Mining ZimbabweLatest Mining News, Policy and Industry Updates

India is ready to extend nearly half a billion United States dollars to support three key power projects in Zimbabwe, an Indian diplomat has revealed, adding the concessional loans either awaited signatures of parties or project tenders.

At Hwange Power Station, for which the largest chunk of the loan facilities is earmarked, advanced age, technical problems due to neglect of maintenance, parts replacement and failure to upgrade have made the plant prone to frequent breakdowns.

The other project is the Bulawayo Power Station repowering.

Indian Ambassador to Zimbabwe Rungsung Masukui, said Delhi was ready to extend US$310 million for upgrading of Hwange Power Station, US$110 million to re-power Bulawayo Power Station and US$45 million for upgrading the Deka project.

India and Zimbabwe have enjoyed very strong cordial socio-economic and political relations since the Southern African country gained independence from Britain in April 1980, which continues to manifest in various ways.

Zimbabwe urgently needs to increase internal power generation to bridge an acute demand-supply mismatch worsened by the drought of last year, which has reduced water levels in the Kariba Dam and curtailed hydro-power generation capacity at the country’s single largest power plant.

Demand for power at peak periods in Zimbabwe roughly stands at 1 800 megawatts (MW) against internal electricity generation capacity of 700MW to 800MW at the height of the plant’s reliable generation capacity.

Ambassador Masukui said the loans were being processed with the tender for Bulawayo power plant re-powering having been issued in India, while the loan for Hwange upgrading only awaits the signatures of parties.

The loan for the Deka Lift Pump upgrades and laying of a second water pipeline from the Zambezi River to Hwange Power Station awaits ongoing tender processes to enlist contractors in India.

There is need to increase water pumping and transportation to the power station given that Hwange is having its capacity expanded by 600 MW.

“At Government to government level, there are several projects. Just at the Hwange power plant; two projects are there; the US$310 million one, which is for the upgrade of six units,” he said.

Hwange Thermal Power Station used to be the biggest power plant in Zimbabwe, before Kariba South had units 7 and 8 added for 300MW, with an installed capacity of 920MW. But can only do 550MW at best, if most of its 5 functional generators are working, which is very rare these days.

“The other one is laying of a water pipeline from the Zambezi River, which is the Deka Pumping Station (project), to Hwange power plant; that is another separate project for around US$45 million,” Ambassador Masukui said.

From the river, water for the boilers and cooling towers is drawn by both high and low lift pumps to a storage reservoir located adjacent to the station and conveyed by gravity to the station.

“The third one is at Bulawayo Power Station; that again is for the refurbishment of that power plant for US$110 million.

“So that put together at Government to government level, which is at concessional terms, amounts to nearly US$500 million,” he said.

Ambassador Masukui said to demonstrate support for Zimbabwe and the strong cordial relations between the countries; India sends business delegations to scout for investment opportunities during every major exhibition that Zimbabwe hosts.

Registrations with Zimbabwe Investment Authority (ZIA) by Indian firms for investments in various sectors, including mining, energy, education and agriculture, have fallen from 16 to 7 in 2017, picked up to 37 in 2018 and reaching 25 by June 2019. They are seen at over 50 by year-end.

Ambassador Masukui said the concessional loans will be ready soon, as India was committed to support the projects since energy is a key enabler Zimbabwe needs to resolve urgently to end disruptive load shedding.

“The quicker we move the better it is,” he said_Business Weekly

The Reserve Bank of Zimbabwe (RBZ) will meet gold mining players next week to resolve differences on forex retention levels as it moves to boost sales through the formal channels amid rising leakages of the yellow metal.

The sector is battling leakages amid claims by Finance Minister Mthuli Ncube that over 34 tonnes of gold were smuggled to neighbouring South Africa which is offering a 15% rebate to miners who sell gold to them.

In February, RBZ lowered the forex retention levels to 55% from 70%, raising the ire of gold miners who warned that leakages would persist. Save for October, monthly gold deliveries to Fidelity Printers and Refiners (FPR) have been low compared to the same period last year. RBZ governor John Mangudya told Business Times that the monetary authorities would continue to discuss with miners to bring the forex retention issue to finality.

“Next week we will meet the Chamber of Mines of Zimbabwe, Zimbabwe Miners Federation (ZMF) and other gold mining affiliates to discuss the forex retention threshold as we move to ensure that gold comes through Fidelity Printers which is the sole buyer of gold in the country,” he said.

“We are free to discuss with the miners to find common ground on retention levels but what we always remind each other is that minerals in Zimbabwe under the Mineral Act are for the people of Zimbabwe, therefore everyone has to benefit from the minerals through the purchasing of critical raw materials from the balance of [the forex retention levels that] we would have agreed upon,” Mangudya added.

Gold is now the highest single foreign currency earner for Zimbabwe ahead of tobacco, but its subdued performance continues to shatter the country’s hope of turning around the economy. Gold contributes 38% of the country’s total earnings and more than 60% to the mining sector, the economy’s highest forex earning sector.

Mangudya, who equated gold’s importance to the country as oil is to Nigeria, said gold was the most liquid asset and most important to Zimbabwe and should be handled with care. Last week, he ruled out 100% retention for gold miners saying the forex from gold was needed to meet the economy’s critical imports, such as fuel and medicines.

In Australia, gold is placed under the Crown and in South Africa, it is under the President’s jurisdiction.

“In as much as we would like our miners to bring the gold to Fidelity to increase productivity, we can’t lie to each other saying that we will give them a 100% percent forex retention level, because we have the people of Zimbabwe to feed through grain importation, we have agriculture productivity to increase through fertiliser and fuel importation, and we have the people to heal through medicine importation,” Mangudya argued. “We can’t afford to give them 100%, we just can’t.”

During the inaugural ZMF conference in Gweru a fortnight ago, President Emmerson Mnangagwa pleaded with the monetary authorities to increase forex retention levels to 60% to woo more miners to sell their produce to Fidelity. That offer was openly rejected by the miners who want over 70%.

Irvine Chinyenze, the CEO of the Gold Miners Association of Zimbabwe, said the monetary authorities should increase forex retention to above 60%. “The monetary authorities should just raise the forex retention levels to around 80% to motivate miners to sell their gold through the formal channels. We would want the FPR to pay miners timely to continue with production,” Chinyenze said. “Most importantly, we would want the FPR to improve on efficiency and the rest will follow as trust should be the first thing that miners should have towards the refinery.”

Gold deliveries decreased 23% to 23.03 tonnes during the first 10 months of 2019 from 30.13 tonnes during the comparative period last year due to currency shortages, power outages, and poor mining policies.

A further decline was caused when the country’s power utility intensified power outages during the month of June, resulting in some companies working only four days a week. Experts warn that the US$4bn export earnings target by 2023 will not be realised if the country does not resolve the electricity problem, and the forex retention level.

Zimbabwe is targeting to increase production to 100 tonnes of gold per year by 2023, a figure which the country may reach if all gold is accounted for_Business Times

When one buys a vehicle, especially in Zimbabwe where fuel prices keep soaring and the supply of the precious liquid is erratic, the size of the engine is critical. This informs fuel consumption of the vehicle in terms of kilometres per litre in simpler terms.

Currently, vehicles with smaller engines such as the 0.99cc, 1.3cc and 1.5cc which can do 20 km per litre, 18 km per litre and 15 km per litre respectively, on a combination of highway and urban driving, are proving to be popular.

On the other hand, the fuel guzzlers with engines such as 3.0cc and 4.5cc are a preserve for the big boys in town with deeper pockets. These are the guys who do not check their fuel gauge while driving, they have excess. Zimbabwe’s energy crisis has seen miners and other corporates now considering using solar in place of diesel generators.

This comes at a time when the power utility ZESA Holdings has been rationing electricity with blackouts sometimes lasting 18 hours due to a low water level in the Kariba dam and obsolete equipment at the Hwange Power Station.

As of Tuesday, ZESA was generating below 600MW against a national demand of 1800MW. Other countries are making a positive score to sustainability as they push for environmentally friendly energy production solutions with even credits in taxes and other incentives offered.

In the case of Zimbabwe, miners have been forced to ditch diesel powered generators, as the cost of fuel soared in the past year. Diesel opened 2019 at just above US$1.50 per litre before increasing sharply to about US$3.50. The country abandoned dollarisation in Februry 2019, but fuel costs have increased steadily since then.

Now, diesel costs about ZWL$17.74 per litre. This has left many motorists unable to afford fuel as the rate of wage increases remains far below the inflation rate. As corporates and individuals are finding the going tough, having to suffer increasing operating costs in fuel. Miners, in particular, depend on a globally-set price for commodities, as such they want to manage costs in order to retain reasonable margins.

Fungai Makoni, MD for Mimosa Mining Company, told journalists recently at the company’s mine in Zvishavane that cost optimisation was key to managing a mining operation given that no mining company control prices. As the cost of fuel pushes up overall costs, miners have been pushed to a tight corner and have had no option than to set up solar power plants. In the long run, the solar solution is cheaper, and critically the cheaper option coincidentally is green and a score in sustainability.

Mark Learmonth, the chief financial officer of Caledonia Mining Corporation, says the company will establish a 6.5MW solar plant worth US$8m at the Blanket Mine due to unsustainable fuel costs. The company recently installed diesel generators which consume 3,600 litres of fuel per hour, translating to one litre per second to power the plant. “We use 3,600 litres per hour and the cost is too high,” says Learmonth.

“The other problem is that the fuel is not available reliably.” At current costs, the generators cost ZWL$17.74 per second and ZWL$63,864 per hour. Learmonth says the solar project will be implemented in three stages.

“The first stage generates enough power to meet Blanket Mine’s requirements, then we move on to the second stage.” The solar plant will be situated on 40 hectares near the mine in Gwanda. At the second phase, the power will be enough to meet Blanket Mine’s demand at peak time. The surplus will be fed to the national grid. Zimbabwe’s largest platinum producer Zimplats also says it is considering solar energy as a solution to its power crisis.

However, company spokesperson Busi Chindove says security of power supply is a critical component of Zimplats business operations. Power problems are proving to be a headache for business with a need for a viable long term solution.

Lafarge recently reported in its half-year results that profits fell short of expectations due to significant macroeconomic challenges, including erratic power supply.

Lafarge chairman Kumbirai Katsande said: “The rapid escalation of the exchange rate has significantly impacted business performance in terms of cost structure and revenue. Unreliability of electrical power significantly compromised performance as a result of increased downtime due to over and under voltages experienced.

“This resulted in refractory failure and a decline in our kiln’s operating efficiency. The shortage of fuel also affected production as diesel to fire the kiln as well as to run various mobile equipment was not readily available, thereby resulting in lost production time.”

South Africa’s power utility Eskom needs around 187 billion rand ($12.60 billion) to comply fully with existing legislation curbing harmful emissions, a government presentation to parliament showed on Wednesday.

Eskom, which uses mainly coal-fired power plants to generate electricity, was one of 37 top domestic polluters, including Sasol, granted a five-year reprieve by the government until 2020 to meet air emission standards.

The new minimum emissions standards for air quality laws in South Africa, which cover particulate, sulphur dioxide and nitrogen oxide emissions, came into effect on April 1, 2015.

“Complete compliance with the 2010 Minimum Emission Standard would require an estimated 187 billion rand,” the presentation by the Department of Public Enterprises said.

Africa’s biggest public utility supplies over 90% of South Africa’s electricity, relying largely on ageing, heavily polluting coal-fired power stations but does not generate enough cash to meet its debt servicing costs.

Project delays and cost overruns at Medupi and Kusile, two mega-coal plants currently being built by Eskom, largely contributed to Eskom’s debt ballooning to 440 billion rand.

“Given the current financial constraints, at this stage, Medupi will be prioritised to be retrofitted with Flue-Gas Desulphurisation (FGD technology),” the department said.

South Africa has said any new coal plants would need to have emission-reducing technology, such as FGD.

In September, Eskom said it might have to shut some plants if it fails to reduce emissions, raising the prospect of further power cuts in the county and also putting more pressure on the government which has had to bail out the debt-ridden company to keep it afloat.

Eskom has applied to the Department of Environmental Affairs for rolling postponements of its obligations under the legislation to meet the emissions and air standards.

Ageing plants and poor maintenance have triggered several power cuts throughout the year, putting pressure on key economic industries, such as mining, as the country skirts a recession.

The latest bout of nationwide blackouts come after repeated power cuts in February and March, which hit the economy and pushed the government to grant Eskom a $4 billion bailout on top of a $16 billion bailout spread over the next 10 years. – Reuters Africa

One of the artisanal miners reportedly wreaking havoc at Eureka Gold Mine in Guruve was last week shot on the leg after trying to attack security guards in a gold ore scuffle.

Chriswell Mushongahande (27) of Muroiwa village under Chief Chipuriro in Guruve is recovering at Guruve District Hospital after he was shot by a security guard Paradzai Nyamutsenga (51).

Police officer commanding Guruve district Robert Torevasei confirmed the incident.

“One of the artisanal miners was shot by guards after he tried to attack them using an iron bar. Last week, the police had to use tear smoke to disperse them as they ran amok,” Torevasei said.

He said illegal miners were slowly giving up on the mine after police intervention although the law enforcers were slowly moving away to focus on their core business.

“Illegal miners are now coming in small numbers since our intervention and most of the crushing machines were removed, but we are also slowly withdrawing our services because it is not our core business,” Torevasei added.

The mine is currently under care and maintenance, hence many illegal miners are flocking to the place, prospecting for gold.  Source: Newsday

Shots were fired yesterday at Jumbo, Metalon Mine which is now a hotspot for artisanal miners looking for a quick buck.

Our source said they were digging for gold and could not hide their happiness and some colleagues shouted they had stuck lots of gold. This attracted attention from an interested buyer who offered to buy from them.

In no time a Mercedes Benz pulled up on them started shooting and our source and his friends bolted. “Handizivi chakasara chichiitika but takamhanya” (I don’t know what happened after but we ran for it).

The place is a magnet for the criminal “Mashurugwi gangs” who masquerade as miners with the intention of robbing unsuspecting victims usually at machete point.

Former mine authorities and security are reportedly charging US$15 per head to allow the illegal gold miners into the mineshafts during the night.

lt is said they rake up to US$1 500 per night through the practice.

Mazowe Mine is one of the oldest mines in Zimbabwe, and exploration and development in this region dates back to 1890, with over 1.4 million ounces of gold produced to date. Mazowe Mine comprises two underground operations, Mazowe and the BSV sections. The mine has a total of 247 claims over 2,939 hectares of landholding. Ore is processed in a single plant which consists of conventional crushing and milling and a carbon-in-leach facility.

ZESA Holdings has disregarded an agreement with miners to ensure uninterrupted power supply, a situation which has cost the resources industry millions of dollars in potential lost output, Business Times can report.

ZESA imposed the worst power cuts in three years early this year following reduced output at its largest power plant, the Kariba South Power Station, due to dwindling water levels. The situation has been exacerbated by poor generation at ZESA’s ageing thermal power stations in Harare, Hwange, Bulawayo and Munyati.

Zimbabwe last experienced such serious blackouts in 2016 following a devastating drought. As part of diligence, the mining industry, which contributes about 15% to the country’s GDP and more than 60% of the foreign exchange earnings, signed an agreement with ZESA for uninterrupted electricity supply. Under the agreement, the miners pay for electricity in advance in US dollars, and in return, they expect to get dedicated power supply.

But ZESA has not been honouring its side of the agreement, and continue to load-shed the mining sector. This has angered the miners who say ZESA’s failure to honour the agreement will put the economy in peril. Miners are among the biggest consumers of electricity in the country and are already grappling with weak profits that could be compounded by the potential output loss due to power outages of up to 40%, according to the latest survey.

If ZESA’s continued power generation problems destabilise the mining industry, the economy will feel the pinch, especially if the power crisis forces the sector to shed jobs. The monetary authorities will also take a hit as mineral exports are one of the leading foreign currency earners for Zimbabwe.

In a survey conducted by consultants Albert Makochekanwa and Caren Pindiri, which was released last week, all mining houses indicated that despite paying for electricity in advance and in foreign currency under the agreement, ZESA has not been honouring the signed agreement, causing irreparable damage to the mining sector.

The consultants are Economics lecturers at the University of Zimbabwe. Almost all the miners said they were experiencing regular and prolonged power outages. Some had been cut off for up to three days a week, the survey showed.

“Almost 60% of respondents were facing power outages of up to 3 days a week, while 30% were facing between one and two days. About 10% were facing power outages of less than one day per week,” the survey said.

“The majority of respondents indicated they signed agreements with ZESA and were making advance payments in foreign currency for the supply of dedicated power. Almost all respondents indicated that the power outages have resulted in production stoppages and output losses of between 1% and 40%.

“About 80% of respondents also indicated that the revised tariff framework for the mining sector is high. Approximately 70% of respondents were of the view that the power situation would deteriorate in 2020 while 30% indicated that the power situation will remain the same.” Miners want ZESA to respect the signed ringfencing contract.

“Almost all respondents underscored the need for ZESA to honour and respect the contract signed with the mining houses and provide dedicated uninterrupted electricity as per the agreement,” the survey said.

Almost all mining companies also want to be allowed to import electricity directly for their consumption, according to the survey. Half of the miners have proposed a tariff between US$0.07 per kWh and US$0.09 per KWh, while 40% recommended a tariff between US$0.05 per KWh and US$0.07 per KWh. Approximately 10% recommended a tariff of between US$0.09 per KWh and US$0.10 per KWh.

Isaac Kwesu, the Chief Executive of the Chamber of Mines, said mining was a critical sector which should be spared the crippling blackouts. “Mining requires electricity for both operations 24/7 and the safety of workers. It is very costly to have production stoppages. The safety of workers also needs to be guaranteed,” Kwesu told Business Times.

Responding, Owen Mavengere, the retail manager of the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) said the power utility had prioritised the mining sector “because they have supported us to anchor electricity imports, which are very expensive. We are currently engaging stakeholders for further imports. Unfortunately, where we are coming from, we nearly collapsed, but we are now back on our feet as consumers are now paying the correct tariff,” Mavengere said.

“As far as the ring-fencing agreement is concerned, where miners have paid in advance, I will agree that we should give power to the miners 24/7. However, we have two components of imports, that is, firm where electricity is guaranteed and non-firm where it depends on availability. The firm component is the way to go. We need to correct that. To say we have reneged on the ringfencing agreement, no, we will honour that.”

Business confidence index in the mining sector now stands at +2.2 for 2020, falling from +8 in 2019. This means mining executives are slightly confident about their business in 2020. Statistics show that the 2020 index was weighed down by various variables such as access to capital, political and country risk, and economic prospects.

The mining industry is expected to record decline in output growth with the majority of respondents (80%) indicating that their output for 2019 will be less than 2018 by a range between 10% to 40% on the back of the above challenges. Gold miners expect a negative output change of between -5%, to -35%; platinum 0% to -7%; diamond -30% to -40%; chrome ore -10% to -20%; nickel -2% to -10%; and coal -10% to -40%.

Currently, most miners’ average capacity utilisation is at around 70%, compared to 75% this time last year. This is due to the power outages, inadequate foreign exchange allocations, capital shortages, high cost structure, and obsolete equipment. However, the platinum group metals (PGMs) continue to operate at 100% capacity utilisation.

Almost half of the miners projects to record marginal to significant profits in 2020, while 30% and 20% expect to post flat and a contraction in profitability respectively in 2020. At the moment, the mining industry has slightly above 35,000 formally registered employees, a figure which excludes small and artisanal miners and other unregistered mining employees.

About 60% of respondents indicated that they had lost some critical skills during 2019, citing erosion of incomes because of inflation as well as government policy that disallows payment of salaries in forex. About 60% of supplies and consumables were sourced off shore and 40% were locally procured. Of the 40% sourced locally, about 30% were manufactured in Zimbabwe_Business Times

Gold inched up on Wednesday after U.S.President Donald Trump threatened to raise tariffs on Chinese imports if no deal is reached with Beijing and as the U.S. Senate passed a bill backing human rights in Hong Kong.

Spot gold rose 0.1% to $1,473.98 per ounce by 0341 GMT. U.S. gold futures was flat at $1,474.40 per ounce.

The U.S. Senate also passed a second legislation to ban the export of certain munitions to Hong Kong police forces. China condemned the moves and said Washington should stop interfering.

Trump on Tuesday threatened an escalation of the U.S.-China trade spat that has damaged economic growth worldwide. “There are concerns that the latest bill passed in the U.S. in support of the Hong Kong protesters might derail the progress in the U.S.-China trade deal,” Ilya Spivak, a senior currency strategist at DailyFx said.

However, gains in gold are limited as investors are “not quite prepared to take a firm bet ahead of the U.S. Federal Reserve’s minutes, which will probably confirm that the Fed is on hold for now and that’s not good news for gold,” Spivak added.

Investors are awaiting minutes from the Fed’s October policy meeting, due at 1900 GMT, for further cues on the monetary policy outlook.

The U.S. central bank cut interest rates thrice this year to help sustain U.S. growth, but had signalled last month that there would be no further cuts unless the economy takes a turn for the worse.

Lower interest rates reduce the opportunity cost for holding the non-yielding bullion.

Asian shares moved lower on conflicting messages on the trade front, in contrast to the strong rallies seen recently in global equities markets. “The precious metal, though facing bearish pressures over a strong rally in the equities market, will remain vigorous over subdued global growth and geopolitical uncertainties in Q4,” Phillip Futures analyst Benjamin Lu said in a note.

In Hong Kong, the last band of anti-government protesters trapped inside a besieged Hong Kong university were weighing a narrowing range of options as police outside appeared ready to simply wait them out. Spot gold may rise into a range of $1,480-$1,485 per ounce, according to Reuters technical analyst Wang Tao. Elsewhere, silver was unchanged at $17.14 per ounce, while palladium fell 0.1% to $1,760.80 per ounce. Platinum was down 0.6% to $904.52 per ounce_Reuters

THE Zimbabwe Consolidated Diamond Company (ZCDC) recently fulfilled pledges made in 2016 to the Zimunya and Marange community of Manicaland to improve their area after it finally constructed two modern courts for traditional leaders in the area.

The 2019 construction of traditional court premises is in fulfilment of pledges made early on in 2016 by the company to improve the livelihoods of the local community and traditional leaders after it took over diamond mining operations there.

Seven companies, among them Marange Resources, Diamond Mining Company, Gyn Nyame Resources, Kusena Diamonds and Mbada Diamonds, who were licenced to mine alluvial diamonds in 2016, had failed to meet their pledges to develop the communities.

In 2016, these companies were collapsed and consolidated into State-owned ZCDC.

’The new state-of-the-art courts will now see traditional leaders moving from presiding over their cases under trees to the new courts with modern facilities,” Killian Ukama, ZCDC spokesperson, said at a recent ceremony to mark the handover of the modern courts.

“This social responsibility project has been on the cards for a long time, but I am happy that ZCDC has now delivered on its promise,” Ukama said.

“ZCDC will continue to work with traditional leaders to improve the lives of the communities, as stability and development in rural communities can bring about economic opportunities,” he added.

After diamonds were discovered in Marange communal lands in 2006, many people, especially those living in villages around Chiadzwa, expected their living standards to undergo positive transformation.

The diamond mining companies had promised them decent housing, employment and compensation for loss of quality livelihoods, but had until their disbandment failed to fulfil their undertakings_Zimmorning Post