Mining ZimbabweLatest Mining News, Policy and Industry Updates

Miners are demanding that the government should reduce diamond royalties to around 7.5% to encourage them to produce more to meet the government’s target of US$12bn mining revenue by 2023.

This is after Finance Minister Mthuli Ncube recently reduced diamond royalties from 15% to 10% effective from January 1 2020. It also comes at a time when the mining sector is reeling with foreign currency and electricity shortages, the lack of top-quality machinery, and low forex retention levels.

RioZim chief executive Bhekinkosi Nkomo told Business Times that Zimbabwe would struggle to reach the US$12bn target by 2023 if it continued with too many taxes and levies in the mining sector as they affected serious investments in the extractive sector.

“Zimbabwe has the highest royalties share in the region with 15% and once you factor in that 15%, your net present value for any project becomes negative,” Nkomo said.

“If we put our royalties at a range of between 5% and 7.5%, the industry becomes more attractive. The second highest country in the region is at 10%, which means we are way ahead of others which is not good for investment,” Nkomo added.

Mining contributes 65% of the country’s export earnings, with gold contributing 38% of overall exports.

According to Nkomo: “The mining industry has over 20 pieces of legislation that regulate it and all of them have a long list of charges, inspection, and rentals, leaving most mining companies in the red.

That issue needs to be looked into very seriously. We need to consolidate those charges and we have done a lot of appraisals for the projects, especially in the diamond sector.”

He said there was also a myth that if taxes were reduced, revenues would also go down. This, he said, was wrong because if the authorities “charge 15% of US$100, that’s US$15, but if they reduce the tax to 10%, the government will get more money in the process”.

The mining sector has suffered due to crippling power outages which escalated in June this year. Nkomo said there was a need to spend more time to de-risk the country as far as electricity availability was concerned.

Despite mining companies ringfencing themselves from power outages by paying their bills in forex, Zesa Holdings still fails to provide them with power. This is costing the country millions of dollars in revenue as mining companies have been forced to work four days a week.

“Investors don’t come into a country so easily, they need to look at the risk they will carry and whether they will get a return or not, and when there is no electricity, it means there is a big deterrent,” Nkomo said.

The Chamber of Mines of Zimbabwe said besides royalties, duties should also be competitive and red tape cut to improve the ease of doing business.

Currently, it takes two to three months to apply for a project status document, and by the time the application goes through the miner would have lost a quarter of the year. Industry experts say all miners, big or small, need more incentives to attract investment in the country_Business Times

The Ministry of Mines and Mineral Development is readying itself to adopt the Extractive Industry Transparency Initiative (EITI) by setting up a mining cadastre office, an official has said.

Repeated calls have been made by the new government that Zimbabwe is now open for business, what opportunities and challenges does this policy direction mean to ASGM sector?

Ennocent Murapah, Human Resources Officer in the Ministry of Mines made these remarks while addressing a Public Finance Management indaba organized by Zimbabwe Coalition on Debt and Development (ZIMCODD) recently.

Murapah said government pressed upon by civil society, is in the process of setting up cadastre offices at all levels to develop a comprehensive structure which can then put the country on a better position to join the EITI and curb illicit financial flows rampant in the sector.

He said despite political resistance government has forged ahead with setting up structures for cadastre officers as well as a Director of the cadastre office, to enhance transparency in the sector.

“The whole issue of ETI surrounds the secrecy that was on the issue of mining claims that’s why the EITI has been raised by civic society as a solution, and as government we have acceded that this is the position that we are perceived from.

“The whole concept met a lot of resistance because of transparency that it brings to the mining sector, most people do not want to be known who is doing what and how in the mining sector.

“We are now currently implementing reforms on the structure side of the issue of EITI, which was the missing link even if we were going to implement, we needed that structure to ensure that we are able to implement it fully.

“Fortunately for us we have currently set up a post of Director in terms of cadastre, we used not to have that portfolio, and it speaks to the aspects of implementation, over years we have faced challenges in implementing the cadastre system.

“The aspect of structure has been cascaded down to provinces, we now have cadastre officers and technicians to make sure that we can implement the cadastre system,” said Murapah

Tafadzwa Chikumbu, ZIMCODD Socio-Economic Analyst said the government does not have any motivation to implement reforms as the mining sector thrives in secrecy.

He said delays in implementing amendments to the Mines and Minerals Development Bill, stretching over ve years, betray the lack of political will to reform the mining sector.

“There is no motivation on the part of the government to make reforms which promote transparency in the mining sector, because traditionally this a sector that thrives in secrecy.

“We have gone for ve years with the Mines and Mineral Bill in the state of being a mere bill because the extractive industry or mining sector is one sector that thrives in secrecy, where information is not shared, that’s its nature.

“Natural resources are political, and for Zimbabwe, we say let’s have a Mines and Minerals Act first because the commitment was made, the policy was drafted in the new form but its failing to see the light of the day,” said Chikumbu.

He added, “It’s because of the nature of the sector that we are dealing with, and we could go another year without the signing of the EITI.”

263 Chat

THE introduction of the new currency has proven to be what not the doctor ordered to serve as panacea for the cash crisis.

This can be evidenced with events where ordinary citizens in the country continue to face the daunting challenge to access the cash from banks.

A snap survey carried out by Zim Morning Post in the capital indicated that ordinary citizen are still struggling to get cash from their banks.

Long winding queues remain permanent features outside banks as citizens struggle to access their funds, which are quickly eroded by the run-away inflation.

The Government set a maximum withdrawal of ZWL 100 which is elusive but interestingly cash barons are seen selling hordes of hard cash.

Speaking to Zim Morning Post Business this week, an elderly woman Sheila Chihota (78), who hails from  Chihota village, said she came to Harare to collect her monthly pension which she is struggling to get and is spending nights sleeping at outside the bank albeit without luck.

“I have been here for the past three days and three nights hoping to get my pension which I worked for but nothing tangible is coming from the management.

“What pains me most is that we see people selling cash in the streets and we do not know where they are getting the cash from, if I want to buy cash from the streets I will be left with nothing since my pension is already peanuts, ” Chihota lamented.

Chihota called the government to address the issue of cash crisis and deal with cash barons who are making life difficult for ordinary citizens

“The government should deal with those who are selling cash, where are they getting money to sell while we can’t get money which we have worked for the leaders should deal with this cash crisis as a matter of emergency, ” added Chihota

The question that lingers with no answer is the cause of the cash crisis.

Is it because of bank panics, stock market crashes, bursting of other financial bubbles, currency crises, sovereign defaults or otherwise? One can say, the cash crisis in Zimbabwe is the crisis of discipline and confidence in the economy as a whole.

Speculation in the market is also rife with the richer getting richer, and the poor getting poorer.

Chihota told Zim Morning Post that she has lost confidence in the Zimbabwe banking sector.

” I just want my money, I have lost trust and faith in our local banks they take us for a ride, “ added Chihota.

Economist Kudakwashe Machere said the government should dollarise so as to ease the cash challenge rather than doing things they know they won’t bring any meaningful result.

“Introducing new currency when people do not have faith in the banking sector is trying to plant tobacco in a desert, you will not get any result, ” said Machere.

Zimbabwe has been facing cash crisis since the turn of the new millennium and the situation got easy during the time of inclusive government.

The crisis was to later haunt the government and in 2016 when the late former  President Robert Mugabe through Reserve Bank Governor John Panonetsa Mangudya introduced the bond notes.

This surrogate currency was pegged at a value at par with the United States Dollar.

Zim morning post

HARARE – Expansion work at Hwange thermal power station now stands at 25 percent, 14 months into the project which will add 600 megawatts into the national grid by 2022.

The $1.5 billion project, being carried out by Chinese firm Sino Hydro,  entails the addition of two power generating units, unit 7 and 8 to the existing 6 units that were commissioned between 1983 and 1987.

Along with many others at various stages of implementation, the project is part of Zimbabwe’s efforts to find sustainable solutions to power shortages that are retarding industrial growth and bedeviling the economy at large.

In an update, the Zimbabwe Power Company (ZPC) said most excavation work had been completed including for the cooling tower, the boiler house, and the chimney.

“We have completed all the excavations up to foundation level for  Hwange 7 and 8,” the ZPC said.

“As of this month of November, we have done fourteen months into our schedule. Our current progress we are around 25 percent and we are on  target in terms of what we had planned to achieve up to month 14, we are  currently on schedule.”

The whole project will take up to 42 months to complete, but unit 7 is expected to start firing by April 2021 while unit 8 would follow later on.

Hwange Power Station is Zimbabwe’s largest coal-fired power generator with production capacity of 920 MW.

But because of old age, the plant’s current dependable capacity is around 600 megawatts.

In addition to the Kariba South Hydropower Extension Project, which was completed in March 2018, the Hwange expansion project is expected to substantially add to the national power grid and lift the nation out of the current power woes.

Zimbabweans are having to endure long hours of load shedding every day due to depressed generation capacity and limited ability to import power from regional neighbours. – New Ziana

A BULAWAYO businessman who operates a farm and mine in Inyathi in Matabeleland North province allegedly shot two suspected illegal gold panners who were rushed to hospital after sustaining life threatening injuries.

This emerged when Nhlanhla Makuyana (56) approached the High Court seeking bail pending trial.

Bulawayo High Court judge Justice Martin Makonese released Makuyana on $300 bail and ordered him to reside at his given address and not interfere with State witnesses until the matter is finalised. 

He also ordered the applicant to report twice a week on Mondays and Fridays at Bulawayo Central Police Station as part of the bail conditions.

Makuyana, a retired civil servant, is facing attempted murder charges after allegedly shooting and injuring two suspected illegal gold panners who had strayed into his mine in Inyathi.

In his bail application through his lawyers, Abigail Masawi Law Chambers citing the State as a respondent, Makuyana said there were no compelling reasons by the State for refusal of bail. 

He said his farm has been invaded by illegal gold panners and efforts to get assistance from the police proved fruitless.

“On the day in question, mindful of a previous incident on the farm, I had gone to check on the intruders armed with a licensed 303 rifle. I only fired warning shots when the intruders became confrontational. I submit that the State has no compelling reasons to curtail my liberty,” he said.

Makuyana said as a family man with various properties including a house in Harare, a flat in Bulawayo, a plot, a mine, and several cars, he had no reason to abscond.

He also disputed the assertion by investigating officers that if released on bail, he was likely to interfere with State witnesses.

According to court papers, on October 29 this year at around 8.40AM, Makuyana was at his farm known as Twin Farm in Inyathi district when he spotted two suspected intruders walking along a fireguard at the boundary of his farm. 

He allegedly opened fire and shot them on their thighs. They sustained injuries and were taken to Inyathi District Hospital.

A report was made to the police leading to Makuyana’s arrest.

The Chronicle

ONE person died while another was severely injured in Inyathi, Bubi district, Matabeleland North when a gang of about 50 gold panners went on a rampage attacking other miners in the area.

In a Twitter post, the Zimbabwe Republic Police said the violence occurred on Sunday and Monday.

 “Fifty artisanal miners armed with machetes and axes went on a rampage, attacking other miners. Two male adults were severely assaulted and they sustained serious injuries. One resultantly died upon admission to Inyathi Hospital. The accused person, who informed other gold panners of his heinous deed, is still at large,” tweeted ZRP.

In a follow up interview yesterday, national police spokesperson Assistant Commissioner Paul Nyathi said they were investigating the alleged murder and reports of violence in gold rich areas across the country.

“We have made arrests, people have appeared in court, we are aware that there are areas where people have reported the so-called gold rush which is causing chaos and disputes. Members of the public should report incidents where the so-called gold rush is taking place so that appropriate and swift action can be taken before people engage in acts of violence,” said Ass Comm Nyathi.

He, however, said they have not yet received any cases of women being raped and livestock being slaughtered in Matabeleland North by gold panners.

Asst Comm Nyathi said they have partnered with the Ministry of Mines and Mining Development to fight against escalating illegal gold panning wars that have claimed lives in the Matabeleland North.

“We also appeal to mining companies that where some mines have been decommissioned, security measures have to be put in place to curtail chances of people coming in to try to get gold and, in the process, engaging in some of these disputes which can easily be resolved,” Asst Comm Nyathi said.

 Matabeleland North Provincial Affairs Minister Cde Richard Moyo blamed a group of artisanal miners called amaShurugwi/maShurugwi for terrorising residents in his province.

He said amaShurugwi were killing people, raping women and slaughtering residents’ livestock while conducting illegal mining activities.

“Our people are living in fear because of the violent behaviour of the illegal gold miners who come from other districts. The guys who are called amaShurugwi attack locals if they find them also panning for gold. They are always carrying axes and machetes. They are so daring that if the gold belt is stretching to people’s homesteads, these criminals violently force them out of their homes so that they can extract the minerals,” said Cde Moyo.

He called on the police to take action against the violent illegal miners who are causing untold suffering to members of the public.

“We are engaging police to ensure that they increase deployment of their officers in these areas affected by the violent gold panners,” said Cde Moyo.

Deputy Chiefs’ Council president, Chief Mtshane Khumalo, whose jurisdiction covers Bubi district said the illegal gold panners were not just making life a hell to communities but their livestock as well.

“A lot of animals are falling into pits left by these illegal gold miners who have no regard whatsoever for locals. They brutalise people while damaging the environment. They even dig shafts in grazing lands so some of the villagers are now losing their livestock and cannot even confront the violent gold panners,” said Chief Khumalo.

“When these gold panners come, they build their shacks that are not fit for human habitation. As it is, we have water shortages and the toilets are not enough to cater for everyone.  This exposes the community to diseases,” he said.

Recently, Midlands Minister of State for Provincial Affairs Larry Mavima said amaShurugwi had caused extensive damage in the province resulting in Government deploying the provincial Joint Operations Command

AUSTRALIA-Stock Exchange-listed miner, Invictus Energy, says it has completed a placement to raise US$1,5 million through rights issue as it seeks partners in the proposed oil project in Muzarabani.

In a quarterly update for the period ending September 30, 2019, the mining concern announced that it had received “strong” interest from exploration and production companies as well as private equity investors seeking to partner it in the proposed Muzarabani oil project.

In a statement on Monday, the oil and gas exploration and mining company said it has completed the placement to raise the funding it requires. 

“Invictus Energy Limited is pleased to confirm that further to the announcement on November 12, 2019 it has completed a placement to raise $1,5 million (before costs) by issuing 57 692 314 shares at an issue price of $0,026.

“Shares were issued to new and existing institutional and sophisticated investors under the company’s existing ASX (Australia Stock Exchange) Listing Rule 7.1 and 7.1A placement capacity,” it said. 

The placement saw a total of 18 592 125 shares being issued under the company’s Listing Rule 7.1 allowance while 39 100 189 shares were also issued in accordance with Listing Rule 7.1A.

“Together with the existing cash reserves, the new funds ensure Invictus is well funded through this growth phase as farm-out discussions develop, preparatory works for the on ground exploration phase commence, the company progresses its corporate social responsibility programme within the community resulting from the completed Environmental Impact Assessment field survey, and Government discussions on the petroleum regulatory framework.”

The Environmental Management Agency (EMA) has approved an Environment Impact Assessment prospectus for the proposed oil project.

Invictus Energy has confirmed the potential of oil in Muzarabani, Cabora Bassa Basin, 25 years after one of the United States of America’s major oil firms, Mobil, carried out similar studies in the area and left.

Under the first phase of exploration work, Invictus Energy has been able to mature the acreage and prospectivity in about 12 months since the acquisition of the project and complete the work programme obligations ahead of schedule.

The technical work for this phase of the project has been completed and the company is focused on completing the farm out process in progress.

The Muzarabani prospect is estimated to contain 8,2 Tcf plus 250 million barrels of conventional gas/ condensate (gross mean unrisked) across five horizons while the Msasa Prospect identified under the same permit (SG 4571) is estimated to contain 1,05 Tcf plus 44 million barrels of conventional gas/condensate (gross mean unrisked) across three horizons.

Unrisked reserves already developed by drilling and production have a very reasonable certainty of being produced while risked reserves are either probable or possible reserves depending upon the amount of uncertainty involved and basically represent poorly developed or undeveloped oil and gas fields_The Chronicle