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De Beers cancels third diamond sight due Covid-19 travel restrictions

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De Beers cancels third diamond sight due Covid-19 travel restrictions

DE BEERS has cancelled its third sight for the 2020 financial year owing to travel restrictions placed on buyers as a result of COVID-19.

Anglo American, which owns 85% of De Beers, said in an announcement that sightholders would be able to defer all of their third sight allocations to later in the year. It would “… continue to seek innovative ways to meet sightholders’ rough diamond supply needs in the coming weeks,” it said.

The travel restrictions are “… on the movement of people and products in Botswana, South Africa, and India, which prohibit customers from traveling and prevent the shipment of goods to customers’ international operations,” Anglo said.

Cancelling the third sight for this year is hardly a surprise given the way governments have ratcheted up their efforts to contain the spread of the virus in the last week, including a decision by the South African government to embark on a 21-day near total shutdown from March 27. De Beers had initially intended holding its sight however.

The COVID-19 outbreak has come at a terrible time for the diamond industry following poor trading conditions in 2019. De Beers made its smallest profit in more than a decade last year after a glut of rough and polished stones destroyed margins for the industry’s crucial middlemen who cut, polish and trade them, said Bloomberg News.

Early evidence that 2020 diamond sales were off to a poor start owing to travel interruptions was provided by GEM Diamonds which said on March 19 that it had replaced a tender for its large diamonds with a “flexible direct sale process” in mitigation of travel bans on buyers.

Last week Petra Diamonds brought forward the closure of its fifth sales tenders in South Africa and Antwerp three days earlier than the planned March 26. It also found “depressed and opportunistic” bidding for its goods, particularly in the larger size and higher quality, greater categories.

Gemfields said on March 24 that it could not provide a forecast for its financial performance in the current financial year as COVID-19 related travel restrictions prevented auctions of rubies and emeralds from taking place.

“Due to the current global travel restrictions the company cannot be certain when or if the ruby and emerald auctions scheduled for the coming months will take place,” it said in notes to a trading statement which showed a strong recovery for its 2019 financial year.

Mining MX

Blanket applies for exemption to suspension of operations

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Blanket applies for exemption to suspension of operations

Gwanda gold miner Caledonia Mining Corporation Plc notes the announcement by His Excellency, President E.D. Mnangagwa on March 27, 2020, of a nationwide lockdown of Zimbabwe to restrict the spread of COVID-19 infections.  In terms of these regulations all commercial activities other than “essential services” must suspend operations from March 30, 2020 for a period of 21 days. 

Although the Zimbabwe authorities have confirmed that gold mining is not an essential service, Blanket is currently permitted to continue with its operations, as the authorities will grant exemptions for businesses which demonstrate they can operate in a manner that contributes to the management of the spread of COVID-19 infections.  Blanket Mine has applied for such an exemption on the grounds that:

·    Blanket and its employee village can be quarantined from the surrounding area; and

·    Blanket will re-configure its operations to reduce the risk of infections being transmitted amongst its employees. 

A key measure to reduce the risk of infections amongst Blanket’s workforce will be to increase the “social-distancing” of employees as they enter and leave the underground workings.  This will reduce the number of employees who can work underground and will result in daily production running at approximately 70 – 80 percent of the target production rate.

Blanket is permitted to continue operations at the reduced level until its application for exemption is dealt with by the authorities.

As noted in the Company’s announcement on March 26, 2020, Caledonia enters this unprecedented situation with a strong balance sheet such that it can withstand an interruption to production of several months. Cash on hand at March 25, 2020, was $12.5 million following strong production in the first quarter of 2020 and the higher gold price in 2020. 

South African gold shipments to London stop

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South African gold shipments to London stop

South African gold refiner RAND REFINERY has stopped shipping gold to London because of a lack of commercial flights, adding to the disruption that’s upending the physical bullion market.

Rand Refinery, said it’s exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market.

“The supply from the established mines on the African continent to the refinery is currently disrupted,” said CEO Praveen Baijnath. “We are working hard with global logistics service providers to ensure our inbound and outbound commitments can be achieved.”

He didn’t specify how much gold could be affected. Still, it’s another example of how the supply chain — which runs from deep African mines to refineries and storage vaults — is being upended by the coronavirus. Earlier this week, refineries in Switzerland also announced they would temporarily close.

In one sign of how things have slowed down, shipping Russian gold overseas can now take about a week instead of a day, said Alexey Zaytsev, head of commodities & funding products at Otkritie bank.

The London Bullion Market Association, which oversees the spot market, said it’s confident there is more than sufficient global refining capacity and that refiners and other market participants are talking with logistics companies to ensure the physical movement of metal.

The Rand Refinery is running at reduced capacity during a national lockdown, even though the company was exempted from restrictions, Baijnath said.

He said it’s important to keep some processing going because selling gold is a key source of foreign exchange revenue. The facility refines gold for companies including AngloGold Ashanti and Gold Fields, which operate mines throughout Africa. The refinery, which has operated since 1920, sources gold from countries including Ghana, Tanzania and Mali.

“A complete shutdown of the refinery would have had a domino effect on the production on the continent,” he said. “Moreover, stockpiling of mined gold on the surface would have heightened security risk for any mine.”

Mining Weekly

Volatility to continue driving metals prices lower

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Volatility to continue driving metals prices lower

Market-leading solutions research agency Fitch Solutions expects volatility to continue playing to the downside for metal prices in the coming weeks owing mainly to bearish investor sentiment on the back of the widespread Covid-19 pandemic.

The agency notes that metal prices started the year on a strong footing as the Phase One trade deal between the US and China was signed, before succumbing to the news of Covid-19 that infiltrated markets in mid-January.

While metal prices stabilised somewhat in February, Fitch Solutions laments that March saw another collapse, along with the unprecedented stress in financial markets, which resulted in metals broadly falling to below multi-year support levels and heading into lows not seen since the 2015/16 price rout.

Taking this into account, the research firm says it believes prices will remain subdued with further downside risks in the second quarter of this year as governments globally implement measures to contain the spread of Covid-19.

Despite China starting to get its economy back on course, the agency believes investor concerns about global demand outside of China will continue to put pressure on metal prices in the second quarter of the year.

Although lockdowns in China are being lifted, economic growth remains at a standstill outside of China.

In light of Covid-19, Fitch Solutions now sees a global economic recession in 2020, with global growth at 0.8% year-on-year with further downside risks for the year.

The agency has also revised its growth forecasts for major economies and now expects the US, German and Eurozone economies to contract this year.

However, the agency holds on to its forecast for metal prices to recover slightly in the second half of the year, albeit closer towards the fourth quarter, with two main reasons supporting its view.

First, there is an increasing number of miners outside of China announcing halts to production, suspending operations and withdrawing their supply guidance for 2020, which Fitch says “should lead to a tightening of the market later this year as operations halt”.

According to the agency, the market has not priced in this supply issue yet.

For instance, Peru recently implemented 15-day emergency isolation measures. Freeport McMoRan, the operator of the Cerro Verde mine, which produced 453 000 t of copper in 2019, placed the mine on care and maintenance on March 16 following the announcement.

In addition, Anglo American announced it would slow construction at the Quellaveco copper project for 15 days.

“We also think the market has priced in perhaps more than necessary the decline in demand that we will see this year,” Fitch comments.

Second, the agency’s country risk team believes government stimulus in China will be stronger this year than in 2018 or 2019, despite revising down the agency’s forecasts for China’s 2020 real gross domestic product (GDP) growth to 2.6% year-on-year compared to 4.2% year-on-year previously.

This, the agency says, will likely translate into recovering metals demand through increased construction activity or greater manufacturing of automotives or consumer electronics, depending on where stimulus is targeted, offsetting 2020 first-half demand losses and putting a floor under prices by the second half of the year.

Meanwhile, iron-ore and steel remain resilient, and are outperforming other metals, Fitch says.

“While there are no winners during a pandemic, ferrous metal prices have remained relatively more resilient than non-ferrous counterparts since news of Covid-19 emerged in January, in part due to supply issues and partly due to investor optimism on stronger Chinese demand from infrastructure projects,” the agency notes.

Fitch expects this trend to continue this year, with iron-ore and steel prices hovering around $83/t and $541/t, respectively, at the time of writing, displaying weakness but no collapse since averaging $85/t and $565/t, respectively, in December 2019.

As of March 20, iron-ore inventories in China are down to 110.3-million tonnes, compared with 116.6-million tonnes on January 3.

After Vale cut its previous iron-ore production guidance for the first quarter of the year, seasonal wet weather in Australia has buoyed prices.

The Covid-19 situation and its impact on air travel also puts iron-ore at the greatest supply risk, as about 60% of the world’s seaborne iron-ore is produced in the Pilbara, a remote part of Western Australia that is a two-hour flight for workers from the state capital of Perth.

“We believe that operations at the greatest risk of disruption are likely those that have a higher dependency on a mobile (fly-in, fly-out) workforce or use local labour but are significantly reliant on fly-in, fly-out employees or contractors for higher skilled roles,” Fitch notes.

With regard to steel, Chinese steel mills are only operating at about 50% or less of total capacity currently, with steel product making likely to see prolonged disruption as the production of rebar used in construction makes better sense.

The spread between Chinese domestic rebar and hot rolled sheet has risen to $40/t as of March 25 compared to just $14/t on January 2.

Additionally, Fitch comments that metals with weaker fundamentals are expected to see a slower price recovery, particularly as non-ferrous metals are expected to see a greater price weakness in the coming months, compared to ferrous metals, especially non-ferrous metals with weaker fundamentals.

Since news of Covid-19 broke in January, the prices of copper, tin, zinc and nickel have fallen by 22.2%, 22.0%, 21.4% and 21.1%, respectively. Lead and aluminium have suffered declines of 17.4% and 14.2%, respectively.

And, despite stronger fundamentals, copper has suffered the most owing to its status as a barometer for global economic health.

However, since the announcement of stimulus measures, especially in the US, copper prices have stabilised somewhat in the last two days.

Despite aluminium having suffered less than copper, Fitch believes copper has a greater chance of seeing a revival in the second half of the year, compared with that of aluminium, considering that the latter will register historically weak global demand this year even without factoring in the impact of Covid-19 with oversupply in the market widening.

Like copper, fundamentals for nickel remain tight, especially as Indonesia has banned exports since the start of the year, while demand from the Chinese stainless-steel industry will pick up in the second half of 2020.

Nickel stocks at global warehouses, meanwhile, remain low compared to historical standards, and Fitch currently expects the global nickel market to remain in a deficit in 2020.

Fitch further laments that the downside risks to its current price forecasts are slated to the downside, with the main risk being the global demand for metals declining to such an extent, owing to major economies contracting, that gains in Chinese demand fail to offset global losses.

“There is also the risk that the level of stimulus from China that we currently expect does not translate to actual metal demand, which would see prices heading into further bearish territory, especially iron-ore and steel, which have remained resilient compared to other metals due to investor expectations of a strong China rebound and their heavyweight towards China.”

Nonetheless, Fitch’s price forecasts for metals still show that its 2020 forecasts are broadly lower than 2019 averages but slightly bullish from spot levels.

Mining Weekly

Zimbabwe Shutdown, implications on Mining

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Zimbabwe Shutdown, implications on Mining

President Emmerson Mnangagwa announced that Zimbabwe will shut down for 21days from Monday the 30th of March 2020 as the country joins the rest of the world in trying to minimise transmission of the deadly Coronavirus that has claimed thousands of lives globally since its outbreak.

 The President Announced the following:-

 “Starting Monday March 30, 2020, and subject to further review, Zimbabwe will be under a total lockdown for a period of 21 days,” Mnangagwa said.

 “This means all our citizens are required to stay at home except, of course, in respect of essential movements relating to seeking health services, to purchase and procure food and medicines and other critical services supplies.”

Covid-19 aka Coronavirus, Transmission

For COVID-19, each person with the virus can go on to infect around 2.5 people. If each of those people go about their day as normal, and infect another 2.5 people, within a month, 406 people would be infected just from that first infection.

Thousands of people with either no symptoms or very mild symptoms have been spreading the virus unaware that they were even infected. This means that before health experts were aware of the problem and started to recommend control measures, the virus had already spread to multiple countries.

Social Lock-down (In this case shutdown)

In the absence of treatment or a vaccine, ceasing most human contact is the only way to stop the spread of the virus. Essentially, the less contact people have with each other, the less the virus can spread. Given the rapid spread of the virus, social lockdown is urgent to bring overall transmission down, and see whether testing followed by isolation could be effective – this is all in an attempt to ‘flatten the curve’ or reduce infections and spread cases out over a longer time frame to avoid overwhelming health systems.

Since the announcement by Mnangagwa messages started flooding our inbox with miners asking about the implications on mining the shutdown will have.

Implications on Miners

Shipping minerals overseas halted

Due to Coronavirus outbreak countries globally have banned incoming and outgoing flights to and from almost all countries Zimbabwe included. This has disrupted the international shipping of minerals. South Africa’s Rand Refinery halted shipping gold to London because of a lack of commercial flights said it is exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market. The refinery, which has operated since 1920, sources gold from countries including Ghana, Tanzania, and Mali.

Gold Buyers will not be able to move around

Gold buyers will not be able to move around buying therefore if ASM miners decide to stay at their mines and continue with operations no one will come to buy. This will force operating gold miners to stock their gold, and stockpiling of mined gold is increased security risk for any mine.

Mineral prices crash

The price of any mineral is moved by a combination of supply, demand, and investor behavior. Many mining giants have cut down, halted or are in the process of halting operations. Copper prices hit their lowest level since January 2016, with three-month copper futures on the London Metal Exchange (LME) touching $4,371 per metric ton. That’s down from a high of around over $6,340 in mid-January. On the 19th by 6.30 a.m. London time, copper prices were trading around $4,548. This past week, gold fell from $1,590 to $1,455 before recovering around $1,500. The fall is approximately 8.4 in percentage terms, which is very high compared to average weekly movements.

An Idle mine is costly to resume

Halting operations at mine shafts with water issues will cause flooding and risks shaft collapse. Operating mines continuously pump out the water to alleviate this problem. Halting operations will intricate the resumption of operations. South African based SP Angel mining analyst Johan Meyer referring to that country’s lockdown said “The lockdown could result in some major capital expenditure to reopen certain deep-level shafts,” the same goes for our own mines both small and large scale.

Income is affected

As the shutdown begins on essential services as mentioned by the government to be Police, Army, Hospital staff, selected grocery shops for the rest this means business is at a standstill. Source of income will no doubt for the next 21 days will be zero to most. The national purse is also on the firing line.

A local politician said, “While the lockdown appears to be noble, in our Zimbabwean context, it becomes a heavy blow to the same human life that ought to be saved if no further measures to cushion livelihoods are put in place,”.

No doubt millions will suffer but from the look of things, the need to combat the disease seems to outweigh the need to keep hustling.

Deals will be delayed

Zimbabwe has many exciting mining deals this year and one highly anticipated is the Chiadzwa deal with AIM-listed Vast Resources. Vast is currently working on the JV agreement between its majority-owned Katanga Mining and Zimbabwe Consolidated Diamond Company (ZCDC) regarding the Chiadzwa Community Diamond Project. It was revealed that Vast had “received official communication from the Ministry of Mines and Mining Development to the effect that all internal processes leading to the conclusion of the Joint Venture are expected to be finalised in March 2020.

However days back the President stated all government departments and ministries will only have a third of their staff at work after the confirmed cases of Covid-19. The virus claimed the life of prominent journalist Zororo Makamba who days before his death had visited government offices. Some Government officials including the Presidental Spokesperson Mr George Charamba had to be moved to self-quarantine and the government is currently at full throttle trying to minimise Covid-19 impact. We have seen government suspending several high-level events and meetings and it is highly probable several projects and deals will be delayed due to the world-wide pandemic of Covid-19 that has 7 confirmed cases locally.

Conclusion

It is of extreme importance for miners to understand the pandemic that is the Covid-19 virus aka Coronavirus and its severe implications should stern measures be not taken to stop its spread. Coronavirus is highly contagious and the best way to stop it is to minimise contact with the infected and the best way to ascertain that is a complete lockdown since some carriers do not even show symptoms.

It is worrying that some people are still taking the threat of Coronavirus lightly undermining social distancing in the name of earning a living. Although it is of great concern that incomes will be lost for the duration of the shutdown prevention may be the better option than contracting a disease that will likely spread like a wildfire and has the potential of killing many who contract it.

There are many implications to the shutdown but as Mining Zimbabwe we encourage everyone to comply with the government directive and stay at home. We will continue with our mandate of keeping miners updated with current affairs. This is also the time for us to conversate about pressing issues in the mining industry through various platforms.

Zimbabwe Shutdown announced for Monday 30 March 2020

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Zimbabwe Shutdown announced for Monday 30 March 2020

The President of Zimbabwe has announced the country will be shutdown from Monday 30 March 2020 to minimise the spread of the deadly Covid-19 also known as Coronavirus

see video below:

https://www.facebook.com/zimbabwebroadcastingcorporation/videos/214057896364310/

ZIMASCO shuts down its Kwekwe plant

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ZIMASCO shuts down its Kwekwe plant

Portnex has shut down its Zimasco Ferrochrome plant in Kwekwe after prices of the alloy fell to four-year lows on weak demand caused by the coronavirus outbreak.

The closure places at risk hundreds of jobs at one of the town’s largest employers, reflecting the local impact of a global health crisis that has disrupted economies around the world.

“The ferrochrome industry has been the most affected with ferrochrome prices coming down to shut-down levels, even lower than those of 2015. Responding to the above, most smelters have been put on care and maintenance, with Zimasco having announced its care and maintenance on the 25 March 2020. Portnex has already closed while Afrochine are operating below 50% of installed capacity,” the Chamber of Mines said.

Afrochine, a unit of Chinese stainless steel giant Tshingshan, is the largest producer, putting out 100 000 tonnes of ferrochrome at its Selous plant a year.

Apart from Afrochine, only Gweru’s Jin An is still in operation out of the country’s 13 producers, according to players in the industry.

Although Portnex officials were yet to respond to request for comment, newZWire understands from staff that they had been informed that they would continue to earn a fraction of their salaries.

China dominates global market for ferrochrome, which is the main ingredient in stainless steel production. China, like much of Europe and Asia, has suspended many steel mills due to the COVID19 outbreak. In Europe, many large stainless steel producers such as ArcelorMittal, Europe’s largest steelmaker, have halted production indefinitely.

This has driven prices to their lowest levels in years.

The coronavirus outbreak is only the latest crisis to hit Portnex operations. In December, operations were halted due to a dispute over power bills with ZESA. Electricity accounts for 29% of the production costs at the plant, while chrome ores account for 31%.

Portnex, a South African company, took over operations at Zimasco’s Western plant in 2015 on a five-year lease, which must be renewed this year. Portnex produces 200 tonnes of ferrochrome per day, taking in chrome ore from tributaries mining on Zimasco claims across the Midlands.

newZWire

Police impersonators arrested for extorting miners

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Police impersonators arrested for extorting miners

Hwedza Police arrested two Police impersonators who camped at Wedza Mountain and extorted from miners claiming it was protection fee.

Nomatter Nhambirwa (23) and Beloved Gangayi (24), all of Budiriro in Harare, who were clad in police uniform before misrepresenting themselves as officers from Chikurubi Police Support Unit, were arrested after a mining syndicate alerted police in Wedza.

Mashonaland East provincial police spokesperson Inspector Tendai Mwanza confirmed the arrest.

It is reported that on March 23, the two went to Wedza Mountain, where they told a gold mining syndicate that they had been sent by their superiors to monitor them, hence they needed some money as protection fee.

The suspects, who were clad in police uniforms, demanded that each person pays US$50 and that they had pitched their tent in the mountain under the Operation Chikorokoza Chapera.

The illegal miners then negotiated for a downward payment and they agreed that each pays US$30.

The bogus police officers then collected US$160 and $200 from the syndicate. It is reported that one of the miners, Carrington Gotora, informed the Police at Wedza, who swiftly reacted and arrested the suspects.

The two failed to provide proof that they were police officers. Upon arrest, police recovered the uniforms and the money extorted from the syndicate.

Newsday

Zimbabwe to shutdown for 14 days?

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Zimbabwe to shutdown for 14 days?

Internet Newspaper Bulawayo 24 has reported that President Emmerson Mnangagwa led government is contemplating imposing a 14-day lockdown in the country due to the deadly coronavirus epidemic.

More HERE

Reserve Bank re-introduces the United States Dollar

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Reserve Bank re-introduces the United States Dollar

Reserve Bank of Zimbabwe Governor Mr John Mangudya has announced that the United States Dollar can now be used as legal tender until further notice.

In a statement issued yesterday night, the governor said this measure is to mitigate the effects of Covid-19 also known as the Coronavirus.

The governor also announced the Exchange rate is now fixed at 1:25 USD/ZWD. BA @25% and Bank Statutory Reserve ratio reduced by 0.5%. Winter Wheat funded up to 2,5bln.

Read the full statement below:

Pursuant to His Excellency, the President’s 23 March 2020 Address to the Nation on additional measures to mitigate the devastating impact of COVID 19 on the Zimbabwean society and the economy, government through the Reserve Bank of Zimbabwe (the Bank*) would like to advise the public that it is making it easier for the transacting public to conduct business during this difficult period by making available an option to pay using free funds for goods and services changeable in local currency. This intervention takes into account the country’s limited access to foreign finance, which is adversely affecting the country’s balance of payments position

The dispensation to use free funds will also promote social distancing as banks will be able to provide digital financial services to their customers that include producers of gold, tobacco and cotton and recipients of diaspora remittances. Digital financial transactions will go a long way in enhancing confidence in the economy and assisting banks to play 3 critical roles as systemic stabilisers of the economy during these unprecedented times in response to COVID. 19.

Related to the above measures, Government, through the Bank has suspended the managed floating exchange rate system to provide tor greater certainty in Ube pricing at goods and services in the economy. In its place the Bank has, with immediate effect adopted a fixed exchange rate system at the current interbank level of ZW$25 to the USS This measure will be reviewed when markets stabilise from the effects of COVID-19.

Further, the Monetary Policy Committee (MPC) of the Bank at its meeting on 24 Match 2020, resolved to respond to the seeds of the economy in the wake of COVID-19 through the following:

1. Increasing the Medium Term Bank Accommodation Facility for supporting productive sector activities by an additional ZW$1 billion ta ZW$25 billion, the additional amount will be targeted at financing the 2020 winter wheat planting program:

2 Reducing the Statutory Reserve Ratio from 5% to 4.5% in order to tree some funds to the banks to enhance their lending activities,

3 Reducing the Bank’s policy rate from 35% to 25% with the expectation that banks will also
Follow suit and adjust their lending rates to meet the requirements of their customers that are being adversely affected by the pandemic: and

4. The issuance of the Open Market Operations (OMO); Corporate Bills to enhance the monetary targeting framework that is necessary to support the exchange rate and to stabilise prices in the economy.

The Bank also agreed with the banking sector to suspend increases in charges related to the provision of all electronic payments during these trying times. Similarly, the Bank is also engaging the mobile network providers to ensure that their mobile banking charges are reduced in order to promote electronic banking which is in line with social distancing.

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