impacted negatively on the deliveries.

This has created arbitrage opportunities for miners to smuggle gold outside the country’s borders.

Over 34 tonnes are believed to have been smuggled out of Zimbabwe. Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said Covid-19 has negatively impacted gold production.

“By far Covid-19 has negatively affected our operations as small scale miners struggle to procure crucial raw materials and restrictions in movements across the country as authorities tighten lockdown measures,” Chinyenze said.

He said the underlying problems of forex retention continue to affect production as miners look for alternative markets.

Some miners, especially large scale, are believed to be selling their gold to suspected smugglers to get more forex for their operations.

Experts suggested that established mining companies with huge capital have dominated this year’s deliveries due to lack of movement from the small scale miners.

Zimbabwe is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the sector to earn US$12bn yearly and only if the forex retention threshold, fundamentals, and funding issues are addressed.

Gold is expected to lead the charge with US$4bn_Business Times