Mining ZimbabweLatest Mining News, Policy and Industry Updates

ZESA Holdings yesterday said it is implementing prolonged load shedding following a technical fault at Hwange Power Station.

The power utility said it was moving to Stage 2 load shedding that has previously seen customers going for up to 18 hours per day without electricity. 

Before the latest technical fault at Hwange Power Station, power generated locally and imports from South Africa and Mozambique saw customers enjoying longer hours with power.

In a statement yesterday, the power utility said increased load shedding would persist until the fault is rectified. 

“Zesa Holdings would like to advise its valued customers countrywide that there was a technical fault at Hwange Power Station this afternoon Monday 11 November 2019, resulting in an increase in load shedding outside the publicised schedule. 

“Load shedding is now being implemented at Stage 2 until the fault at Hwange has been rectified,” reads the statement.

According to Zesa, Stage 1 load shedding happens to the first group of customers as listed on its schedule and these are switched off as the power shortfall will be within planned limits.

In the event that the power shortfall increases beyond the planned limits, load shedding will move to Stage 2. 

Zesa said while it is importing electricity to augment national supplies, power would remain constrained. 

“While all efforts are being made to improve the power supply availability through imports, the supply situation remains fragile. 

“Customers are advised to use the available power very sparingly and will be updated as the situation improves. The inconvenience caused is sincerely regretted,” it said.

The Hwange Power Station has outlived its lifespan resulting in it having consistent breakdowns.

The country’s power shortage is worsened by subdued electricity generation at the Kariba Hydro Power Station due to poor rains in the 2018/19 rainy season.

The Government is importing power from South Africa and Mozambique to address the suppressed electricity generation. 

The Government has also poured resources for the rehabilitation of Hwange unit 7 and 8 as it strives to improve the country’s electricity generation which is key in its bid to attain an upper-middle-income status by 2030_The Chronicle

CEMENT producer PPC’s shares slumped more than a fifth in early trade last Thursday after the company said interim earnings could fall more than 80% because of low demand for its products in SA and shortage of foreign currency in Zimbabwe.

This shines the spotlight on the challenges that PPC’s new CEO Roland van Wijnen, who took over six weeks ago, will grapple with in turning around SA’s largest cement maker.

PPC’s shares hit a 53-week low after falling 21.28% in early trade. But the stock recovered to close 12.31% down at R3.42, the largest one-day decline since March 2002. Since the beginning of 2019 the stock has shed more than 42% of its value.

The company’s disappointing performance comes amid a surge in imports, lack of infrastructure investment, mooted price increases in Southern Africa and weak consumer demand. PPC must also make provision for carbon tax, which came into effect on June 1 2019. PPC has said that the effect of carbon tax would be R100m-R120m for cement and lime per year. PPC partially attributed the expected fall in earnings to inflation in Zimbabwe exceeding 150% in the six months to end September.

Mish-al Emeran, an equity analyst at Electus Fund Managers said though PPC had said that the Zimbabwe operation was self-funding, PPC Zimbabwe’s US$21m (R310m) debt due to PPC SA posed a balance-sheet risk.

PPC owns 70% of PPC Zimbabwe, which includes a clinker manufacturing operation at Colleen Bawn and two milling plans in Bulawayo.

PPC Zimbabwe is that country’s largest cement manufacturer. The Zimbabwean operations have a total capacity of 1.4-million tons a year. PPC said in a trading statement that earnings before interest, tax, depreciation and amortisation (ebitda) in Zimbabwe was expected to fall by 40%-45% from the prior period’s R352m. “PPC has been closely monitoring the economic situation in Zimbabwe and though the business is self-sufficient, the Zimbabwe Public Accountants and Auditors Board (PAAB) announced that Zimbabwe is a hyperinflation economy,” PPC said in a trading statement.

It said the rapid increase in inflation to more than 150% at the end of September and lack of access to foreign currency supported PAAB’s assertion about hyperinflation. PPC said other than the hyperinflation in Zimbabwe, other drivers of the decline in ebitda were the “difficult trading conditions” in SA and one-off restructuring costs amounting to R85m.

PPC has a presence in SA, Botswana, Democratic Republic of Congo, Ethiopia, Rwanda and Zimbabwe.

PPC said the group’s ebitda was expected to fall by 15%-20%, compared to the ebitda of R1.03bn in the six months to September 2018. Headline earnings per share were expected to decrease by  65%-85% from the prior period’s 21c. —  Business Day

The gold sub-sector lost 20 percent of potential output due to intermittent power supply during the course of the year despite mining companies making an advance payment to the Zimbabwe Electricity Supply Authority (ZESA) in foreign currency.

This came out In the State of the Mining Sector Survey 2019 released today.

Earlier in the year, Miners went into a contractual agreement with ZESA to secure constant power supply but for the power, utility has failed to meet its side of the bargain aecting gold production.

“All gold producer respondents indicated that the power outages resulted in output losses with the majority (70%) having lost more than 20% of potential output while the remainder (30%) lost between 10% and 20% of potential output,” the report reads.

It further states that all gold producer respondents (100%) indicated that they were facing regular and prolonged power outages with about 80% of the respondents indicating that they were facing power outages exceeding 6 hrs/ day, while 20% said they were facing power disruptions of 0 to 6 hrs/per day.

“All gold producer respondents indicated that they signed contracts with ZESA for dedicated power. All gold producer respondents also revealed that they were paying a revised tariff of USc9.86/ KWh in advance in foreign currency,” said the report.

Zimbabwe is targeting 40 tons output of the precious stone following a remarkable 33.2 tons delivery in 2018 which surpassed the 30 tons target.

However, officials have already conceded the 2019 target won’t be reachable as a cocktail of challenges include power shortages continue to dampen productivity.

“We have several issues like power outages and complaints from miners, especially small scale miners, that we never dealt with diligently and I think that contributed to the drastic fall in gold production,”

Deputy Minister of Mines and Mining Development Polite Kambamura was quoted this week. Zimbabwe has undergone serious electricity shortages since the beginning of the year owing to the drought that affected hydropower generation at Kariba dam.

This has led to 16-hour long power cuts across the country affecting the entire economy. Major gold producers are feeling the pinch with Rio Zim and Caledonia in their half-year output for 2019 shedding 8 percent and 3.2 percent of production respectively on account of energy constraints.

Meanwhile, Zimbabwe has set an ambitious target to produce 100 tons of gold annually in 2023_263 Chat

– Paramount Chief Marange has blasted the government-owned Zimbabwe Consolidated Diamond Company (ZCDC) of imposing corporate social responsibility programmes on the community who continue to live in abject poverty despite sitting on top of the precious stones.

Speaking to delegates at the annual all stakeholders Diamond Indaba held in Mutare yesterday, Chief Marange accused ZCDC of failing to provide tangible employment opportunities for locals as well as imposing corporate social responsibility programs on the community.

“As a community, we didn’t know about diamonds until they were found in our area but we are still living in poverty, we are suffering and we hope that the board will hear our pleas that we have continuously expressed.

“We have a hospital build as long back as 1940 and our expectation was that this would be upgraded because diamonds were found in our backyard, yet that clinic as we speak does not have toilets.

“We do not have access to clean water, we have no dams and boreholes, people are struggling to make ends meet yet diamonds are being extracted right under our nose by people employed from other areas yet our children are unemployed,” he said.

Manicaland Minister of State Dr. Ellen Gwaradzimba also acknowledged the concerns of Chief Marange, saying it was a paradox that villagers lived in squalid conditions in the midst of plenty.

“For some issues brought in by the community, I have had discussions with them on the issue of employment, young people are desperate for employment and we urge ZCDC to practice good recruitment practices.

“In this era of devolution, we are saying locals should benet not that we are excluding the nation but we expect local people to be employed for jobs that are not technical,” said Gwaradzimba.

Gwaradzimba urged ZCDC to address environmental legacy issues inherited from former mining
companies that were posing a threat to both humans and livestock.

“If communities are suffering and livestock is perishing due to effects of mercury and cyanide, and
water is contaminated in rivers by from mining activities without consummate benet, this shows a lack
of leadership and good governance,” said Gwaradzimba.

“ARDA Transau has been a thorny issue in my office people are threatening to come and do some press-ups at my offices and I think the model of relocation did not provide for the sustenance of those people,” she added_263 Chat

Security officials have raised alarm over an exponential increase in illegal panning activities in Chiadzwa diamond fields with more than 3000 panners arrested this year only.

Zimbabwe Consolidated Diamond Company (ZCDC) chief security over Ellias Mvere told delegates at the recently held Diamond Indaba that there has been a two hundred percent increase in the arrest of illegal panners.

Inversely while previous statistics showed that locals were thirty percent of arrested suspects, this has increased to about eighty percent of over three thousand panners arrested this year, said Commissioner Mhere.

“Illegal diamond panners commonly referred to as gwejas remain a cause for concern to the operations of the ZCDC company and continue being a threat to the national economy.

“In the last indaba, a total of 1 375 illegal miners had been arrested. Notably, only 30% of those arrests were of individuals from Manicaland.

“However, since then, the department has made a total of 3 259 arrests. Worryingly, only 21 percent
of the arrests were illegal panners from outside Manicaland.

“This represents an increase in illegal panner arrests from the Province, highlighting the need to further engage the local leadership so that cases of illegal panning can be eliminated,” said Mhere.

He added that the illegal miners, sponsored by illegal buyers, were using sophisticated syndicates of connivance and corruption with some inside security details to evade arrests, as he appealed for a collaborative effort with local leadership.

“The panners are operating from bases on the mountains and some are offered rented
accommodation by local villagers and shop owners.

“The intelligence we have suggest that the panners are being sponsored by illegal buyers and
syndicate managers. This highlights the need to further engage the local leadership so that cases of
illegal panning can be eliminated,” he said.

Minister of State for Manicaland Dr. Ellen Gwaradzimba said this was a reaction of the impoverished
state of affairs in the country calling for the formalization of illegal panners, as a sustainable solution to
empowering local communities.

Formalization of artisanal mining, if properly implemented, will ring-fence revenue from diamonds by
curbing illicit financial flows rampant in the diamond sector, says Zimbabwe Environmental Law
Association deputy director Shamiso Mtisi.

Mtisi said however warned that there should be a legal framework to guide formalization of artisanal
saying that a haphazard approach will foment chaos in the diamond sector.

He said to curb the scourge of artisanal mining ZCDC should follow Kimberly Process 2010 Joint Work
Plan guidelines which require governments or mining entities to fence o diamond mining areas.

“In terms of formalization of artisanal miners, the first thing is to develop a framework for
formalization and also a legal instrument for formalization and also a legal instrument just like they
have done in other jurisdictions.

“If you just open up the mines for artisanal miners without controlling them or organizing artisanal
miners, it will be creating chaos and will result in non-compliance of KP standards,” said Mtisi.

“One of the recommendations of the Kimberly Process in a joint work plan that was developed (2010)
was that all areas where there are diamonds should be fenced, but what we have is situation where
some areas are still open and there is no control there,” he added_263 Chat

 The United States is taking advantage of record-low prices of one of the world’s dirtiest fuels by buying record volumes, which it intends to upgrade into cleaner products before new shipping rules take effect, trading and analyst sources say.

US trade sources said it recently had become economical to ship fuel oil from countries such as Russia, boosting imports of the product into the United States.

This comes even as prices for high-sulphur fuel oil (HSFO) on the US Gulf Coast trend lower while demand for high-sulphur fuels sags globally.

Fuel oil in the region traded at $41,56 per barrel on November 6, a three-year seasonal low, data from S&P Global Platts shows.

Fuel oil prices in Europe have also fallen to record lows, which has helped make exports to the United States economical.

According to data from oil analytics firm Vortexa, US imports of fuel oil from Russia and former Soviet Union (FSU) countries surged to at least a multi-year high of 1,35 million tonnes in October, and they are expected to hold firm at similar levels in November.

“The broader rise in FSU-US flows since the beginning of this year has therefore helped to offset the impact of the collapse in Venezuelan fuel oil imports in the wake of US-led sanctions,” Vortexa said.

Vortexa separately noted that the United States had received fuel oil from Jordan at the end of October, with another tanker set to arrive around the end of November.

The route from Jordan to the United States is unusual, Vortexa said.

New regulations on marine fuel by the International Maritime Organisation that take effect on January 1 will restrict sulphur content in shipping fuels to a maximum 0, 5 percent, from 3,5 percent now.

Complex US refiners have long been expected to benefit from the new regulations because they have greater capability to break down cheaper, heavy crudes into higher-margin, compliant products.

They have vacuum distillation capacity to break down straight-run fuel oil, which comes directly from a crude unit, as well as coking capacity, which upgrades cracked fuel oil, a by-product from complex refining methods.

The increased imports may be related to US refiners looking to run fuel oil directly to their cokers as the price of high-sulphur fuel oil declines ahead of IMO 2020, said Sandy Fielden, energy analyst at financial services firm Morningstar.

“If fuel oil is a good deal cheaper than crude, you can run it direct to the coker to produce gasoline and diesel and increase refinery returns,” Fielden said.

“If it proves profitable then we should see more of it in the coming months as HSFO prices fall.” — Reuters

Diamond sector mining output for the 2020 period has been pegged at US$1 billion
buoyed by investments in exploration as well as joint venture agreements, officials in the diamond
industry have said.

Zimbabwe Consolidated Diamond Company (ZCDC) will spread its exploration footprint around
Zimbabwe by leveraging on joint venture opportunities, board chair Engineer Killian Ukama told
delegates at the recently held all stakeholders Diamond indaba.

Eng. Ukama said there was a massive interest in diamonds with at least 13 different producers
expressing interest to start exploration mining. Zimbabwe has signed a joint venture with Alarosa, the
world’s biggest producer of diamonds in carats.

“The Diamond Industry is expected to contribute $1 billion to the mining industry contribution target
of 12 billion by 2023 under the government’s Vision 2030.

“ZCDC is investing in exploration in partnership with other players in the diamond industry. We have
received at least 13 expressions of interest in joint ventures, to spread its footprint in the country
beyond Chiadzwa.

“It is hoped that such partnerships will yield positive results for the growth of the diamond industry with
the associated benefits such as increased revenue generation, employment creation, economic
growth, infrastructural development, and investments in downstream industries,” he said.

To achieve these lofty goals, Eng. Ukama called for a collaborative effort to get rid, in particular, of
negative perception dominated by what he termed a dual portrayal of the government-owned entity.

He called for unity of purpose to protect the diamond industry against an influx of negative reports
around ZCDC which have an adverse effect on the market of gems produced by the amalgamated
government concern.

“To fully unlock the value of diamonds it is critical that we jointly work towards building positive
perceptions of our diamond industry. The perception of our organisation remains one marred by
rumours, innuendo, untruths and an apparent lack of trust among stakeholders.

“As an industry which is driven by ‘the feel-good factor,’ this obtaining situation has serious
implications on the value of our diamonds. We need to unite in order to protect this asset,” said Eng.
Ukama.

Zimbabwe Environmental Law Association deputy director Shamiso Mtisi said the negative perception of
the diamond industry in Zimbabwe can be busted by embracing responsible mining, transparency in
disclosing revenue as well as upholding international benchmarks.

He said the government must assess, detect and address potential negative impacts of mining
operations across the supply chain, as well as adopting full disclosure practices detailing
disaggregated output.

Mtisi said in light of huge investment potential through joint ventures, the government must ensure due
diligence in assessing potential investors in the industry.

“ZCDC must clean its image through action and join other diamond industry players who are
promoting responsible mining practices.

“Responsible mining and sourcing has to be based on the need to manage social, environmental or
human rights related impacts of mining, including responding to community needs and national
development needs and growth.

“Rough diamonds may be over-taken by synthetic diamonds if we do not rebrand them as ethically
mined and mined from areas free of human rights abuses, environmental degradation and poor
labour standards, synthetics are being marketed as clean and not tainted by human rights violations,”
said Mtisi.

“Give a national breakdown of Production from Marange voluntarily, if you are quite people will
continue assuming the big guys are eating all the money from Marange, share disaggregated data of
revenues, contracts signed and use of resources,” concluded Mtisi_263 Chat