Mining ZimbabweLatest Mining News, Policy and Industry Updates

A CHINESE firm, Livetouch Investments, in partnership with the Zimbabwe Miners Federation (ZMF) plans to invest US$2 million is setting-up a gold service centre and purchasing of mining equipment for use by small-scale miners in Matobo District, Matabeleland South Province.

Speaking after a familiarisation tour of gold mining operations in the Maphisa area in Matobo District recently, ZMF president Ms Henrietta Rushwaya said there was a need to capacitate artisanal and small-scale miners as they contribute immensely to the mining sector and to the growth of the country’s economy.

“Mining is an important aspect towards the revival of our country’s economy. Thus, for capacity levels to be scaled-up it is important to support small-scale miners who are the major contributors of gold deliveries to Fidelity Printers and Refiners. This class of miners produced 22 tonnes out of the 34 tonnes of gold produced by the country last year and that accounts for about 65 percent of the total gold output,” she said.

Ms Rushwaya said Matobo was one of the country’s richest gold areas but lack of technical and financial support has hampered miners to effectively extract the yellow metal.

“Matobo has one of the best gold deposits in the country but due to lack of equipment miners from this area are incapacitated, which is one of the reasons we have partnered with Livetouch to capacitate them with equipment worth US$2 million,” said Ms Rushwaya.

Livetouch is the parent firm for Diamond Cement, which is based in Redcliff. It also has a chrome processing business along the Great Dyke.

The company’s Zimbabwe operations were established in 2013 and it invested US$30 million towards setting-up its cement plant in Redcliff. 

Ms Rushwaya said there was a need to expedite formalisation of artisanal miners so as to curb the rampant smuggling of gold across borders.

“I believe we are producing more than 100 tonnes of gold annually with most of it being siphoned out of the country. This is largely due to the fact that artisanal and small-scale miners don’t have the requisite papers to trade their gold and in most cases don’t want to be asked too many questions.

“If we were able to maximise and utilise to the fullest, our natural resources, I don’t think we will be experiencing any power challenges. So, we are saying let us help Government as much as we can by ensuring that we take gold to Fidelity and that way we will be able to pay our bills as a country,” she said.

Livetouch general manager, Mr Kyle Wang reiterated Ms Rushwaya’s sentiments on the need to capacitate artisanal and small-scale miners further stating the need to provide mining equipment at affordable prices to them.

“We are going to put up a milling centre as well as a service centre, which will be a storage facility for all types of back up spares for small-scale mining equipment here in Maphisa. We have realised that small-scale miners are paying unreasonable prices for equipment. So, we are planning to import and sell it to them at a reasonable price but the issue is still under discussions with the Government as well as ZMF,” said Mr Kyle.

He said the company’s long-term plan was to put in place milling centres in all the country’s gold mining districts. Source

Mineral sector reform has brought mining back to Africa aided by price rises in the early 2000s impacting on investment, growth and poverty reduction and there are no indications that price trends will decline to previous levels. For the sector to have a sustainable impact on poverty in Africa, governments must convert non-renewable capital into skills, infrastructure and business development.

The success of this will be underpinned by improvements in governance. There have been massive calls to liberalise mining and Zimbabwe has not been spared of that argument.

Miners postulate that the government’s hand in the operation of mines up until the marketing of minerals has caused massive distortions and discontent.

Government influence in Zimbabwe has seen the Central Bank managing the allocation of export proceeds which come in the form of foreign currency.

This has seen gold miners retaining about 55 per cent in foreign currency with chrome getting 50 per cent and
platinum getting a sizeable number. This has generated massive discontent from miners who have abjectly admitted that the government’s hand in mining should be minimized for assured growth of the sector going forward.

At a macro level, the mining sector has never played a crucial role across Africa as it does now. This is due partially to the rise in mineral prices since the early 2000s but more to the success of many mining sector reforms in the late 1980s and 1990s.

Zimbabwe now sees this sector as a possible engine of sustainable development. Zimbabwe needs to engage
in mining developments rather than operating in an enclave fashion. This needs to be done in order to increase linkages to other economic opportunities directly or through better integration of associated infrastructure.

They also desire to have a larger share of the sector’s rents particularly when mineral prices are high as well as having control on how the proceeds are utilised.

Mining expert Masango Mahlahla said that the liberalization of the mining sector is the way since the current regime has done nothing but cause continued clashes between miners and government.

“In my professional opinion, mining operations should be allowed to manage their own foreign currency. This will
enable mining companies to direct their earning towards planned capital investments. The banking sector should
manage the export documentation process as well as transactions as they will be more efficient and have better
processes for managing transactions,” said Mahlahla.

Another mining expert Innocent Nicks gave a nod to the liberalization of the mining sector.

“Yes I give a nod to the liberalization of mining sector on other minerals that can be mined under small and artisanal mining. Minerals like gold, chrome, all gemstones etc can be mined by small scale and artisanal miners to increase our stocks, markets and bringing in foreign currency. ’’The effects of liberalization of mining sector will be very positive since it closes the gap on unemployment, reduction in crimes committed ranging from robberies, drug abuses etc.

“Youths will be having some economic activities that bring food on their tables and as a result will reduce crimes, an idle mind is very dangerous. The effects will be seen through the circulation of money in the system, the introduction of our mineral-based currency or float based currency,” said Nicks.

On the other hand, Nicks alluded that what needs to be done is to make sure that all minerals are marketed through the government system to plug in all illegal marketing of our minerals to incentive miners so that they sell their stuff through government agencies.

“Value addition and beneficiation of our minerals is of paramount importance again because we would be having down and upstream economic activities that will lead to our community development. The government would then be able to reallocate resources to manage regulatory oversight regarding compliance issues. The government should not manage business transactions as this is best managed by the private sector. This will help to facilitate industry growth,” he said.

Most African countries nationalized their mining sectors in the 1960s or 1970s. However, by the end of the 1980s the trend had reversed partially due to market liberalisation but also due to the weak performance of state-owned mining enterprises.

Further, to attract additional Foreign Direct Investment (FDI) into their mining sectors, African countries often called upon the World Bank – which, with the IMF, was often involved in structural adjustment programs that began in the 1980s – to support the design of mining policies and laws that would make countries attractive destinations for FDI. This occurred at a time when mineral prices had been very low for nearly 20 years (and would remain so for another 15 years).

The focus of mining sector reform in the 1990s was revitalization as state control of the sector had scared away both new developments and exploration. State-owned companies typically suffered from underinvestment as profits were mostly brought into the country’s general fiscal revenues.

Hallmarks of these reforms were revisions to mining laws and regulations. These included transparent and nondiscretionary procedures in allocating exploration and production rights; exploration rights allocated on a first-come, first-serve basis and subject to minimum work conditions; according to finders the automatic right to exploit a deposit, subject to certain conditions, or to sell the right; stable fiscal terms although not necessarily fixed as
discussed later – throughout the lifetime of the operation (or for a well-defined period); well-defined property rights and, subject to commitments being made, no expropriation.

“The truth is that the government is the regulatory arm there should be a separation between politics and business. Therefore I am in support of the government liberalizing the sector. However, with the current foreign currency shortages, I don’t see that happening in the short-term. “Businesses need to plan and expand operations by using the retention money portion, moreover they should have adequate to large savings balances to cover their operations in the event of maintenance and reinvestment. Thus the balances sitting in the nostros FCA is a
normal business practice. There can’t be expectations that businesses would be emptying their nostros FCA,’’.

In conclusion, a large mining sector can have a substantial impact on the long-run sustainable development of a country. Firstly by being an engine of growth through the spin-off firms and industries, it creates and opportunities opened up by non-dedicated infrastructures, such as roads; railways; ports and power stations, and secondly, by using fiscal revenues generated by natural capital to produce other forms of capital.

1 Chrome Producers / Miners have a clearly defined payment structure which enables them to receive the much needed foreign currency earnings.

Chrome Producers wishing to receive payments in foreign currency from chrome buyers are required to open an Exports Nostros Account in order to enable chrome buyers to send payments in forex .With this new update, the Nostro Export Account enables Chrome miners to receive  funds from a domestic / local transaction but the rules still apply on retention at 50% .

2 Chrome Producers / Miners have a formal payment structure that enables them to pay for the required goods and services in foreign currency as per the requirements of the foreign based service providers and equipment suppliers.  Note: The majority of the Producers / Miner’s Costs are in Foreign Currency.  Mining Equipment, Maintenance Parts, Technical Support Services are all imported.

3 A Key point to Note:  Our Zimbabwean Government Officials, RBZ, Ministry of Finance, Ministry of Mines & Mining Development, MMCZ, as well as the Commercial Banking System will now be able to assess and monitor the domestic/ local Chrome sales transactions, (these make up the majority of small scale miner transactions).  This will further drive our nation to identify Chrome Buyers who are engaged in predatory chrome buying practices (offering ultra-low amounts below the international market prices for chrome to producers / miners).  Concurrently , this will enable RBZ to track and target chrome buyers who are currently engaged in illegal transfer pricing activities .Chrome Buyers and their agents engaged in transfer pricing activities, we expect will  be seriously dealt with to the maximum capacity  of our nation’s laws and they will be subsequently removed from operating a predatory business from within our nation.

4. With the Commercial Banking sector taking on its role as the manager of financial transactions on the domestic as well as export markets, chrome producers / miners will benefit from their banking services such as financial advisory and business growth planning services. Loan packages in both foreign currency and RTGS dollars will become available to assist in advancing operations, obtaining mining equipment, as well as in technical support services.
5. Direct foreign investment (Which had left the chrome mining sector upon the RBZ / Ministry of Finance announcement of the foreign currency payment ban for domestic transactions), will now return to the chrome production / mining sector as the ability for chrome producers/ miners to earn foreign currency has returned to the domestic market; Direct Foreign Investment also restituted because the new policy enables foreign currency payment obligations to be met .This policy facilitates the operational requirements for a business to be deemed commercially viable.
6. Equally important, the policy provides a pathway to value addition for chrome producers/ miners as they will now earn the required foreign currency to invest in value addition machinery and technology. In addition, Commercial Bank Investment loans can be accessed leveraging the foreign currency earnings of the Chrome Producers / Miners.
7. When combined with the new Chrome Policy which is currently under review by the Ministry of Mines and Mining Development’s policy implementation team, the chrome sector is now repositioned for growth.
8. The National benefit – increased access to foreign currency within our nation’s Banking System which will also feed into other industries as well.

It has been noted with great surprise that people with disabilities have become invisible in the Zimbabwean mining industry. The chief reason being that determination alone does not suffice for one to be fully recognized in the industry. The prevailing requirements expected of plwds are discreditable considering that this group deserves special treatment.

Mirirai Melissa Ngoya

People with disabilities (PLWDs) are facing various challenges in terms of being recognized in the mining industry. In an interview with Mining Zimbabwe, the secretary of people with disabilities Moses Marufu suggested that there are many stumbling blocks that are perpetually obstructing this group from reaching out to their dream of venturing into the mining sector.

Disabled people are despised and discriminated against, they are perceived as individuals who are incapable of bringing fundamental development in the mining sector as highlighted by Moses “it is with great sadness that people who live with disabilities are looked down upon and many offices do not give them the attention they deserve”

Even though PLWDs aspire to venture into mining they are facing challenges due to the infrastructural set up of many offices which they would be required to visit in trying to get registered. The requirements expected of them are overwhelming considering that moving around is very difficult for them. It is a requirement that they must visit various offices for them to be registered which is quite burdensome.

 Relevant authorities are failing to exorcise these discriminatory measures and this is one of the major challenges plaguing the mining industry in Zimbabwe.

“It is a great challenge for people with disabilities to access buildings such as the ministry of mines since the way it was constructed does not suit the conditions of PLWDs.”

“It disturbs me seeing the ZMF national secretary for PLWDs being hauled up at the rainbow Towers simply because the building is not sensitive to their plight” added on Chiedza Chipangura ZMF chairperson for Mash west.

The secretary further highlighted that there is an unfair office set up at the ministry which therefore shows that from inception, the ministry disregarded the disabled. Hence their chances of being successful in the mining sector are seriously being jeopardized.

“There is an unwelcoming atmosphere in those offices due to language barriers, looking up for a deaf person wanting to venture into mining.”

The communication barrier hampers the succession of plwds who aspire to venture into the mining industry.  Relevant authorities have dismally failed to make resource allocations to people with disabilities resulting in some services being inaccessible for them.

Mr. Secretary said “plwds have their own means of communication which most of the officials operating in the ministry of mines offices do not understand therefore any proper communication between the two groups of people”

It is high time for the government of Zimbabwe to lookup for this group since they are citizens of this nation. They need, substantial assistance in this enterprise enjoying the same benefits that everyone is enjoying.

“People with disabilities are not very mobile-like able-bodied people hence will spend much time on production as the study has shown. We will become taxpayers, bankers, employers, and also earn for ourselves, therefore, reduce the national budget on social welfare” added Moses Marufu.

Rising exchange rates, rapidly changing monetary policies, along with the lack of willing sellers of forex has negatively impacted direct foreign investment in the mining sector, Zimbabwe Miners Federation provincial chairperson has said.

Rudairo Dickson Mapuranga

Speaking to Mining Zimbabwe, ZMF chairperson of Mashonaland central Masango Mahlahla said that Zimbabwe has experienced a sharp fall in mining investments. Apparently, companies are considering the prevailing pol-economic situation that is in Zimbabwe hoping that the government will clarify on its monetary policy in order for them to invest.

“Currently the mining sector has experienced a sharp drop in foreign companies interested in directly investing in Zimbabwe mining operations.  International businesses are waiting for monetary policy clarification regarding how invested capital and profit earnings will be converted back into foreign currency and repatriated to the home countries.  They have noted the shortage of willing sellers within the interbank formal sector ’’, he said.

“International businesses who trade publicly neither operate on parallel markets nor illegal systems as it violates international laws governing foreign investment as well as shareholder agreements. Hence the reduced interest to invest in the current environment” added Mahlahla.

Mahlahla maintained that the government’s willing buyer, willing seller policy has greatly affected mining investments because banks are willing to buy foreign currency from miners but they are not willing to sell it to the same people who provide that foreign currency to them. Consequently, this affects mining operations because most mining equipment is imported, thus they need forex.

“What has greatly impacted mining businesses is the “willing buyer” “willing seller” policy implemented by RBZ.  The majority of financial institutions such as Commercial Banks and International Funds Transfer Services such as Western Union are willing Buyers of forex but not willing sellers.  This means that the much-needed forex is purchased and removed from the formal market whilst it’s not being replenished via sales. This further limits access to much needed foreign currency for imported mining equipment purchases” he said.

 Member of Economist Round Table Zimbabwe Sifelani Jabangwe admitted that the 30 day period is not conducive enough for business as some members are advocating for its review. However, Jabangwe is convinced that access to foreign currency has improved since the willing buyer willing seller mantra was introduced.

“The 30 day period is under discussion as some feel it’s too short, then access is also improving since the full willing buyer and seller was introduced.  The position has always been that the effective operation of the interbank is critical for investment to come into the economy” he said.

TWO gold fraudsters have been sentenced to four months in prison for selling a Bulawayo man fake gold for US$150 and ZWL $450.

Sebastian Gwande (32) and Lovemore Netha (34) from Cowdray Park suburb defrauded Mr Gerald Nkala (38) from Northend suburb by selling him 7,5 grammes of what they claimed was gold.

Gwande and Netha pleaded guilty to a fraud charge before Bulawayo magistrate Ms Ulukile Muleya who sentenced them to four months in prison.

Prosecuting, Mr Nathan Marime said on July 17, 2019 at around 2PM, the duo called Mr Nkala and told him that they were selling gold.

Mr Marime said the two invited Mr Nkala to come and collect the gold at Fundisi Mine.

“Mr Nkala collected the gold and asked the men to accompany him back to his office to weigh the gold. However, they refused and stated that they were rushing to meet their sponsor,” he said.

Mr Marime said Mr Nkala paid their money out of trust and told them that he would return to collect his receipt since they were in a hurry.

“Mr Nkala got back to his office and smelted the gold and he realised that it was not gold,” he said_The Chronicle