Mining ZimbabweLatest Mining News, Policy and Industry Updates

Guruve based Chinese mining firm, San He Zimbabwe, had its property attached by the sheriff after it failed to settle over US$218 970 in salary arrears and non-payment of overtime.

The mine, based in Guruve, had failed to pay workers their full salaries, forcing employees to sue and eventually winning the case.

The award was registered at the High Court, paving way for the attachment of property such as dump trucks, tractors, irrigation equipment and excavators.

After the attachment, the company, however, applied for a stay of execution at the High Court but lost the case.
“Applicant became aware of draft ruling and felt it was at peace. It was served to appear before the Labour Court but failed to do so, thinking it was at peace. (It) was served with an application for registration of arbitral award, but did not file a notice of opposition, thinking it was at peace,” part of the judgment read.

“Now that the property has been attached, it wants to cry foul. I uphold the point in limine that this application is not urgent. It is ironic that the applicant only saw the writ of execution, but failed to see other notices of set down. The application is dismissed with costs, and without dealing with the merits,” the judgment read.

Zimbabwe Diamond and Allied Minerals Workers’ Union (Zdamwu), which represented the workers, warned mining companies against labour malpractices, saying the law would deal with them.

“Chinese chrome mine is in soup over underpayment of wages. We have attached the property to recover US$219 000 or RTGS dollars equivalent,” Zdamwu general-secretary Justice Chinhema said.

“This is a clear message to all violators of labour rights that the law will catch up with them. Zdamwu will fish you out and make you comply in a painful way. The time for corrupt employers is over. They can bribe a few individuals for protection, but when we reach you, we fish you and your protector,” he said. Source: Newsday

THE Zimbabwe Mining sector can only pay electricity tariffs in forex to Zesa Holdings if the Reserve Bank of Zimbabwe increases its foreign currency retention threshold, a top mining official has said.

The power utility has been crippled by various challenges such as failure to settle its debts for power imported from Eskom in South Africa and Hidroeléctrica de Cahora Bassa in Mozambique. They owe the two power utilities a total US$83 million for electricity imports.

This has resulted in Eskom cutting power supplies to Zimbabwe from 450 megawatts to just 50 megawatts which has contributed to the intensified power outages countrywide. Zesa has proposed that the mining sector pay its tariffs in forex to assist them to pay its foreign obligations.

In an interview done before the return of the Zimbabwe dollar on Monday and the banning of foreign currencies as legal tender, Bindura Nickel Corporation MD and immediate ex-president of the Chamber of Mines Batirai Manhando said the ability to pay Zesa in forex is dependent on the central bank increasing the forex retention threshold to mining companies.

“The mining industry is not averse to the idea of paying electricity tariffs in foreign exchange. The only challenge is that the current retention thresholds as agreed with RBZ covers the procurement of inputs for production excluding electricity and assumes power is paid in RTGS dollars,” Manhando said.

“Thus, any further demand for foreign exchange from the mining industry should be compensated by a commensurate increase in retention thresholds. Meanwhile, we are engaging RBZ, Ministry of Energy and Zesa to resolve the matter and support Zesa in meeting their foreign obligations.”

Manhando said the current power outages have had an adverse impact on the operations of the sector and warned that this could result in mine closures.

“The mining industry requires uninterrupted power supply because it’s a round-the-clock business. The current situation where on average the mining sector is getting four days of power per week has resulted in widespread output losses. Production statistics for the first four months of 2019 show that all key minerals recorded output declines of not less than 10% compared to the same period in 2018 due to power outages,” Manhando said.

“The use of diesel generators, which are expensive to run, has led to an increase in the cost of production impacting negatively on the viability of the mining industry. The immediate implication of this is a decline in foreign exchange earnings from the mining industry and if the situation is not resolved, we will witness some marginal mines closing their operations in the next few months.”

He said the mineral output for the year is dependent on the successful resolution of the various constraints afflicting the mining sector which also includes inadequate foreign currency allocations and a high-cost structure.

Speaking at the COMESA market workshop facilitated by ZimTrade, Zimtrade Export Development Manager Tatenda Marume said that Zimbabwe needs to adopt value addition mechanism in order to enhancement our exports returns.

By Rudairo Mapuranga

According to Marume Zimbabwe’s export market was at its best in 1992 with base metals constituting 23 per cent of the total exports trading with countries such as the Netherlands, Brazil to mention a few who have soon vanished on Zimbabwe’s total exports in 2018.

Marume added saying that since 2009 Zimbabwe has been exporting raw minerals, which in actual sense has affected Zimbabwe’s exports returns negatively.

“The direction Zimbabwe has been moving in terms of exports is not so positive,” said Tatenda Marume.

The Mineral Marketing Corporation of Zimbabwe has been urged to make use of Zimbabwe’s trade agreements with the Southern African Development Community (SADC), Common Market for Eastern and Southern Africa COMESA, The Environmental Protection Agency (EPA), Continental Free Trade Area (CFTA).

MMCZ was also advised to make use of Zimbabwe’s Bilateral trade agreements with countries such as Mozambique, Namibia and Botswana and avoid the over-emphasis of trading with South Africa because it would yield unpredictable trauma on the country if South Africa’s economy is not functioning well.

Speaking at the COMESA market workshop Zimtrade Director Mr Philip Phiri said also warned Zimbabwe of the dangers of focusing solely on South Africa in terms of exporting goods and services which he said is not healthy for the survival of the country.

“We need to be careful about how we target our markets if South Africa catches flue Zimbabwe is the one who sneezes,” said Phiri.

Speaking to Mining Zimbabwe after the Economist Round Table of Zimbabwe meeting with journalists Mucha Mkanganwi said that although the government is going to divorce from all transactions of foreign currency in every trade be it ZIMRA and other government arms, it will be difficult for it to buy gold in local currency as this will catalyst in low delivery of gold to fidelity.

By Rudairo Mapuranga

Mr Mkanganwi said that the huge differences between the interbank foreign currency exchange rate and that of the black market are the major reason which causes gold leakages.

“If we start pushing out the buying of gold in local currency today, deliveries will stop. The interbank foreign currency exchange rate should not be too different from that on the black market for the country to be able to buy gold and other minerals in local currency” said Mkanganwi.

The Economist Round Table of Zimbabwe members said that exporters hold near USD900 million which will be automatically be liquidated after 30 days in order to promote the use of local currency.

The members also said that Zimbabweans should stop thinking in USD in order for the local currency to gain momentum, therefore, leading to a stable economy.

The recent announcement of 100% local payment system had miners outraged. Miners were lamenting for price hikes from US$55/RTGS45 to at least US$80%/20% rtgs and being hit by a 100% local currency payment that’s losing value daily was a major drawback.

By 12 noon, the government had reverted back to the US$55/RTGS45 pricing system as the news to pay in 100% local currency was received with anger and guaranteed promises of not submitting to Fidelity.

Of all the conversations we had with small-scale and artisanal miners not even one expressed the will to shut down operations. The common response was snubbing submitting to Fidelity.

With the current economic state, the country needs to desperately boost its foreign currency earnings. The unpopular decision to pay in a currency that still lacks confidence was going to have dire consequences as it had caused panic and despondency in Zimbabwe’s top Industry. Whilst the move by the government to outlaw forex was to arrest the almost daily hiking of goods and services in RTGS, the market does not have confidence at all in the RTGS dollar.

We look at the reasons why Miners particularly small-scale and artisanal miners will never stop operations no matter how unfavourable government pricing is.

Alternative Markets

There is always a gold buyer with ready cash, ready to get gold and usually, that kind of buyer always has hard cash. In some cases, they also have rtgs/bond notes that will be at par with parallel market rates of which Fidelity uses bank exchange rates which are way lower. Most of these buyers smuggle the precious mineral out of the country where there is a ready market for them so the cycle goes on and on. Fidelity can easily get most of the gold (if not all) if they pay competitive prices. The government needs to have competitive pricing in place, otherwise, submissions will continue to dwindle.

Source of Livelihood

A report in 2014 stated Zimbabwe had approximately 500,000 artisanal miners. This is mainly due to the lack of jobs on the formal market. As such Mining is a source of livelihood to millions therefore depressed prices will not make artisanal or small scale miners abandon their source of livelihood. Many articles have been published of people getting into risky mines just to earn a living. Many mine disasters have had deaths of people from far off places. Eldorado Mine disaster that claimed 12 lives in Chinhoyi had people from as far as Shurugwi. For most miners, it is risky business and such risk should always be worth the rewards. Its only natural they will go to the one that pays better.

Stopping is just not an option

Earlier this year At Cricket and Silver Moon mines in Battlefields,  the Environmental Management Agency (EMA) had raised a red flag over safety conditions at the two mines, but the warnings were ignored. People still went into the Mines which resulted in the death of over 30 miners. Those who escaped said they knew the mines were not safe however they still chose to get in and search for the precious mineral. They just cannot afford to stop as this will be a threat to their survival. At the Eldorado mine accident that also claimed lives, illegal miners offered to go down rescue the trapped bodies in exchange for permission to mine. This was despite the fact the mine had not yet been declared safe or inspected.

It is a well-known culture that when Makorokoza leave for mining they say their goodbyes and let their family know they may not come back alive. Going down the shafts has to be worth their while therefore they will always be attracted to the one that offers better returns.

Increase of Artisanal miners 

Informal mining will increase as miners will refuse to be regulated with the fear of unstable government policies, so continuing operating as an artisanal miner government policymaking will not affect them at large.

Miners will not bother getting Legal Mining titles 

Zimbabwe Miners Federation president Henrietta Rushwaya said that over 500 000 people are in the small scale mining sector, and only 30 000+ are operating legally which means over half a million miners are operating in Zimbabwe without any government binding. These miners are already operating illegally and therefore the sell of their production is also done illegally which then keep them in business even when the government errs in policies.

Minerals do not lose value because of bad policies

Zimbabwe is rich in mineral deposits and there is a huge appetite when it comes to the consumption of these minerals all world over. According to the Zimbabwe National Statistics Agency (ZimStat) minerals were the largest foreign currency earner in 2018. The largest earners were gold at $1,030 billion followed by other minerals. Miners will soldier on because the minerals market is strong outside Zimbabwe and there are people willing to risk their freedom to smuggle minerals out of Zimbabwe.

Conclusion

The decision to revert back to the 55/45% pricing structure is a welcome move. Reverting back to paying in our own local currency should eventually be done only when the economic climate has stabilised and confidence restored. Competitive pricing will always have Fidelity getting less and less even if miners mine more and more. The Ministry of Mines and Mining Development now has a highly experienced Minister at the helm perhaps it is time to liberalise Zimbabwe’s Top Industry.

Fidelity has reverted back to buying rates of 55% USD and 45% RTGS.

The country sole buyer had earlier today published the buying rates in local currency. This was in line with government announcement abolishing the multi-currency system. The Public Relations Officer head Chelesani Moyo acknowledged the change but advised she could not shed more light as she was on leave.

The Zim currency rates had sparked outrage as miners swore Fidelity will not receive anything from them.

Below are the new revised gold buying rates. Please note payment will be in 55% USD and 45% RTGS and EXCHANGE RATE : 6.3107

Gold prices 23 January 2020 55%US$/ 45%ZWL

The earlier announced rates (No longer to be used)

Gold prices 25 June 2019

FIDELITY HAS REVERTED BACK to the 55/45% payment system

Following the announcement by The Finance Minister of the abolishment of the use of Foreign currency, Fidelity Printers and Refiners has published gold buying rates in local currency.

This move will likely see a reduction in gold submissions to the Entity as the miners were complaining about the previous pricing which the miners were allocated 55% of their payment in Hard US$ and the remaining 45% in local currency.

These are the prices today

Gold prices 25 June 2019