The Chinese Deputy Ambassador to Zimbabwe explaining how China has made great achievements.
He touched on how the Chinese are accused of being looters.
See video below:-
Chinese Deputy Ambassdor explaining how China has made great achievements
"You don't call investors looters" @nangozim 2019 Directors, Summer School. pic.twitter.com/rqMJPzjgRy
— Open Parly ZW (@OpenParlyZw) November 29, 2019
In January 2018, the PR Newswire online, London, published that the gemstone market is approximately 23 billion US dollars and that the popularity in non-diamond gemstones had soared to a 100% increase in prices within the decade.
By Maison Phiri
In the economic downturn that the country has been experiencing, it would be unwise to ignore the economic potential of the colored gemstone industry to the GDP, taking into account that we have vast known deposits under the stewardship of citizen miners or ASMs.
To appreciate the potential impact of colored gemstones on the economy, one needs to comprehend the mine to market value chain:
This article 1st appeared in the Mining Zimbabwe Magazine November 2019 issue
Last month the President of Zimbabwe Emmerson Dambudzo Mnangagwa unveiled the USD12 billion road map which aims at developing the mining sector in Zimbabwe to a USD12 billion industry by 2023. The mining sector is already Zimbabwe’s biggest foreign currency earner. Experts and the government are of the view that the sector is the leading horse towards the revival of the economy.
Rudairo Dickson Mapuranga
The President’s USD12 billion road map has put a target of USD4 billion for gold producers which is a third of the target while platinum and diamonds will weigh in with US$3 billion and US$1 billion, respectively. Chrome, Nickel and Steel are expected to generate USD1 billion, coal and hydrocarbons are also expected to produce USD 1 billion. Lithium at the moment is expected to produce USD0.5 billion while other minerals are forecast to produce USD1.5 billion up to USD 2 billion.
It is a well-known fact that Zimbabwe is hamstrung by a lack of mining exploration, moving to the USD12 billion industry by 2023 and of course becoming a middle-income earner by 2030, investing in mining exploration is the key. However, it is also a known fact that tapping of the known deposits in the country should be of primary concern.
Investment in mining prospects should be the country’s number one concern towards improving the mining sector and the economy at large. Is it possible for the sector to earn 12 billion annually by 2023?
With the copiousness of mineral deposit, the country is sitting on both under exploitation and unexplored but known resources, the country has the potential to earn and turn the wheels of the economy and transform the country into an upper-middle-class earner not later than 2023. It is, therefore, Mining Zimbabwe’s opinion that the country can reach the president’s vision of the country becoming a middle-income earner by 2030 with the backup of the mining industry.
The Miners in Zimbabwe have thrown their weight behind the USD12 billion roadmap for the mining sector in the next three years optimistic that the target was achievable, however, miners are of the knowledge that certain initiatives, policies, and reforms need to be looked into for the sector to achieve the USD12 billion fate.
The mining sector last year earned US$3,4 billion, driven by the high performance of the gold sector, which delivered a record 33,2 tons. Overall last year the sector failed to earn USD 4 billion how can the sector as a whole achieve that feat?
Experts are of the view that the majority of Zimbabwe’s gold is being smuggled out of the country through different channels and the nation is losing millions due to rampant smuggling.
In order to achieve the USD 4 billion mark, there are various factors that need to be addressed by the government for the gold sector to achieve the target.
(a) Curb gold smuggling there are various reasons which has led to gold smuggling from Zimbabwe among them, the 55/45 per cent retention, late payments from Fidelity and various Statutory Instrument (SI) implemented by the government.
In order for the sector to achieve the target, it is of paramount importance for the government to consider paying gold miners what they are demanding, pay the gold producers on time to limit alternative markets and remove the current SIs gazetted by the Minister of Finance Mthuli Ncube which banned the use of foreign currency in all local transactions and pricing of equipment in foreign currency.
The government of Zimbabwe needs to revive the gold mining sector by investing in gold mining through Fidelity, supplying miners with equipment, making public the gold development fund and issuing miners with prospecting licenses on time in order for them to acquire loans. Geologists believe that there is little activity happening along the Great Dyke for the country to reach full gold exploitation.
Production in Zimbabwe is limited by a lack of exploration. Identifying new mines in the mining sector is key, the government should, therefore, make it their duty to invest in exploration by granting as many EPOs as possible to various EPO holders.
Identifying a gold mine is a daunting task, it can take up to 10 years for geologists, chemists, and engineers to examine a potential site. And even then, the likelihood of a mine being developed into a production gold mine is less than 0.1 per cent. Only ten per cent of these sites contain enough gold to justify further development. But above ground, gold is everywhere. New deposits of gold are increasingly hard to come by and increasingly difficult to locate. Geologists have estimated that only 55 tons remain buried away in the Earth’s crust. This means, that if current global mining rates continued, we could run out of newfound gold in just 20 years. So as gold Mining continues to slow and the cost associated with mining increases to meet the challenge of extraction, gold could become even more expensive.
Zimbabwe hosts the second-largest platinum group metals (PGMs) resource in the world on the Great Dyke. An estimate of 2.8 billion tones PGM ore at 4g/t 4e is estimated to lounge on the Dyke. The grade and thickness of the ore body persist over large areas.
It is indeed true that the sector can contribute up to USD 3 billion and push the economy of Zimbabwe to Yester year’s heights thereby helping the nation reach the USD 12 billion target however it could be difficult for the country to reach by 2023 without the necessary steps taken by the government.
It is, however, of no doubt that the PGM sector has all it takes to contribute even more than its projected target through the coming in of projects like Karo and other platinum mining firms.
Zimbabwe in the Marange field has the largest diamond field in the world in terms of carats produced, estimated to have produced 16,9 million carats in 2013 that is about 13 per cent of the global rough diamond supply. However, diamond production at Marange is estimated at under USD 60 per carat while some diamond mines in the world produce rough diamonds valued at over USD 1000 per carat.
Zimbabwe has other diamonds reserves in Masvingo, that is Chivi, Beitbridge, Mwenezi, and Mazvihwa in Zvishavane where the diamond miner RioZim’s Murowa diamond is the miner. Murowa diamond at its Mazvihwa reserves has a record high of 740,244 carats in 2018.
The president of Zimbabwe and the Minister of Mines and Mining Development were optimistic that the diamond sector will have an immense contribution than before through the coming in of world’s biggest miners in the diamond sector like Anjin, Alrosa, and Vast Resources.
It is, however, important to note that Zimbabwe is at loggerheads with the west, the selling of its diamonds is at risk with the US Customs and Border Protection alleging the use of forced labor in Zimbabwe’s diamond mining sector. The sector could lose market if the government does not prove to the world that the allegations are malicious.
Zimbabwe has the second-largest high-grade chromium ores in the world after South Africa with reserves of approximately 10 billion tonnes. The country has more untapped than tapped Nickel deposits with only Trojan mine in Bindura only mining the mineral at a very low scale.
Only steel production can reach the target in this category if plans are in place to revive the sector. However, as of now it could be just wishful thinking with no plans in place.
The government also needs to address issues of predatory chrome pricing in order for miners to invest in the sector.
Zimbabwe has one of the world’s biggest hard rock lithium. The Arcadia lithium project located near Harare, Zimbabwe, is considered to be one of the world’s biggest hard rock lithium resources.
Prospect Resources fully owns the lithium project, which is estimated to produce an average of 75,000 tones per annum (TPA) of spodumene and 155,000tpa of petalite concentrates during its 20-year mine life.
In 2010, lithium was added to the United States government’s list of critical minerals — minerals that are important to the country’s manufacturing and defence industries, highlighting its growing importance in the global economy.
Through the Arcadia Lithium project alone, the sector can generate more than half a billion per annum, however, the project could start kick to its full potential slightly after 2023 which means that the government’s target may fall by the wayside.
The country has one of the world’s highest mineral deposits with records showing that the country has got almost all the minerals found on earth. There are various projects underway from oil and gas to gemstones.
According to one miner, the gemstone sector only has the ability to earn USD 2 billion annually if the government through Minerals Marketing Corporation of Zimbabwe (MMCZ) focuses on promoting the sector to attract buyers and value addition.
Mining Zimbabwe believes that it is possible for the sector to earn more than USD 12 billion per annum, however, certain points need to be addressed before the government starts on preaching about the USD 12 billion mining sector.
The government of Zimbabwe needs to take on the following 10 priorities which will get the mining sector moving towards the USD 12 billion industry.
although not muchly recorded corruption in the sector is too prevalent and the cancer of corruption needs to be dealt with once and for all.
There should be no changes to rules and regulations without wide stakeholder consultations and advance notice.
A stable economy where property rights are respected and policy is consistent will help stabilize the mining sector, thereby leading to the growth of the sector through attracting the right investment.
A floating exchange rate is a regime where the currency price of a nation is set by the forex market based on supply and demand relative to other currencies. This is in contrast to a fixed exchange rate, in which the government entirely or predominantly determines the rate.
Capital Flows Foreign capital tends to flow into countries that have strong governments, dynamic economies, and stable currencies, therefore, Zimbabwe needs to have a relatively stable currency to Attract investment capital from foreign investors.
The government of Zimbabwe reportedly lost millions of dollars through delayed Revenue inflows due to the slow processing of imports and exports after switching off the internet services countrywide early this year.
ZMDC is reportedly dead broke which led to speculations that they cannot afford to explore their numerous claims. Many assertions are constantly being thrown around which are of the view that ZMDC is sitting on dead assets and the government has no money to give so as to carry out high-risk exploration. Therefore, this has led experts into believing that, ZMDC must be listed on the stock exchange to raise money and obviously the government gets diluted to less than the controlling shareholder.
Amidst reports of corruption, money laundering, externalization and other unscrupulous behaviours by mining personnel, all transactions which are mining-related in Zimbabwe if done digitally will avoid corruption and Improve transparency.
The government of Zimbabwe, therefore, needs to prioritise on these 10 points in order for the sector to achieve the 12 billion dollar status without which it will be just another project that will never yield results like the other targets previously set by the government.
This article 1st appeared in the Mining Zimbabwe Magazine November 2019 issue
The gold industry in the country has been in existence for over 1000 years with one of the powerful early societies, the Great Zimbabwe kingdom and the Mutapa kingdom believed to be gold funded economies. Since then the country has produced a significant amount of gold. Zimbabwe’s production peaked last year when it produced 33,2 tonnes and in 1906 and 1999 at 30 tonnes and 27 tonnes respectively.
Rudairo Dickson Mapuranga
In Zimbabwe, all gold by law is sold to the country’s sole gold buyer and exporter, Fidelity Printers and Refiners (FPR). Experts believe that gold produced in Zimbabwe is four times more than gold delivered to the country’s sole gold buyer and exporter.
Despite the coming in of more small scale and artisanal miners on board and better mining technology introduced, the country has surpassed its record production of 30 tonnes per annum only once last year (2018) when a record delivery of 33,2 tonnes was recorded due to various reasons.
This year, the government has set a gold production target of 40 tonnes which has proven to be out of reach with the country’s sole gold buyer and exporter recording only 12 tonnes during the first half of the year. Production is expected to rise to 17 tonnes during the second quarter of the year, however, the record set last year will not be surpassed as expected by the government.
The government through its USD12 Billion road map has set a likely to be laughable target earnings of gold per annum of up to 4USD billion that is over 100 tonnes of gold per annum when the country since 1980 has failed to reach 40 tonnes in a single year.
Traditionally, the mining industry has been very important to the economy of Zimbabwe. The sector generates considerable employment, foreign currency earnings, infrastructure development and attracts significant foreign direct investment.
According to Zimbabwe Miners Federation spokesperson, Dosman Mangisi the gold mining sector can deliver 100 tonnes of gold or more to the country’s sole gold buyer and exporter if the government supports the sector.
“More gold is being produced in the gold mining industry, the sector has the potential to produce 50 to 100 tonnes of gold annually and if more resources are channeled, we are able to produce more in this country,” said Mangisi.
However, according to Core Miners Association Founding Chairperson Canaan Joseph Saurombe, the 100 tonnes production figure being thrown around cannot be considered to be true, however, production according to him is very high and delivery to the country’s sole gold buyer and exporter can only be achieved when the gold mining sector is formalized.
“Well, I don’t know how that assumption was build up. But I do agree without a doubt that we are producing more than what is accounted for. The complexity begins on our definition of production, in this case, it focuses on formalised production which is accounted for and adds up to the monthly/ annual gross” said Saurombe.
Saurombe also added saying that it should be the government’s main priority to make sure that, small scale and artisanal miners are attracted to formalisation before the idea of formalisation is preached. The Core Miners Association chairperson said that the government needs to dovetail gold production and declaration through dialogue and creating relationships with the miners.
“We need to interlock the gold production and gold declaration to Fidelity; we have to create incentive policies for the formal sector. Besides preaching formalisation, one has to be attracted to formalise by just evaluating the pros of making that decision.”
“If it becomes more profitable and business-oriented for a miner to be formal and to work with fidelity being the sole buyer, then I’m sure we can revolutionise as intended.”
“So, I think engagements between the miners and the government being the policymakers have to be ongoing. To make sure that the mining environment becomes very much favorable for business to those who are supporting production. I’m sure that how we will experience a boom in production” Saurombe said.
The year 1999 is Zimbabwe’s most successful gold production period before 2018, with the country getting over 27 tonnes from both large scale and small-scale gold producers.
According to Zimbabwe Miners Federation spokesperson Dosman Mangisi, production in 1999 was high because of the government despite the sector being under-exploited was very promotive to all the miners through different initiatives which encouraged miners to sell their gold directly to the government without being pushed.
The ZMF spokesperson also said that gold production was very high during the period because the control of gold was production was controlled directly by the Ministry of Mines and the ministry of finance through the central bank could only care about receiving the gold from the miners.
“The policy was just simple government being so promotive through RBZ, miners were being resourced directly through their banks to buy gold and deposit to RBZ. It was right on the grassroots, it was direct interaction, there were not so many arms who deal in the regulation of gold” said Mangisi.
Mangisi also said that production in the 1990s was high because the small scale and artisanal miners were recognized by the government in 1991 through the amendment of the Mines and Minerals Act which allowed independent gold mining efforts by black workers.
The year 2000 gold production declined only by 2 tonnes from the record set in 1999 and by 7 tonnes in 2001 setting production of 20 tonnes in 2001. Gold delivery during the period is believed to have been caused by different factors among them the grabbing of commercial farms by the government a move which made some small scale and artisanal miners move to farming from mining.
The period also was the genesis of the economic crisis which hit the country due to the economic sanctions which were imposed on the country by the European Union and the United States of America.
In 2002 gold delivery to FPR was 15,5 tonnes, the following year production was 18.78 percent decline with the country’s sole gold buyer and exporter recording 12.5 tonnes. In 2004 production increased getting over 21.3 tonnes of gold an increase in production by over 69 percent. Delivery, however, declined in 2005 when the gold buyer recorded over 34 percent decrease in production, with only over 14 tonnes of gold delivered.
Although foreign currency retention was higher both from 2006-08 when gold buyers would receive 75 percent forex from all gold delivered to the central bank, and 100 percent foreign currency during the GNU era, gold production during the era was very low averaging only 9 tonnes per annum.
According to Mangisi, artisanal and small-scale mining was criminalised in 2006 as part of a government effort to ensure that all gold extracted in the country be sold to the government, but that policy only pushed illegally mined gold to the parallel market.
From 2014 to 2018 gold deliveries to the country’s sole gold buyer and exporter increased rapidly mainly due to the reason that small scale and artisanal miners who were banned were allowed to operate again, the period produced an average of 30 tonnes of gold delivery to Fidelity.
According to Mangisi, in 2014, the government began issuing artisanal mining permits, free of charge, to anyone interested in selling gold to the government-run Fidelity Printers and Refiners, the only legal gold buyer in Zimbabwe. In 2018, there was a massive public outreach through ZMF to encourage miners to sell their gold to Fidelity. During the period before 2018, there was no hustle getting a gold buying permit.
For the government to get more gold from small scale and artisanal miner it is of paramount importance for the government to reminiscent this period and look forward to improving the period than disturbing it.
The government through the Ministry of Mines and Mining Development has set a gold target of 40 tonnes which the deputy minister of Mines Hon Polite Kambamura has expressed pessimistic views that the target would not be reached.
Caledonia has reduced its yearly target from 56 000 ounces in 2019 to 50 000 ounces due to the electricity problems the country has been experiencing during the first half of the year. The unstable power supply is one of the reasons that makes it difficult for the sector to gain ground in 2019.
ZMF spokesperson Dosman Mangisi also said that the target cannot be achieved due to policy inconstancies by the Ministry of Finance. According to Mangisi, it is not the production that usually declines in the small scale gold mining sector but deliveries to central bank because of some of the policies introduced during the year affected the market greatly.
“It is deliveries that decline caused by economic policies that the country put, as long as our payment methods are very poor gold delivery is affected, the situation will then attract vultures in the country to buy gold at low prices,” said Mangisi.
The ZMF spokesperson also said that mining disputes in the sector have caused a decline in production, the year 2019 recorded more mining disputes than the previous four years which led to the sector halting some operations that would have helped in the attainment of the gold target.
Late payments by Fidelity are also a cause of concern, this year one of Zimbabwe’s biggest gold producer Metallon Corporation Limited placing its mines under care and maintenance siting late payments by the country’s gold buyer. RioZim for almost 2 months during the year also suspended operations due to late payments.
For the sector to have achieved its 40 tonnes target, monetary policies would have been improved to favor business than indulgence government appetite.
Rising mining disputes would have been curbed and a lasting solution reached, the situation might be carried over to 2020 which might also affect production next year.
The government should liberalise gold buying, give free permits to all gold buyers in the country. As long as the miners who are the producers are still complaining about pricing, licensing, marketing and late payments, then gold Mining submissions to Fidelity may further decrease.
According to Core Miners Association chairperson, Canaan Joseph Saurombe, “Next year there is a need to work on the pricing of gold, I would personally suggest at least 80%US+, 20%-Rtgs, considering that government is also banking on the forex for the acquisition of other important commodities such as pharmaceutical stocks.
(2) FPR being the sole buyer has to be readily available to each and every miner. Most being breadwinners they need quick money and the advantage is being taken up by smugglers.
(3) Encouraging policies and/or incentives for miners who are declaring their yellow metal to FPR
(4) Direct support to miners; machinery, mining loans that can be effectively assessed
(5) need for accountability and clarity; if a target is set, steps towards the mandate must be clear to quickly identify falls in trends to allow the authorities to deal with them whilst they are still short term and less complex.”
This article first appeared in the Mining Zimbabwe Magazine November 2019 issue
Gold delivery to the country’s sole gold buyer and exporter, Fidelity Printer and Refiners has declined significantly as compared to the previous year due to various reasons. There is a big assumption that, although gold delivery to Fidelity has declined production has not declined but improved due to the coming of more investments and more players in the artisanal and small-scale mining sector.
Rudairo Dickson Mapuranga
According to the Chairman of the Institute of Mining Research at the University of Zimbabwe Lyman Mlambo, Fidelity can achieve more gold delivery through the following among other measures that he highlighted to Mining Zimbabwe.
To achieve that we need a gold price support scheme from we draw when prices are depressed and into which we add when the price is very good. This means Fidelity needs to build a reserve of Forex specifically for that purpose. This will curb side-marketing. In the long-term things will balance out as the price is generally fluctuating in the long-term.
The country’s sole gold buyer and exporter must increase the component of the price from the current 55% to about 85 % because of equipment, spares and consumables are mainly imported. Despite miners advocating for higher forex retention last year from 75 percent they were getting, the central bank through the Ministry of Finance reduced the forex retention to 55 percent.
This will ensure non disruption of operations. We have had cases where mines had to wait for several months to get paid, yet in the meantime they got imports to pay for. If Fidelity delays paying the RTGS component it will be insignificant value due to hyperinflation.
Not to relax when it is getting loads of deliveries. This loan support should be well integrated into the ASM formalisation program so that eventually the ASM sector stands as a business entity, not livelihood or poverty-driven activity. Remember formalisation has two main aspects to it: mechanisation and legality (registration) – with the latter providing avenues to deal with issues of compliance on the environment, child labor, social welfare, SHE standards, etc.
There is an assumption that a lot of gold in Zimbabwe is going to waste due to poor mining methods by the small scale and artisanal mining sector, it is the due of the government to hold or support Mining Indabas that support miners to improve their mining methods and gold recovery processes.
The ministry of mines has been called to work with small scale and artisanal miners through giving them documents that would identify them to suitable donors and loan providers.
Government must finalize the mining policy and the main Mines Act Bill which have provisions for recognition of SSM sector as well as those addressing the various issues in the sector.
With regard to Fidelity, there is also the need to simplify the fiscal regime as a whole and to make it more competitive, for example by making royalty profit-based rather than gross revenue- based in which case we double tax profit when we exact corporate tax. But Fidelity has done well to make royalty deductible for income tax and also to index it to international prices.
Zimbabwe is currently experiencing grueling power cuts. There is need for government to urgently address this issue as it has created days of downtime monthly. An alternative power source is needed in case of drought as the country’s major source of power is hydro. New generators are needed for Hwange as the current ones are too old and constantly breakdown.
Tax issues are the domain of ZIMRA so Fidelity can recommend these measures to the former.
The government’s bold move to reintroduce the local currency, which is being ravaged by hyperinflation, before first getting the fundamentals right, has backfired as the economy is now, unofficially, hugely dollarised again, throwing the government’s plans to revive the economy into disarray.
A survey conducted by Business Times this week in Harare and other parts of the country showed that most small to medium enterprises were charging their products in United States dollars and other currencies. They were doing their receipts and invoices in Zimbabwe dollar equivalent, meaning the government had failed to deal with price distortions on the market.
This is despite the government banning the use of the multicurrency system in June this year in a bid to defend the Zimbabwe dollar. Several economists and other analysts see the swift outlawing of the foreign currencies as unjustified, given most countries that dollarise their economies fail to successfully reintroduce a local currency. They indicated that dollarisation would help Zimbabwe stabilise in the throes of the hyperinflation it is currently experiencing.
Recently, the RBZ Governor John Mangudya and Finance Minister Mthuli Ncube said the process of de-dollarisation was not an easy one, but the nation had to do it, saying all the fundamentals were now in place to ensure a stable local currency. They said having one’s own currency was an achievement. But this appears to be the opposite. Several analysts believe that the macroeconomic fundamentals for the return of the Zimbabwe dollar were not yet right.
The fundamentals include minimum foreign exchange reserves equivalent to one year of import cover, now said to be less than one week’s import cover, according to credible sources at the central bank. Mangudya did not respond to enquiries on the foreign exchange reserves yesterday. The other fundamentals are that Zimbabwe should have a balanced and sustainable government budget, high consumer and business confidence, a sustainable level of inflation, and a healthy job market. All these have not been met.
Ncube has claimed in the past that the Treasury had been achieving budget surpluses, but the correct position is that these have been cashflow surpluses, not budget surpluses. So far, Zimbabwe has missed several of its macroeconomic targets. The government has been targeting an economic growth rate of 3.1% by the end of 2019. But there is an economic recession, and the economy is expected in fact to contract by 6.5% this year.
There is a runaway exchange rate volatility when the government was targeting inflation to be around 5% by year-end. Now there is chronic inflation, hovering around 600% per annum. Even the month on month inflation has shot up again to 38% in October from 17% in September, meaning the government has missed its target again.
There is also acute shortage of foreign currency, excessive erosion of wages, salaries, massive shortage of electricity, and increasing cost of doing business because of increased electricity tariff, budget deficits, and incessant current account deficits.
“The government failed to diagnose the economic problem,” said one analyst. “We find ourselves being amputated for fever. How do you do austerity for an economy that is not producing, especially for an economy with structural challenges? The government should have done a diagnosis report first.” The analyst continued:
“The statistics from the Ministry of Finance do not inspire confidence. Everything that the 2020 national budget is trying to do spells doom than hope. It’s a miracle that the government wants to increase exports. How will that be when it has not given any cent to ZimTrade? Look in the Bluebook, there is nothing.”
The analyst said the budget assumptions were not realistic. “If companies want to be patriotic and use the Zimbabwe dollar for budgeting, you will be like Mthuli Ncube, who changes figures every day. The US dollar is going to continue. And this is a game the government is going to lose. This is why ZIMRA is also interested to get it through tax. The government expects improved rainfall to enhance agricultural production. But the analyst said while that was a valid observation, the sector was in danger due to the incapacitation of the farmers on the back of the high cost of farm inputs and capital erosion.
According to the analyst: “Electricity generation is a medium to long-term goal, so we don’t expect to see an improvement in electricity generation in 2020, hence this assumption will not help the country in meeting the targets. This means, the government will place emphasis on electricity imports.”
In the budget presentation, Ncube said he wanted to improve foreign currency availability. But that can only be improved when the country exports. The government also wants to improve macro-fiscal stability and business confidence. This, the analyst said, would not happen overnight.
“A stable environment requires us to stabilise the exchange rate, then inflation, and then growth. This is a long walk to freedom, which requires credible policies,” the analyst said. “Confidence is built over time by walking the talk, which is not happening with reference to the government’s policy inconsistencies. It takes away confidence.”
Martin Makaya, the former Institute of Chartered Accountants of Zimbabwe (ICAZ) president, said: “In 1999, we had hyperinflation because of fast track land reform which resulted in acute shortages of foreign currency and economic decline. In 2009, we dollarised. Fast forward to 2019, we have hyperinflation and the effects are foreign currency shortages, economic decline and de-dollarisation. I think we will officially dollarise again, we will be officially back to the US dollar. I can assure you that the use of IAS 29 (hyperinflation accounting) is here to stay. Macro-economic stability is not overnight. It is relevant and applicable in our situation.”_Business Times
Aim listed Vast Resources plc and Katanga Mining (pvt) Ltd formed a new agreement for the development of Vast’s Heritage concessions in the Marange Diamond Fields of Zimbabwe.
To manage and hold the interests of Vast Resources and Katanga Mining (pvt) Ltd, a joint venture company for the Chiadzwa Community, a new company, ‘Newco’, has been formed.
Consultancy partner, Botswana Diamonds will now receive new shares representing 2.5% of Newco, and Vast a total 97.5%, in the special purpose vehicle created by Vast.
Under the agreement, Botswana Diamonds will provide its consultancy efforts to Vast pro bono immediately for a five-year period whilst Vast will cover all capital requirements for up to $10 million.
Both companies explained how a review of an agreement between the two parties was required in light of Vast nearing its finalisation of an agreement with the Central Authorities on a package of ground in the Chiadzwa / Marange area.
Shares in Botswana Diamonds were trading 8.82% higher at 0.925p on Thursday morning.
Andrew Prelea, Chief Executive of VAST explained how the group concluded that BOD’s contribution as a consultant would ultimately “add significant value to the project.”
“We look forward to the diamond agreement being concluded and to work starting on what is highly prospective ground,” added Chairman of Botswana Diamonds, John Teeling.
Teeling further acknowledged Zimbabwe as a country “rich in resources” with “significant diamond potential” that is opening up to investment.
According to Reuters, President Emmerson Mnangagwa has recently tightened efforts to benefit from the region’s mineral resources to combat inflation and unemployment affecting Zimbabwe’s economy.
Vast is developing the project through Katanga Mining, a joint venture formed together with the local community at Chiadzwa, whom the company emphasised in its September update will directly benefit from natural resources acquired from the area.
Vast Resources is focused on the rapid transformation from exploration company to mining company and delivering multiple revenue streams. This will be driven by the advancement of its two primary value drivers, the Baita Plai Polymetallic Mine in Romania, and the Chiadzwa Community Concession in Zimbabwe, into near term production. Vast resources was once a shareholder in the Chegutu based Pickstone Peerless Mine.
Vox Markets
Zimbabwe’s gold deliveries have dipped 23% to 23.03 tonnes during the first 10 months of 2019, from 30.13 tonnes during the comparative period last year, due to the government’s adverse mining policies.
The development comes at a time when the country is experiencing rampant inflation, subdued production across most sectors of the economy, crippling power outages and serious shortages in many areas, leaving Zimbabwe on the edge of total economic explosion. Given that gold is the single highest foreign currency earner, ahead of tobacco, the government should pay more attention to the sector.
Gold contributes 38% of the country’s total earnings and more than 60% to the mining sector’s revenue. Surprisingly, the crafters of mining laws and regulations have turned a blind eye to the critical issues affecting the gold sector. In various forums, the RBZ Governor, John Mangudya, has insisted that gold miners cannot get a 100% forex retention level because the country needs money to import grain, fertilisers, drugs, and fuel.
This year, the RBZ reduced the gold forex retention level from 70% to 55%, and this has greatly displeased gold miners who have resorted to selling a large chunk of their production to South African dealers. The level of side marketing in the gold sector is a cause for concern. Some reports have claimed that senior government officials and ruling party stalwarts are involved in side marketing.
That puts the central bank in an invidious position as this has created arbitrage opportunities for those close to the corridors of power. Worse, Finance Minister Mthuli Ncube believes that close to 34 tonnes of gold have been smuggled out of the country in the first 10 months of 2019 and nothing concrete has been done to stop it.
A fortnight ago, during the US$12bn mining roadmap conference in the capital, Henrietta Rushwaya, the Zimbabwe Mining Federation president, told the gathering that gold production had gone up significantly but formal gold deliveries were going down.
“We can’t say gold production is going down, actually it’s going up, but gold is sold through other channels which are offering high forex retention levels, which show that the government should do something to ensure that the precious mineral is sold through formal means here,” Rushwaya said in the presence of Mangudya and Ncube.
Irvine Chinyenze, the Gold Miners Association of Zimbabwe (GMAZ) chief executive, says the fact that the authorities maintain the forex retention levels means there is someone benefitting somewhere.
“The monetary authorities should rethink their 55% forex retention threshold if they want miners to sell their yellow metal via Fidelity Printers and Refiners, otherwise we will continue to lose gold to South Africa which offers good incentives for gold miners and dealers,” says Chinyeze.
The government is planning to increase forex retention to 60% but the miners want above 70%. Analysts believe Zimbabwe is extracting over 75 tonnes of gold but most of it is smuggled out of the country by influential figures.
Some miners, especially large scale, are believed to be selling their gold to suspected smugglers to get more forex for their operations_Business Times
Zimbabwe Stock Exchange (ZSE) listed major nickel mining concern, Bindura Nickel Corporation (BNC), has a long history almost linked with the very history of nickel mining in Zimbabwe.
The company operates nickel mines and a smelter complex in Bindura in Zimbabwe’s Mashonaland Central Province. Scope of operations entail the extraction of nickel and the production of nickel by-products like copper and cobalt.
These are the main activities in the company’s two main divisions, namely, the Mining Division and Bindura Smelter & Refinery (BSR) Division.
The mining division is constituted by Trojan Nickel Mine Limited (TNM) and Hunters Road Nickel Mine (Private) Limited. Assets and liabilities for all the operations, however, is the prerogative of Trojan Nickel Mine.
Trojan Nickel deposits were the first to be discovered in Bindura in 1956 with the first concentrate having been produced in 1964. BNC was then established in 1966 by the Anglo American Corporation Group in Zimbabwe. Madziwa Nickle Mine near Shamva was first mined during the year.
The smelter and refinery was commissioned in 1968, with the first nickel cathode having been produced the very year using two blast furnaces that treated concentrates from the two main suppliers of nickel ore then, Trojan and Madziwa Mines.
The two blast furnaces were decommissioned in 1976 and replaced with an ultra-modern electric furnace.
Epoch Nickel Mine was established in Filabusi in 1969. Epoch and Shangani mine’s introduction had, in fact, necessitated the replacement of old blast furnaces.
In 1971 Bindura Nickel Corporation got listed on the ZSE.
Shangani Mine was closed for two months in 1995 pursuant to a mine accident.
Two years later in 1997 proposals were made to close Madziwa and Epoch mines and develop Hunters Road nickel property.
Epoch Nickel Mine and Madziwa Nickel Mine were closed in 1998 and 2001 respectively due to a decline in nickel prices and poor ground conditions.
As another scourge, toll treatment of matte from Botswana and Australia Bindura’s smelter exceeded nickel production from locally sourced concentrates.
In 2003 the Anglo American Corporation sold its 52,9 percent stake in BNC to Mwana Africa Holdings for US$8 million. BNC was the first of Mwana Africa’s acquisitions before the Anmercosa base metal and gold prospects in the Katanga copper belt in 2004, and the Freda Rebecca gold mine in Bindura in 2005. Freda Rebecca was closed in 2007.
The Shangani and Trojan mines and the Bindura smelter and refinery complex were placed on care and maintenance in 2008 citing depressed performances.
In 2009 RBZ relinquished its role as gold sales agent to allow firms to sell the metal and keep all the proceeds. Mwana Africa, the new holding company, then announced an intention to restart gold production at the Freda Rebecca mine the same year.
In 2012 US$23million was raised through a renounceable rights offer to necessitate the reopening of Trojan Mine.
The mine subsequently restarted operations in October 2012 after nearly four years of care and maintenance.
By March 2014, Mwana Africa PLC’s shareholding in BNC was 74,82 percent. Exactly a year later, the group raised US$20 million for the Smelter Restart Project which by 2017 was 83 percent complete.
In 2015, a Chinese mining and exploration group, ASA Resources, acquired control of BNC by taking over Mwana Africa’s 74,73 percent shareholding.
In tandem with the acquisition, Mwana Africa shareholders approved a name change to ASA Resources.
In 2017 BNC concluded feasibility studies of converting the Smelter into a plant that processes Platinum Group Metals (PGMs). However, results indicated this was impossible, due to a limited supply of platinum concentrates.
ASA Resources disposed of its 74,73 percent stake in BNC in 2019.
Its assets in Zimbabwe include the disposed Bindura Nickel Corporation, Freda Rebecca Gold Mine and an agribusiness venture.
The Smelter enhancing project had reportedly been temporarily shelved as the group pivots towards shaft deepening to boost production on the back of an anticipated improvement in the global nickel price. Prices are projected at US$18 000 per tonne of nickel.
Market Capitalisation as updated November 27, 2019, stood at $185 948 492 with a share price of 15,00 cents.
Business Weekly
South African miners face a conundrum: increasing palladium and rhodium output to take advantage of soaring prices risks depressing the already fragile market for sister metal platinum.
That’s because palladium and rhodium are mined as by-products, with every extra ounce of the former typically coming with two to three additional ounces of platinum.
Stricter emissions standards have boosted palladium and rhodium consumption in autocatalysts for gasoline cars. By contrast, the backlash against diesel vehicles, where most platinum gets used, has seen the metal languish.
Consequently, some of the world’s biggest platinum miners, including Sibanye Gold and Impala Platinum are loathe to boost production, even as palladium’s eight-year supply deficit could widen in 2020.
“They can’t increase production because the main metal is platinum and they don’t want to make the price come down,” said Rene Hochreiter, an analyst at Noah Capital Markets in Johannesburg.
Platinum has rallied 15 percent this year from a decade low, but demand is forecast to drop in 2020, pushing the market back into a surplus. Palladium has jumped 40 percent in 2019, while rhodium has surged 144 percent.
“Expanding production to try and benefit from higher rhodium and palladium prices can be quite risky,” said James Wellsted, a Johannesburg-based spokesman for Sibanye.
“Most companies seem reluctant to raise production in South Africa due to the possible impact it will have on the platinum price.”
The rally in palladium and rhodium is extending the life of older shafts along Rustenburg’s platinum belt, but producers aren’t rushing to invest in new mines, according to Johan Theron, a spokesman for Implats.
Boosting production would make the platinum market “even more supplied,” he said.
Given the geological and market restraints, Implats expects output from South Africa’s mines to start declining over the next five years.
New projects in South Africa would take years to develop, while those in neighbouring Zimbabwe may be stymied by political and economic uncertainty, he said.
Anglo American Platinum Ltd., the most profitable of South Africa’s producers, will make a final decision on whether to expand its Mogalakwena mine at the end of 2020, according to spokeswoman Jana Marais.
Unusually, the company’s flagship mine produces more palladium than platinum, but Amplats must weigh the prospects for power supply from South Africa’s troubled state-owned utility before moving forward, she said.- Bloomberg.
©copyright miningzimbabwe
