Mining ZimbabweLatest Mining News, Policy and Industry Updates

SOUTH African mining company, Ingeli Minerals has made an initial investment of R10 million in alluvial gold mining in Shamva and the investment is expected to be scaled up to US$1 million, Sunday Business has learnt.

In an interview on the sidelines of the Zimbabwe Miners Federation exhibition held in Gweru last week, Ingeli Minerals chairman Mr Pumezo Mqingwana said operations are expected to start before end of the year.

“We have started investing in Zimbabwe up to the tune of R10 million. Very soon we intend to reach to US$1 million investment and after that we will immediately start operations. By the time we start to operate we believe we would have invested more than US$1 million in alluvial gold mining,” he said.

Mr. Mqingwana says the alluvial gold mining and washing project is about 90 percent complete.

“In terms of completion of the project we are now more than 90 percent. What’s left now is to bring equipment which we have been building in South Africa after exploration. The machines have been completed and they now await to be brought over to this side where we will operate,” he said.

He said the company is confident of sustainable operations, which could spur further investments in the country.

“We are certain that this project will unlock more significant projects that Ingeli Minerals will invest in, in Zimbabwe. We hope this will mark the beginning of a fruitful journey between Ingeli Minerals and Zimbabwe’s mining sector,” he said.

Meanwhile, ZMF president Ms Henrietta Rushwaya called upon the Government to relax laws governing the mining sector as some of the laws were stifling mining operations.

“We would like to call upon the Government to help relax laws that are governing the mining sector, especially the law that criminalises gold possession as it is promoting mineral leakages outside the country. If amended, production will increase by three-fold,” she said.

The ZMF Expo which was officiated by President Emmerson Mnangagwa was attended by various mining stakeholders_The Sunday News

An old and battered haulage truck navigates its way through a narrow pothole-ridden road, releasing plumes of smoke as it contends with the sheer weight of its load. In its wake, it leaves a cloud of dust, forcing pedestrians using the same road to cover their noses.

Despite being endowed with black granite, Mutoko, Murehwa and Uzumba-Maramba-Pfungwe is not benefitting from the resource

Similarly antiquated trucks laden with granite are common in Mutoko, where for years they have been transporting the rock from surrounding mines.

They signify rich pickings for the mining companies, but they are also a reminder of the systematic plunder of the resource here, to the detriment of development and the local environment.

The stone is being exported to First World economies including Italy, Canada, the United States of America, Denmark and Australia.

In spite of its mineral wealth, Zimbabwe is losing millions of dollars in potential revenue from the mining of black granite due to poor monitoring, inadequate infrastructure, lax taxation systems and non-existent value addition which, investigations have shown, may be contributing to trade mis-invoicing.

According to the Centre for Natural Resource Governance, the absence of important infrastructure such as weigh bridges, compounded by colonial laws and poor monitoring systems, all which might be resulting in the under-reporting of the actual figures of granite extracted in the country.

Trade mis-invoicing — a method of illicitly moving funds across borders by deliberately falsifying the value of goods — falls under the umbrella of the broader issue of illicit financial flows, whereby money leaves a country with companies, individuals or officials deliberately flouting regulations to make easy gains.

In Zimbabwe, mis-invoicing is prejudicing Government of millions in potential tax revenue — a sum which could be benefiting the population instead of lining the pockets of companies.

Several companies mine in Mutoko with multinational companies from Italy and China. The companies include Red Granite, Quarrying Enterprise, CRG and Zimbabwe International Quarrying and Natural Stones Export Company.

Mr Farai Maguwu, the director of Zimbabwe’s Centre for Natural Resource Governance (CNRG), a civic organisation, says that in the black granite sector, companies are understating production figures in order to pay lower taxes. Officials at borders are also using the naked eye to estimate the weight of granite blocks, a practice that creates room for mis-invoicing and the doctoring of documentation.

“A truck should be weighed at the mine and also at the border in order to compare if the figures tally,” says Maguwu.

For 50 years, black granite has been mined primarily in the north-eastern parts of the country, in areas such as Uzumba-Maramba-Pfungwe, Murehwa and Mutoko.

Zimbabwe produced 223 356 tonnes of granite last year up from 161 123 tonnes in 2017, data from the Zimbabwe Chamber of Mines shows.

Mutoko Rural District Council alone produces around 121 000 tonnes, with 10 083 tonnes produced monthly.

Maguwu says the figures could be much higher, though verifying the figures might be difficult.

Absence of weigh bridges

According to Mutoko Rural District Council, the absence of Government mining officers at sites and the lack of basic infrastructure such as weigh bridges is contributing to mis-invoicing and the understating of production figures by some companies. As a result, local councils and the Zimbabwe Revenue Authority (Zimra) rely on statistics provided by mining companies for taxation purposes.

The chief executive officer of Mutoko Rural District Council, Mr Peter Sigauke, says verifying the authenticity of figures provided by the companies is near impossible.

“We are getting quarterly production figures from the companies and we have no way of verifying if these figures are true,” he says.

Sigauke says Government has failed to address the absence of weighbridges for 12 years now, which “makes it very difficult to ascertain the figures we are being given by the companies”.

“At one point between 2006 and 2007 we raised the issue of a weigh bridge to be erected near Mutoko District Council offices so that we would also be able to verify the figures,” he adds.

Although a high-level committee was set up to oversee the development, and a tender was subsequently flighted, the weigh bridge was never erected.

Zimbabwean law provides that local authorities receive a small fee for every tonne of granite extracted from their jurisdiction. Mutoko RDC gets $1 for every tonne of granite, but the computation of the exact tax figures is complicated by the absence of weigh bridges.

Minerals Marketing Cooperation of Zimbabwe (MMCZ) chief executive officer, Mr Tongai Muzenda, says they are now working on building weigh bridges to rectify the issue.

“We are doing this as a corrective measure since there is a possibility of figures being doctored due to the absence of these weigh bridges,” he says

A 2017 investigation by the Parliamentary Portfolio Committee on Indigenisation and Empowerment noted the lack of transparency around production figures in Mutoko and Mudzi districts due to the absence of infrastructure. It ordered the Mines Ministry to immediately facilitate the setting up of weighbridges in all mining areas.

Spokesperson of the Dimension Stone Producers’ Association, which represents nine granite mining companies in Mutoko, Mr. Edward Muvuro says companies are not responsible for exporting the granite.

“The stones are measured by length, weight, and height and automatically you have the weight,” he says.

“The blocks cannot go out until the MMCZ comes physically to the site to inspect the block and re-measure it. We are not authorised to do exports as exports are done by the MMCZ, who then raise an invoice for us. It is impossible to falsify the weight of the block,” he adds.

A receipt seen by this publication shows that 12 blocks of raw granite costs $30 000, a figure which granite processers refute and say the figure is too low and claim a raw block fetches millions.

The Zimbabwe Revenue Authority (Zimra) which is responsible for collecting revenue from the sales of the granite did not respond to questions sent to them.

Colonial-era laws

In addition to the lack of weigh bridges, the continued export of unprocessed granite is bleeding the country of potential revenue.

Speaking during a visit to a local granite processing factory – one of the few in the country – President Emmerson Mnangagwa said Government will introduce regulations banning exports of raw blocks.

During the visit he said a block of unpolished granite fetches less compared to a similar weight that has been cut and polished.  Thus, he said a blanket ban on the export of raw granite is imminent.

He also promised the introduction of robust monitoring systems to stem illicit leaks.

Mutoko Rural District Council’s Sigauke believes the proposed ban will stimulate local development and job creation.

“The cutting and polishing should be done in Mutoko, this is the only way there can be development in this area,” he says.

Muguwu, of the CNRG, however, opines that the problem lies much deeper.

He says tax rules and mining laws in effect since colonial days need to be overhauled to address the challenges besetting the sub sector.

“We have the Mines and Minerals Act, which was enacted in 1961 by the Rhodesian colonial government, the law was not to empower the indigenous people but to empower the minority,” he says. “There is a need to reform it to make sure it stops some of the loopholes that were causing leakages.”

Environmental impact

Back in Mutoko, the once pristine ecosystem has been ravaged, parts of the district have turned into wasteland, characterised by parched landscapes and poisoned rivers. Houses and public infrastructure have been scarred by blasting. People and livestock have drowned in gaping open mining pits, with little in terms of compensation coming their way.

Most companies use the open-cast mining technique, which leaves large pits in the ground.

The 2017 Parliamentary report notes the massive environmental impact caused by the mining.

“Environmental degradation comes as a result of quarrying, dumping of the large black granite boulders everywhere, pollution and unsustainable clearing of vegetation to pave way for quarry extraction and, to construct roads resulting in serious deforestation,” reads the report in part. “The use of heavy machinery, such as graders, front-end loaders, and heavy trucks, contribute to the rapid deterioration of roads,” it adds.

And in spite of its mineral endowments, Mutoko remains underdeveloped.

Mining companies are accused of neglecting the development of the communities they work in. Local villagers are unhappy. They say the companies’ social corporate responsibility activities are negligible.

“The local ecological debt and underdevelopment does not match with the area’s natural resources endowment,” Faith Chikowore of Mbudzi village says.

Previously, Government tried to force mining companies to develop the areas through the Indigenisation and Economic Empowerment Act, which compelled mining companies to cede part ownership of their enterprises to local communities through trusts. They were also required to provide seed capital to a local trust for community development projects.

But the law has since been repealed.

Mr Muvuro says the companies conduct their activities in an environmentally responsible manner.

“After we have mined we plant trees, grass and add soil at every area that we would have mined. But there are instances where villagers request us not to close pools which they say would benefit their livestock given that there are not many water sources in the area.

“The Environmental Management Agency (EMA) said we should close these pools but communities say their livestock benefit from these pools. We have since asked the communities to write to EMA and explain their predicament, which they have since done.”

In 2016, Government summoned some of the companies operating in Mutoko to explain why they were not contributing to local development. They simply cited the harsh economic conditions as unfavourable to such endeavours.

Mr Muvuro contends that the companies are contributing to development through building and modernising local schools.

He said: “At every school, from primary to secondary up to university level, we have students that we are paying school fees for. We do not limit this to Mutoko, we have operations in Murehwa, we have operations in Uzumba.”

This story was produced by The Sunday Mail and was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

A handful of protesters on the ground floor of the cavernous Cape Town International Convention Centre spread fake oil on the ground and chanted, demanding an end to fossil fuels.

Two floors above, the hundreds of delegates at Africa Oil Week were largely unaware — and mostly unmoved — by the display.

“Under no circumstances are we going to be apologising,” said Gabriel Obiang Lima, energy minister of Equatorial Guinea, adding that they need to exploit those resources to create jobs and boost economic development.

“Anybody out of the continent saying we should not develop those fields, that is criminal. It is very unfair.”

The tension keenly felt at oil conferences in Europe was largely absent over the three-day event in Cape Town; there was little focus on climate change, apart from the shadow renewables cast over long-term demand.

In contrast, investor and government pressure to address climate change has fundamentally altered oil events in Europe. 

While no oil-producing country has stopped developing fossil fuel resources, pledges such as Britain’s promise to be net carbon neutral by 2050 or Norway’s national carbon tax show that governments acknowledge a need to shift away from fossil fuels. 

In Cape Town, African leaders touted the good that oil, gas and even coal can bring on a continent where some 600 million people lack access to electricity.

“Energy is the catalyst for growth,” said Gwede Mantashe, South Africa’s energy minister and national chair of the ruling African National Congress.

“They even want to tell us to switch off all the coal-generated power stations,” he said. “Until you tell them, ‘you know we can do that, but you’ll breathe fresh air in the darkness’.”

While Africa is rich in mineral resources and has for decades shipped fossil fuels to global consumers, its own citizens have contributed a miniscule amount of the emissions that cause climate change.

Since the 18th century, all African countries put together have emitted seven times less carbon dioxide than China, 13 times less than the United States and 18 times less than the combined countries of Europe, according to industry publication Carbonbrief.

Global climate efforts recognise this, pressuring developed countries to cut emissions much more aggressively than developing ones to make up for their historic contributions.

James Josling, head of Africa oil trading for Swiss-based Trafigura, said telling Africa not to develop its resources was akin to making it “pay for the sins” of other regions.

African ministers in Cape Town emphasised their need for fossil fuel cash and power in order to develop and diversify resource-dependent economies. Nearly half of Africans had no access to electricity last year, according to the International Energy Agency (IEA), while around 80% of sub-Saharan African companies suffered frequent electricity disruptions that cut into profits.

Sclerotic transportation networks and clogged ports also add some 30%-40% to the cost of shipping goods within Africa, according to the Infrastructure Consortium of Africa, while the African Development Bank has pegged the amount of cash needed for infrastructure development on the continent at a whopping $130–170 billion a year to 2025.

The IEA said renewables were expected to account for two-thirds of worldwide gains in access to electricity by 2030, and warned that changing global dynamics meant nations could no longer assume oil would translate into reliable future revenues.

Some ministers, including Mantashe and Uganda’s Irene Muloni, also emphasised a need to develop renewable resources.

In Kenya, roughly 70% of electricity comes from renewable sources such as hydropower and geothermal — more than three times the global average — and the government aims to generate 100% of energy from renewable sources by the end of next year.

But few in Cape Town were prepared to limit fossil fuel development.

Oil, said Gabon’s minister for hydrocarbons Noel Mboumba, is a major driver of development. “We will do all in our power to develop it.” — AFP

Mimosa Mining Company (Mimosa) is engaging the central bank and ministry of mines for a more favourable foreign currency retention regime, managing director Fungai Makoni has said.

With foreign currency shortages crippling the economy, the government resolved to retain 45 percent of foreign currency earned by miners and feed into the market through the interbank system. Another decision to allow corporates only 30 days to utilise their foreign currency before it is converted to local currency at prevailing interbank rates is also the subject of contestation.

This has resulted in smuggling of minerals such as gold and use of informal channels to sell and receive payments with official figures indicating a 9 percent slump in forex receipts in the first nine months of 2019 after underperformance in gold, platinum, tobacco and tourism.

“We need more foreign currency for our business because certainly the business largely depends on inputs that are imported like machines, equipment and spares,” Makoni said after a tour of the mine in Zvishavane last week. “In terms of the retention, we think it could be better, but it’s something we are engaging with the RBZ through the Ministry of Mines and the Chamber of Mines.

“Where we feel that there could be better retention to support the mining industry.”

Recently, the company purchased a production plant for US$10m from South Africa. The plant is being dismantled and shipped to Zvishavane where it will be assembled for production. The new plant is expected to optimise recovery by about 1.2 percent or 200 000 ounces. The losses arise from inefficiencies given the plant is operating 10 percent above capacity.

“We are operating at 10 percent above capacity. Our plant the name plate is 185 00 per month and we are doing 210 000 tonnes,” Makoni said. “We have options to expand but what is critical is to remove inefficiencies. Over the years we have been incrementally increasing our production, say one percent this year two percent next year. Where we are now we are running above capacity and we are no longer recovering as efficiently as we should do. We want to optimize current production platform and get as much as we can out of what we are currently doing.”

After optimisation, Mimosa will then do feasibility studies for expansion and cost estimates, Makoni said. Mimosa holds about 6 percent of the platinum resource in the country and is part of a broader strategy to achieve a US$12bn economy by 2023, led by gold, platinum and chrome.

“We believe we still have far to go, a fair amount of resource, although we have the smallest between our two colleagues Zimplats and Unki we believe we still have value to extract,” said Makoni, adding the mine’s resource life span even after expansion could hit 20 years.

Mimosa produced 2,668kg of platinum between January and September worth US$65.8m according to the Ministry of Mines. Zimplats produced 5,757kg while Unki produced 1 844kg_Business Times

Zimbabwe will have to review platinum group of metals royalties, if it is to fully benefit from the price boom that has been witnessed for palladium, observers have said. Palladium, which for long played second fiddle to platinum, has shone, trading at almost twice the price of the later, for the better part of the year.

Its prices have been up by 40 percent this year and has been surging for six straight quarters according to a report by Bloomberg.

Palladium prices are likely to remain elevated as production at the world’s top two producing countries South Africa and Russia has been subdued. Also behind the bullish trend are tighter environmental laws in Europe and China that are boosting consumption, according to Australia and New Zealand Banking Group.

Production is likely to continue to trail use through 2020, Bloomberg Intelligence analyst Eily Ong, said in an October 17 note.

Zimbabwe should benefit as it is the third largest PGM producer after Russia and South Africa. Authorities are already in anticipation and forecasting an increase in product to capitalise on the good prices.

The country’s mines ministry earlier this month forecast platinum-group metals output at 2,79 million ounces in 2024, almost triple the 979 000 ounces currently produced by Zimplats, Mimosa and Unki.

Increased production is also expected from new PGM mine developments in the form of the $4.2 billion Karo Mine as well as the $4 billion Great Dyke Investments mine. That mine houses, in particular those that are already in operation, are making a killing, is not in question but contribution to Zimbabwe is not clear.

The latest results released by Zimplats, for the full year to June 2019, showed the miner made revenue of $264,330 million from palladium alone while platinum contributed $194,9 million. In 2018, the reverse was true, with platinum earning $223,3 million in revenue while palladium weighed in with $200. A year earlier platinum’s revenue contribution amounted to $239,3 million while palladium contributed $161,2 million.

The prevailing prices have meant overall revenue for Zimplats increased to $630,9 million up from $582,5 million prior year comparative.

The question, however, comes from a national perspective. How much is Zimbabwe benefiting from its minerals in general and the current palladium boom in particular?

From Zimplats, national coffers only earned $26,5 million in royalty and commission expenses for all PGMs. The other major benefit could be through staff costs as the company paid $105 million (there is no information whether there are any expatriates that were paid.)

Analyst Mukasiri Sibanda suggests the 2020 National Budget should review platinum royalties upwards to increase mining tax revenue contribution.

He says as it stands now, platinum royalty rates are half the rate of the gold sector and marginally higher than base metals by 0,5 percent.

Ahead of the 2020 National Budget, Sibanda said it is disturbing that the Budget Review had weakened mining fiscal linkages by giving in to industry demands on deductibility of royalties for the purpose of calculating taxable income.

“Starting January 1, 2020, royalties will be recognised as an allowable deduction for tax purposes. Noting the mining sector’s poor tax contribution, the 2014 National Budget Statement directed that mineral royalties will no longer be an allowable cost for the purposes of calculating taxable income.

“Referring to regional best practice, the Budget Review reversed this position. However, the Budget Review failed to realign Corporate Income Tax (CIT) rates of between 15 percent and 25 percent, which were noted as below the regional average. Rather, the CIT rates were deemed as competitive, a major worry because Zimbabwe must not take a leadership position on race to the bottom — using lower tax rates to woo investors,” said Mukasiri.

He said it is imperative that Government adopts a progressive royalty regime with rates increasing or falling depending on the price.

“If a sliding scale was in place, then the country would be benefiting from the palladium boom,” he said.

Treasury must not limit the self-adjusting royalty rate to the gold sector, this should be applied to all minerals. The gold royalty regime is self-adjusting, at 3 percent below US$1 200 and at 5 percent above US$1,200, said Mukasiri_Business Weekly

Minister of Public Enterprises Pravin Gordhan has said that debt-laden power utility Eskom is owed a combined R632 million by three neighbouring countries for providing electricity.

Gordhan, in written reply to a question from Democratic Alliance MP Denis Joseph, said the debtors were Zimbabwe Electricity Supply Authority (Zesa) of Zimbabwe — which owes R322 million; Zesco of Zambia — which owes R221 million; and  Electricidade de Mocambique (EDM) — which owes R89 million.

Eskom, which has a total debt burden of R450 billion, has for years experienced difficulties in collecting money owed to it electricity it has already provided. It is owed about R25 billion by South African municipalities, many of which are financial trouble.

Gordhan said none of the funds owed to Eskom by the power utilities of neighbouring countries were in dispute. “Eskom’s clients acknowledge their debt and attribute economic challenges as well as financial constraints as the cause of their delays in settling the outstanding debt,” Gordhan said.

The minister included a submission from Eskom in his written reply, which said Zimbabwe’s economic challenges meant it was  unable to honour its debt obligations.

“Eskom and Zesa currently have a payment plan agreement for the settlement of the debt and Zesa is paying off the debt as per the agreement,” the submission said. Eskom said it supplies EDM with standby power. — Fin24.

Confidence among mining executives in Zimbabwe has dipped further this year, hit by worries over power cuts, the foreign currency crisis and an uncertain policy outlook, a new industry survey shows.

The Mining Business Confidence Index (MBCI), which gauges confidence among members of the Chamber of Mines, has dropped to 2.2% from 8% at the end of last year.

The index scale ranges from -100 to +100, with the lowest score representing least level of confidence and the biggest score representing the highest.

Mining executives expect a drop in production in 2019, but anticipate some recovery in 2020. However, overall sentiment remains largely weak, the survey shows.

Sharp dip

The latest index shows how much confidence has collapsed from the 2017 index, which rose sharply to 21.9% in the immediate aftermath of the ouster of Robert Mugabe. Before that, the index had last been measured at -6.6%. Under Mugabe, the index had been stuck mostly in negative territory, reflecting sub-zero investor confidence under his rule.

The initial bounce in confidence that followed President Emmerson Mnangagwa’s rise to power late in 2017 has now almost been reversed, replaced by growing pessimism over his failure to solve the power and forex crises, as well as bring policy stability to the economy.

To measure sentiment, the survey polled mine executives on their outlook on the economy, profitability, commodity prices, access to capital, the policy environment, title security, political risk and investment plans.

When asked to rank their most pressing concerns, executives placed power cuts at the top of the list. This was followed by “inadequate foreign exchange retention”; miners want to be allowed to keep 100% of their export earnings. Currently, they keep 55%, while the remainder is sold on the interbank market.

Other key concerns are rising production costs, discounted mineral prices and the shortage of capital.

Key mining survey findings:

• 60% of respondents said they faced power outages of up to three days per week. Some 90% of mine executives said they continued to suffer power outages despite signing contracts with ZESA for dedicated power. “Almost all respondents indicated that the power outages have resulted in production stoppages and output losses of between 1% and 40%,” the survey says.
• Producers demand lower tariffs and want to be allowed to import their own power
• 60% of mine executives are pessimistic about political and country risk, while just 20% indicated that they are positive about the political environment
• 80% of respondents see 2019 output falling by between 10% and 40%
• 70% of miners do not anticipate a stable mining policy environment for 2020, while 20% were optimistic
• 60% are less confident about their prospects to raise capital in 2020. Just 20% are anticipating access to capital to improve in 2020. A further 20% expect the situation to remain the same next year
• 60% expect the economy to contract in 2020. In contrast, Finance Minister Mthuli Ncube has forecast the economy to recover 4.6% next year, after falling into recession this year.

Bright spots

However, there are some bright spots in the mining survey.

The report says 60% of executives till expect their operations to be profitable in 2020, which is more executives than was the case in the last survey. Some 60% of the respondents expect marginal growth of the mining sector in 2020. Of the respondents, 80% expect to inject fresh capital into their business in 2020, while 70% expect commodity prices to firm next year.

However, the good news does not offset the pessimism, which dominates the report. Gold miners expect a fall in output of up to 35%, platinum producers see output falling by up to 7%, diamond output will drop this year by between 30% and 40%), chrome (-10% to -20%), nickel (-2% to -10%) and coal (-10% to -40%).

However, miners anticipate a rebound in 2020, with gold likely to recover by as much as 40%, chrome by 20%, diamond by between 10% and 20% and coal by up to 15%. The forecasts on recovery are based on plans by mines to ramp up production.

Gold accounts for 43% of the country’s total mineral exports, according to the survey.

Mining skills and capacity

Skills flight also hit mines this year, with 60% of miners saying they lost critical skills during the year due to inflation and regulations barring miners from paying locals in foreign currency.

Average capacity utilisation for the mining industry fell to around 70% in 2019, compared to 75% in 2018. Only platinum producers were able to sustain high capacity utilisation, which was close to 100%.

“Executives of mining companies operating below full capacity mentioned acute power outages, inadequate foreign exchange allocations, capital shortages, high cost structure and obsolete equipment as the major constrains weighing down capacity utilisation in the mining industry,” the survey says_Newzwire

GOVERNMENT should invest more incapacitating semi-precious stone industry operators to ensure they contribute to achieving the $12 billion earnings from mining by 2023, Zimbabwe Miners’ Federation (ZMF) chairman, Mr. Makumba Nyenje, has said.

He made the call while giving a keynote address at the two-day ZMF annual general meeting and conference, which ended in Gweru on Thursday. President Emmerson Mnangagwa officially opened the conference.

Mr. Nyenje said the semi-precious stones industry has been relegated to the periphery and it was high time the Government provided equal support to the sector.

“The semi-precious stone industry was until recently virtually ignored and is in dire need of a structured market place as well as investment. There is a need for a proper laid down pricing structure to avoid having miners in the sector being fleeced by fly-by-night investors,” he said.

Mr. Nyenje said there was a need for the Government to intervene by setting up a pricing structure and marketing of the stones. He also bemoaned a downward review of forex retention allowance saying it had impacted negatively on the whole mining sector.

“A review of the forex retention allowances on gold, chrome, and semi-precious stones has had a negative impact on the mining sector. 

“As a result of the current policies, fold packages have dramatically increased, chrome miners have limited access to international markets and are experiencing predatory pricing regime in the domestic market, which has created huge problems for the sector,” he said.

Mr. Nyenje challenged the Ministry of Mines and Mining Development to speed up the implementation of the Mines and Minerals Bill, which he said was key to the growth of the mining industry. 

“As we implement strategies to drive the formalisation process, we noted that our Mines and Minerals Act is inadequate in addressing the challenges faced by our mining sector both in regards to the path to formalisation as well as the facilitator of growth in indigenous small scale operations. Via our enhanced Government and mining industry engagement, we seek to eliminate the gaps, which previously occurred with regards to industry policies,” said Mr. Nyenje.

He said ZMF had stepped up efforts to access operational funding from Government.

“In our efforts to source operations funding from our Government, we noted that it will require an Act of Parliament in order to be added directly to the national budget. In the interim, we are working directly with our parent ministry and we have made a formal request to be added to their budgets to support our joint formalisation initiatives,” he said_The Chronicle

State Power utility, Zesa Holdings, may be forced to stop generation at the Kariba Hydroelectric Plant as water levels have plummeted to critical levels, Business Weekly can reveal. This publication also recently carried a story of low coal stock reserves at Hwange Thermal Station, the country’s second largest power station, as coal miners are failing to meet demand, a development compromising national power supply.

Kariba, Zimbabwe’s largest power plant with a capacity of 1 050MW, is churning out less than 10 percent of its capacity as water levels at the lake, where neighbouring Zambia also draws water for its power plant on the northern bank, are fast dwindling.

At peak periods of demand, the country requires about 1 800MW, but is currently able to produce an average of 500MW, at best, due to the effect of drought on Kariba water levels and the antiquated equipment at Hwange Power Station.

Zimbabwe has been enduring the worst power cuts in three years due to declining water levels at the giant water reservoir and dilapidated power infrastructure at Hwange thermal plant.

Importing power is also a challenge as some of the regional suppliers, particularly Eskom of South Africa, are struggling to keep generating units in service. A scarcity of foreign currency has also resulted in Zimbabwe struggling to pay for power imports.

“What we see is the continued decline in output due to low water levels and there is no guarantee that Zesa will be able to keep the plant in operation in near future,” said a source who requested not to be named because he is not authorised to talk to the media.

Given that water levels in the Kariba dam only reach peak inflows around middle of each calendar year when plains up north where the river originates will have saturated, the dam may not supply power for more than half the year in 2020.

Hwange thermal station has become so unreliable due to recurring breakdowns and the situation at Kariba is likely to worsen the already dire electricity supply situation in the country.

Zesa spokesperson Fullard Gwasira told Business Weekly in an interview that the allowable threshold of water that can be used for power generation continues to decline by the day.

“As long as we continue generating, water keeps going out with no corresponding inflows,” said Gwasisa.

“We will try and stretch the (use of) available water to maintain generation. Zesa will try and maximise what is available. But we do not anticipate to shut down.”

ZESA commissioned two units at Kariba last year with capacity to generate 300 MW built under a US$533 million deal with Chinese company, Sino Hydro.

The same company is building two more generating units at Hwange with capacity of producing 600MW.

Hwange is operating with critically low stocks of coal due to reduced feedstock supplies from the miners amid concerns that the situation could also trigger stoppages of power production.

Recently, Zesa claimed that it was not getting enough supplies from the coal miners — Hwange Colliery, Makomo Resources and Zambezi Gas.

Its target stock is 300 000 tonnes, which is equivalent to 45 days of power generation at 600MW. But ZESA is only receiving an average of 85 000 tonnes, enough for only 11 days.

Prolonged cuts

The prolonged power cuts have led to production stoppages while households are enduring power cuts lasting for 19 hours. The Government assumes the economy will shrink 6 percent this year due to a combination of factors including, power cuts.

Zimbabwe Power Company said it missed its third quarter target by 36 percent, after sending 1,505.44 GWh of energy against a target of 2,355.61 GWh.

This output is 67,48 percent below the output for the same period in 2018.

Year-to-date, ZPC has send out 6219, 28 GWh, representing a negative variance of 9,08 percent_Business Weekly