Mining ZimbabweLatest Mining News, Policy and Industry Updates

…return of Anjin castigated by experts

Government critics, and natural resources experts say the new dispensation has gone the full circle of facilitating natural resources plunder by foreigners, rubbishing the return of Chinese firms to mine diamonds as retrogressive.

This follows the official return of Anjin Diamond Company to Chiadzwa after it injected US$38 million, in an opaque arrangement touted to change Zimbabwe’s fortunes despite the miner listed as one of diamond companies which externalized forex during its first stint.

Before it stopped operations in 2015 Anjin was also sued by the local community, through the Zimbabwe Environmental Law Association (ZELA), for releasing effluent and polluting Odzi and Save Rivers.

Anjin also failed to produce audited annual financial statements since 2010 when the entity started mining diamonds in Marange and also failed to compensate families that were relocated to pave way for its operations.

Several natural resources experts, politicians, and civic society players took to micro blogging site Twitter to question the prudence of granting Anjin a new concession when there is currently no binding policies and the Mines and Minerals Act is yet to be amended.

Centre for Research and Development (CRD) said Anjin did not undertake due diligence processes including an Environmental Impact Assessment (EIA), “Mnangagwa blessed Anjin mining without binding policy reforms in diamond mining. Prior to opening Anjin did not undertake due diligence processes that will protect human rights.”

Outspoken opposition politician Tendai Biti said Zimbabwe has mortgaged its resources after allowing the Chinese miner, which was part of a coterie of companies disbanded in 2015 and consolidated for failing to remit to the national fiscus.

Biti called this rape and pillage of Zimbabwe’s natural resources which he said should be quantified in
the future through a review and audit of all mining contracts.

“A future democratic government in Zim must review & audit all mining contracts and concessions dished out by this regime. Further there must be an international audit of Zimbabwe’s diamond Earnings since 2010. The rape and pillage of Zimbabwe commodities must stop

“Zimbabwe’s alluvial Diamonds could have lasted 25 years but in under 5 years Anjin & others had stripped same and Zimbabwe has nothing to show for its diamonds. Looting of commodities (gold, diamonds, platinum, chrome, and gas) under (President Mnangagwa) Emmerson is criminal and should be stopped.

“Despite the fact that Anjin was the country’s largest diamond producer, averaging a million carats a month it hardly contributed anything to the fiscus. Of the $15 billion worth of diamond revenue lost between 2010 and 2015 Anjin was the biggest looter much worse than Mbada Diamonds and DMC,” said Biti.

Reas Sithole a resident of Chiadzwa said, “Returning Chinese Anjin Company after they failed to remit to the Zimbabwean national treasury and to look after communities in Chiadzwa is really worrisome. What has changed?” he queried.

Others said the government should have done its due diligence to check their Environmental Management Plans and Systems, their Corporate Social Responsibility and Tax remittances to treasury before Anjin began with mining and ensure that it compensate resettled families.

With this deal placing transparency and accountability off the table the international coalition the Extractive Industry Transparency Initiative (EITI) chair Helen Clark said Zimbabwe would greatly benefit from signing transparent deal and joining the initiative dominated by its African peers.

“(The) Extractives Industry Transparency Initiative which I chair is global initiative supporting transparency and best practice governance in extractive sectors. Around half of countries implementing EITI standard are in Africa. Zimbabwe would benet from implementing it,” she said.

Shamiso Mutisi who leads a civil society coalition of the Kimberly Processes Certification Scheme (KPCS) said the government should consider adopting diamond trading principles to safeguard revenue from diamonds and to ensure accountability.

Mutisi, is also deputy director of ZELA, said there are ‘a few insights from the Kimberley Process on trade of diamonds for Anjin and government to consider’.

“Diamond companies required to facilitate the audit of companies for traceability of rough diamonds. All
cash purchases of rough diamonds be routed through official banking channels supported by
veriable documentation.

“Effective security standards is a requirement. Records of diamond buyers, sellers, and exporters
including amounts and values sold, purchased, or exported required,” said Mutisi_263Chat

South Africa’s gold industry has been dying slowly for years. As the coronavirus undercuts the already fragile case for investment, its platinum mines may be next.

Beset by power and water shortages, alongside whipsawing government policies, South African producers have cut spending over the past decade on mines responsible for 75% of global platinum supply. The virus is accelerating that trend, damping demand for the catalytic converters that are the largest users of the metal, while stimulus packages push automakers to speed a shift to electric vehicles.

A series of mega open-cast projects risk being shelved — depriving a recession-hit economy of essential investment — but the toughest blow may land on the so-called western limb, the traditional heartland of the nation’s platinum belt.

“The western limb region has been the bedrock of South African platinum and that is in decline,” said Mandi Dungwa, an analyst at Kagiso Asset Management. “It is the end of an investment cycle in those type of mines.”

Shunning capital spending leaves one of South Africa’s biggest export industries in limbo, just as the demise of the nation’s gold mines enters its final phase. With about 170 000 people employed in platinum mining, the timing is bad for President Cyril Ramaphosa as he battles the biggest economic contraction since World War II.

Output from South Africa’s 130-year-old gold industry slumped over the past three decades as the geological challenges of operating the world’s deepest mines pushed up costs. The platinum deposits discovered by Hans Merensky in the 1920s contain about three-quarters of the world’s known resources, but were only exploited in the 1950s with a surge in demand from carmakers using the metal to cut exhaust pollution.

“The sun is definitely starting to set over some of the conventional, deep, high-grade, western limb areas,” said Johan Theron, a spokesman for Impala Platinum Holdings Ltd. “It’s exactly like gold: there is more gold, but it’s deeper and requires more capex and prospects of making a return are slim.”

Platinum output peaked in 2006, and the lack of investment in deep-level western limb shafts will result in a further sharp contraction in production over the next 10 years.

The windfall from surging palladium prices — another platinum-group metal produced at South African mines — refilled the coffers of local producers over the past 18 months but hasn’t been enough to justify large capital expenditure projects. That’s delaying the construction of the next generation of mines on the northern limb of the platinum belt, and hastening reserve depletion.

In June, Implats balked at investing about R12 billion on building a new mine at Waterberg on the northern limb of the platinum belt. The outlook doesn’t support such spending over the next decade, said spokesman Theron.

Anglo American Platinum has delayed a decision until the second half of next year on whether to spend as much as $1.5 billion on expanding output at its key Mogalakwena mine.

Vancouver-based Ivanhoe Mines said it’s still evaluating finance for its new Platreef project, which could require about $1.5 billion of investment.

Still, notwithstanding the investment hiatus, the platinum sector remains in better shape than South Africa’s gold industry. Even without further spending, some deep-level mines have a 30-year lifespan, according to James Wellsted, a spokesman for Sibanye Stillwater, the world’s No 1 platinum miner.

Still, investment decisions are complicated because of an uncertain regulatory and policy environment, among other challenges, Wellsted said.

With the pandemic creating doubts over future demand, the development of new, lower-cost mines has been put on hold.

“With Covid-19, all the companies went into cash preservation mode,” said Arnold Van Graan, an analyst at Nedbank. “Over the next decade, there could be a big step change down in PGM production, if the industry does not invest.” – Bloomberg

The alleged syndicate involved two Zimbabweans Isaac Nhamo and Shadreck Pungurume, two Mozambicans Zacarias Wilstine and Mamodou Boye, and Democratic Republic of Congo national Hassane Kane.

A FIVE-MEMBER illegal diamond buying syndicate was recently busted and brought before a Mutare magistrate on Saturday.

The five, who are represented by Mutare lawyers Chris Ndlovu and Farai Matinhure, appeared before magistrate Prisca Manhibi facing charges of possession of articles for criminal use.
Nhamo, a diamond picker at Anjin, and Pungurume face an additional charge of money-laundering.

Wilstine, Boye, and Kane were remanded in custody to today as the State sought the services of a Portuguese interpreter.

Nhamo was granted US$25 000 bail and ordered to continue residing at his given address, surrender his passport and not interfere with witnesses.

He was remanded to August 21 for trial, while Pungurume was remanded to today.

The three foreigners were nabbed after the Zimbabwe Anti-Corruption Commission (Zacc) raided a house in Greenside, Mutare, after being tipped off that they were stealing diamonds from Anjin Diamond Mine in Chiadzwa and selling the precious stone on the black market.

Zacc detectives allegedly recovered diamond scales and cutters.

On August 7, Zacc allegedly received a tip-off that Pungurume was conducting illegal diamond mining in Chiadzwa and arrested him at a police roadblock in Wengezi, leading to the recovery of two small diamond scales, four expired access permits into Chiadzwa diamond fields, US$15 000 and $6 255.

In Nhamo’s money-laundering charge, it is the State’s case that between March and August 2020, the accused took advantage of his position as a diamond picker and joined the syndicate and allegedly diverted diamonds from Anjin Investments to the black market for personal gain.

The State alleges that Nhamo went on to buy three vehicles and some immovable properties in Mutare_NewsDay

The CZM boss said there was need for an aggressive government funding programme particularly in the gold sector that could fund up to 10 000 miners at once in a bid to improve the viability of the industry.

CONFEDERATION of Zimbabwe Miners (CZM) president Rangani Chauke has urged government to speedily recapitalise mining operations to achieve its ambitious US$12 billion mining economy by 2023.

“There is need for a fast-track mining programme that avails substantial amounts of capital investment to recapitalise particularly the small-to-medium scale miners,” Chauke told NewsDay Business.

“Yes, we might have our socio-economic challenges as a country, we might be feeling the impact of COVID-19 on our economy, but every dark cloud has a silver lining and mining is the only remaining silver lining.”

Chauke said the support they expected from government was in terms of secured loans with 90% of the loans being new plant and machinery while 10% could be channelled towards working capital.

“I don’t see the 10 000 or more miners getting government support failing to produce half a kilogramme or more of gold each per month,” he said.

“Compared to other minerals and sectors in mining, gold is the fastest foreign currency earner and this sector requires big support from government. Investment in new plant and machinery will ensure growth in terms of volumes and revenue in the gold sector.”

Last year’s gold delivery data from Fidelity Printers and Refiners showed that artisanal and small scale-miners (ASMs) accounted for 63% of total gold deliveries, which amounted to 27 tonnes.

Global economic analysts say ASMs produce about 20% of the current world gold supply_NewsDay

ZISCOSTEEL Finance Executive Munashe Mabheza has become the first person to succumb to Covid-19 in Redcliff.

Mabheza passed on Saturday night at his home in Redcliff.

Redcliff Mayor Clayton Masiyatsva confirmed the death.

“This is the first Covid-19 death in Redcliff. We have gathered that the now deceased is Mr Mabheza, the Financial Executive at Ziscosteel. He died at his home,” Masiyatsva said.

He added that Mabheza had not been aware of his status.

“He didn’t know that he had contracted the deadly virus. It was only after the rapid response team had gone to his place that they discovered he had Covid-19 after testing was conducted by Mars.

“His family initially bared the tasksforce insisting that no-one was sick at the place. It was only after his health deteriorated that they called Mars. Unfortunately, he couldn’t be saved so he died at home,” Masiyatsva said.

The steel manufacturing town of Redcliff now has eight confirmed Covid-19 cases.

“The virus is real and I urge people to take all the precautionary measures as stipulated by World Health Organisation guidelines,” Masiyatsva said.

Midlands has since become one of the epicentres of the deadly virus after Harare and Bulawayo.

Midlands has 390 Covid-19 cases and 5 deaths.

Nationally 105 people have succumbed to Covid-19 out of 4 575 cases_ NewZimbabwe.com

The government urged to ring-fence opportunities for women by reserving extractive sector quotas for women and provides systems that ensure the inclusion of women in the US$12 billion mining strategy.

Speaking during a virtual discussion on women participation in the mining sector towards achieving the 12 billion economy facilitated by Zimbabwe Allied Diamond Workers Union (ZIDAWU) women said they are being left behind.

Government, they said must provide tax incentives to companies which provide upstream female employment, decree minimum quotas of women employment, and develop local procurement plans which guarantee equal access and opportunities for women.

Abby Musiyazviriyo of Marange Development Trust (MDT) said with the abundance of available upstream and downstream linkages in the mining sector, women can also carve niches for themselves.

She said, “Vast upstream, downstream linkages in the mining value chain provides for investment in local content development, power, technology, infrastructure technology and improvement of livelihoods for sustainable development,”

Musiyazviriyo said the government must pursue (or amend existing) policies that incentivize investors which maximize linkage creations that promote women empowerment and impose tax restrictions on those that outsource such linkages.

She said in the continent there are abundant case studies including in South Africa, Botswana, and Nigeria on how governments can leverage upstream and downstream linkages, promote local content development, and promote women participation in mining.

“These linkages are contextual applying to a specific area at a specific time and the opportunities that they present are highly dependent on the existing know-how, expertise, and legal framework in the areas where extraction of minerals is taking place.

“In seeking to develop these linkages, pro linkage policies should be crafted or the existing policies
reformed to stipulate that companies must source domestic suppliers, impose import restrictions to
incentivize downstream processing.

“Government should avoid using incentives like tax holiday and granting subsidies that are contingent
to the sourcing of goods domestic. Furthermore, government should be at the fore of linkage creation
from the extractive sector.

“Policymakers should understand the variegated ways in which women are excluded and adversely
incorporated in the mining sector so that their presence can be improved and women can continue
to be visible and their representation in the sector can also improve,” said Musiyazviriyo.

Sophia Takuva a small scale miner from Zvishavane says providing quotas for women in the mining
value chain alone, without formalization of artisanal mining, may not be adequate to stimulate
inclusive growth towards the US$12 billion target.

She argues that while women can significantly contribute in linkages in the mining sector,
formalization will remove barriers of entry and ensure that government reaps high yields from low
hanging opportunities like gemstone mining.

“There is a need to open these areas for pegging and capacitate small scale miners with necessary
equipment as soon as they finish registration and knowledge on basic gemstone mining and
processing (gemstone finishing, cutting, and polishing).

“In Chiadzwa for example, diamond eld exploration of diamonds shows that there are reserves with
low yields and grades, also there are gemstones like zircon, quarts and corundum these gemstone
rich areas must then benet local communities.

“We can reserve these areas for women and also ensure that beneficiation mechanisms are put in place to create employment and empower women to actively participate in value edition while showcasing their crafting skills. This will bring in more revenue and selling of finished products brings more value to the minerals,” she said.

Takuva said the government’s mines and mineral procedures must also be computerized and open up reserves for locals to peg and mine, with quotas reserved for women only, under close monitoring of bigger mining corporations.

She said to achieve this transparency and accountability are key enablers to ensure exploitation of mineral resources gives birth to benefits for local developmental needs and ensure sustainable local content development.

“Women are there in the mining sector but they may be at the periphery that sometimes they may
not be recognized because of the multi-tasking nature of mining.

“Although women and youth are at the periphery in the ASM sector they play a great role and can
bring change if supported, these two groups face challenges with registration and this is fueled by a
corrupt system that is slow in facilitating necessary processes in time.

“There is need for a computerized and accessible mining cadastre for transparency on licensing, we
have artisanal gemstone miners where are the gemstones sold to, obliviously to the black market and
the country loses,” said Takuva_263Chat

In its latest mining sector and communities situational report, the Zimbabwe Environmental Law Association (Zela) said small-scale chrome producers were facing challenges to access markets for their chrome.

ZIMBABWE’S small-scale chrome miners are stuck with tonnes of ore which they are failing to sell to the international markets following the closure of borders due to the COVID-19 pandemic outbreak.

“The Chinese are the main buyers of chrome in Zimbabwe. As a result of the pandemic, borders have been closed and no buyers have been able to buy the chrome. This has left chrome small-scale miners stuck with the ore which can be easily stolen by criminals in the sector,” read part of the report.

“Chrome prices are at relatively low levels and it is difficult to see how chrome producers will benefit. Many ferrochrome producers and international markets suspended operations.”
In Zimbabwe, the Minerals Marketing Corporation of Zimbabwe controls the prices of all minerals mined in the country.

Chrome is one of Zimbabwe’s main exports after gold, platinum group metals and diamonds.

Zimbabwe has the world’s second-largest known chrome ore deposits, with about 900 million tonnes of untapped ore against total world reserves estimated to be 7,5 billion tonnes.
Only South Africa has more chrome ore reserves than Zimbabwe.

Zela said although the mining industry was given a reprieve at the start of the COVID-19-induced national lockdown to continue operating upon meeting certain conditions, the chrome sector had already been experiencing operational challenges way before the deadly global pandemic struck.

Chrome producers suffered another blow after its stainless steel-making markets in Europe and Asia scaled down operations.

At the end of March this year, Zimasco, one of the country’s largest chrome producers, temporarily halted its smelting and related mining operations in response to weak global demand and resultant low prices for ferrochrome, which made continued production unviable.

NewsDay

Governments and advocates of cleaner environments are pushing for it and platinum producers are having nightmares about it; “The shift towards New Energy Vehicles (EVs)”.

Some governments have also declared their intention to grow the share of EVs in their countries’ automobiles market.

The proportion of EV, PHV, and hybrids in global auto sales is estimated to reach between 50% to 60% by 2030.

The electric car market penetration into the global vehicle fleet (1.2 billon cars) will be the key demand driver.

The current market share of yearly EV sales in just under 1.0%.

Overall, a drastic change in the automobile industry and materials sector is expected as EVs (which use Lithium-ion-Battery) will take the place of the internal combustion engines (petrol and diesel).

The implication is certain kind of mineral resources are going to be in high demand.

A Lithium-ion-Battery requires Lithium, Cobalt, Nickel, and Graphite as significant materials.

Already, the demand for these resources is in a surprising uptrend.

Lithium requirement is likely to reach 36 times current demand by 2030.

The other materials are also expected to see a similar surge in demand.

While the EV story has been cited as one of the drivers of nickel prices going forward, nickel demand from the electric car market will largely be dependent on the selection of energy storage technology, which is still to be decided by the major PEV manufactures.

Nickel is likely to form part of the cathode of choice however this is then a function of how large the battery will be in the respective vehicles.

We note that nickel is generally the weakest of the so-called battery metals. Only 6.0% of output goes into batteries and nickel is still mainly a steel play (more than twothirds is used steel).

Nickel is more tied to outlook for China’s economy.

Overall, Nickel producers should still benefit from the growth in the demand for batteries used in electric vehicles (EVs).

EV production is expected to register double-digit growth rates as the clean energy revolution continues.

Bindura Nickel Corporation (BNC) is strategically positioned but will have to invest more so as to benefit fully from firmer prices.

We estimate the required capital injection to be in the region of USD30m – USD40m.

That said, while the counter looks very cheap compared to its international peers, we are still concerned about the value depreciation to shareholders emanating from the incomplete smelter project.

We have a SPECULATIVE BUY recommendation on BNC.

Batanai Matsika is the Head of Research at Morgan & Co. He can be contacted on +263 78 358 4745 or email: batanai@morganzim.