Mining ZimbabweLatest Mining News, Policy and Industry Updates

Mining rights advocacy groups have slammed the government for seeking to appease investors by reducing the diamond royalty instead of up-scaling its exploration capacity in the diamond sector.

Centre for Research and Development director James Mupfumi said the recent slash in diamond royalties by 33% would not result in improved production if diamond extraction remained shrouded in secrecy.

In his 2020 budget statement, Minister of Finance Professor Mthuli Ncube announced that Treasury had cut royalties for diamond mining from 15 per cent to 10 per cent of gross revenue, to reduce the cost of extracting deep-seated kimberlite gems.

Professor Ncube said diamond miners were now exploiting deep-lying conglomerate deposits, with a higher cost of extraction hence the need to revise downwards the diamond royalty.

“In order to promote investment in exploration and extraction, I propose to review the royalty on the diamond from 15 per cent to 10 per cent of gross revenue, with effective from 1 January 2020,” he said.

Zimbabwe has targeted revenue of US$1 billion through the production of 6 million carats by end of 2023, after the launch of a diamond mining policy recently under an ambitious plan to grow the mining sector into a US$12 billion industry.

However, Mupfumi contends that dangling incentives to foreign investors are an indictment of the government’s failure to invest in exploration technology to fully exploit conglomerate diamonds.

He said the decision to slash royalties was also compounded by the veil of secrecy in mining affairs as well as a weak legislative and governance structure.

“The tragedy of the mining sector in Zimbabwe is that the government lacks the capacity to undertake meaningful exploration to ascertain mineral potential in order to make informed decisions.

“The decision to slash diamond royalties is obviously informed by the investors who have knowledge of the mineral.

“Against this background it is difficult for the country to realize meaningful revenues from its mineral resources, worse of the sector is marred by governance deficits and poor legal frameworks,” said Mupfumi.

Zimbabwe Consolidated Diamond Company (ZCDC) board chairperson Engineer Ukama recently made revelations that diamond production was being hampered by high exploration costs of conglomerate diamonds.

To counter these costs, Ukama said ZCDC had partnered investors to undertake exploration activities as they vie to extend their footprint across Zimbabwe.

“ZCDC is also investing in exploration in partnership with other players in the diamond industry to
spread its footprint in the country beyond Chiadzwa.

“It is hoped that such partnerships will yield positive results for growth of the diamond industry with the associated benefits such as increased revenue generation, employment creation, economic growth, infrastructural development and investments in downstream industries,” said Ukama

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A BULAWAYO man is battling for life at the United Bulawayo Hospitals after he sustained severe burns following an electric shock from a high voltage overhead cable while attempting to steal copper cables in Colleen Bawn.

Matabeleland South provincial police spokesperson Chief Inspector Philisani Ndebele confirmed the incident which occurred last week. 

He said Albert Moyo (29) of Cowdray Park suburb in Bulawayo was assisted by a police officer who ferried him to Gwanda Provincial Hospital in Gwanda where he was later referred to UBH.

“I can confirm that we recorded an incident of a man who sustained severe burns while attempting to steal Zesa copper cables in Colleen Bawn. Albert Moyo is suspected to have staggered to the main road where he was assisted by a police officer who was passing-by who ferried him to the hospital. He was naked as all his clothes were burnt,” said Chief Insp Ndebele.

He warned culprits vandalising Zesa infrastructure that the hand of the law would soon catch up with them. 

Chief Insp Ndebele said by stealing copper cables the culprits were not only hindering development in the country but they were also putting their lives at risk.

“These activities by copper cables thieves are a great hindrance to development in the country. A lot of economic activities need power and therefore disruption of power supplies impacts negatively on productivity,” he said.

Gwanda Provincial Hospital acting Medical Superintendent, Dr Rutendo Manyati, said the hospital referred Moyo to UBH for specialist management. She said Moyo was in a stable condition when he left the hospital but his life was not out of danger.

Dr Manyati said Moyo sustained plus or minus 30 percent burns which were a mixture of superficial and deep.

 When the Chronicle news crew visited the hospital, Moyo was groaning in pain. 

He could hardly keep his eyes open and was speaking with great difficulty saying he wished to die because of the excruciating pain.

The Chronicle

JOHANNESBURG, South Africa – South African cement company PPC Ltd reported a lower first-half headline earnings per share on Wednesday, hurt by a weaker Zimbabwean dollar and said it had started a review of its operations.

The company’s results were affected by the application of hyperinflationary accounting by PPC Zimbabwe, which it said complicated comparability at a group level.

Zimbabwe has suspended publication of annual inflation data until February, but economic analysts say the figure reached 440% last month. Many expect the country will miss its target of single-digit levels by the end of the first quarter of 2020.

“PPC has initiated a comprehensive strategic review and certain initiatives necessary for sustainable value creation are underway,” the company said.

PPC reported headline earnings per share (EPS) of 6 South African cents for the six months ended Sept. 30, compared to 21 South African cents a year earlier.

Headline EPS is the main profit measure for South African companies and removes certain one-off items.

The company’s group revenue for the six months fell 12% to 4.95 billion rand ($335.03 million) and there was a 17% decline in overall cement volumes. – Reuters

Zimbabwe’s mining industry is rushing to establish solar plants for their power requirements, with plans to put the excess on the national grid as electricity problems hamper production across the economy.

Despite making concessions such as paying for power in foreign currency and securing dedicated lines from utility firm ZESA, miners are still struggling with electricity like the rest of the country, going for hours without power and having to incur huge costs in fuel for generators.

This eats into their margins. Business Times heard this week that at least four major mines, including Caledonia Mining Corporation’s Zimbabwean unit, Blanket Mine, and the platinum producer Zimplats are at advanced stages of establishing solar power plants.

The successful completion of the projects is among steps towards dealing with the electricity challenges now threatening industry. The development will also result in the country becoming a net exporter of electricity and ending overreliance on hydro power from the Kariba dam. Successive droughts in Kariba’s catchment area along the Zambezi River have caused problems for Zimbabwe despite ongoing efforts to expand capacity.

The country also has thermal plants, the major ones being in Hwange, but production is hampered by antiquated equipment. Currently, Zimbabwe relies on expensive imports and has set up a diesel generation plant at Dema which, sadly, has become a white elephant. Hundreds of independent power producer licence holders are yet to move, forcing Energy Minister Fortune Chasi to intervene by way of cancelling licenses of those who have failed to show cause.

A mega hydro power project of 2400MW capacity at Batoka Gorge to be shared between Zimbabwe and Zambia could turn Zimbabwe’s fortunes and see the country exporting, but the project is no low hanging fruit as it costs billions and could take at least five years to produce the first kilowatt-hour.

Caledonia Mining’s chief financial officer Mark Learmonth confirmed plans to put up a solar plant at Blanket Mine, saying it was at an advanced stages, having tendered for advisory services. Learmonth said the solar project would be implemented in three stages, two of which would generate power at a cost of US$8m. The plants will be 6.5MW each based on a tender document seen by Business Times.

“The first stage [will] generate enough power to meet Blanket Mine’s requirements, then we move on to the second stage,” Learmonth said in a telephone interview. The solar plant will be situated on 40 hectares near the mine, which itself is situated in the Gwanda area. At the second phase, the power will be enough to meet Blanket Mine’s demand at peak.

“The surplus will be put on the national grid. Learmonth said the company was currently in negotiations with Zesa and the Ministry of Energy to conclude agreements to either bank or put electricity on the national grid under favourable terms. Contracts for the project are expected to be issued in February 2020.

“Negotiations are going on smoothly and we are satisfied with the commitment and speed at which progress is being made,” Learmonth said, adding that the company expected a licence to produce power by year end.

Stage One works are expected to start next year, once funding is secured while stage two is subject to approvals of favourable terms by Zesa. The third stage is not an immediate priority and depends on the success of the two first stages. Learmonth said funding could be sourced globally from pro-green project funders, but Zimbabwe’s high-risk profile could be a challenge. Other options are to get debt on the international market or locally.

The last option is to give up a portion of equity to secure the funding, but indications are that shareholders have no such interest in the absence of major guarantees along the way. On its part, Zimplats, Zimbabwe’s largest platinum producer and largest investor after independence, could not be drawn to shed more light on its own project.

The company however confirmed it was considering solar energy as a solution to its power crisis. Company spokesperson Busi Chindove said the security of power supply was a critical component of Zimplats business operations.

“To this end, we are in constant dialogue with our current key power service providers and potential future power service providers in an effort to ensureaffordable, uninterrupted power supply to our operations and support the government’s thrust on economic turnaround,” she said in emailed responses_Business Times