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New monetary policy: The worst possible scenario to the miner

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New monetary policy: The worst possible scenario to the miner

The new monetary policy which was presented by the Reserve Bank of Zimbabwe governor Dr John Mangudya on Wednesday aimed at giving value to money through recognizing the fact that RTGS and the USD were not at par, may negatively lead the country to a genesis of serious economic meltdown that will haunt the miner instead of reviving them to their greatest potential.

Rudairo Dickson Mapuranga

Experts are of the view that the bank rate of RTGS dollar to the USD will never surpass that on the parallel market, again giving illegal money changers an edge when it comes to the handling of foreign currency than the banks.

“This means that the new policy instead of curbing black market forex trading have actually managed to strengthen it, the black market might again offer a handsome rate which is difficult to resist to those selling foreign currency and this might cause individuals to go and buy USD to the banks and Bureau de change and sell it to the black market, unless very serious measures have been put against illegal foreign currency dealers, the policy might turn to be just a piece of paper assigned to destroy the economy by giving individuals too much power indirectly” said one expert.

What does this mean?

Miners in particular gold artisanal miners have been receiving forex retention of 70 percent from Fidelity Printers and Refiners (FPR), however, with the new monetary policy outlines that these same miners will get forex retention of 55 percent which is a huge decrease considering the fact that small scale artisanal miners have been crying for 100 percent foreign currency.

However, the ability to retain mineral value remains the key point no matter what the market changes to, when one converts RTGS to USD the mineral will retain its value, under the old policy all minerals at 50 percent RTGS lost 39 percent of its value at 1:1 making it not feasible to mine, under the new policy the market rate might ensure the minerals will retain their value in equivalent to USD, on the other hand, the scarcity of the USD and forex might also prove be a stubborn point towards feasibility and equal value.

Also according to some miners, the idea that small scale artisanal miners will receive 55 percent retention might be swept under the carpet considering the idea that these miners have been receiving 70 percent from FPR when in actual fact large scale gold miners were getting 55 percent retention, at a window of more than 30 days of which artisanal miners would receive their money instantly, therefore in reality artisanal gold miners might find themselves in a comfortable situation than the rest of miners.

 

Miners were robbed?

Miners were receiving up to 70 percent USD retention and another 30 percent in RTGS which was pegged at 1:1 with the USD of which in actual fact RGTS and USD were trading differently on the market, which means miners were being robbed of their hard earned money through the 30 percent RTGS.

Reminiscence in policy

In April 2008 the then RBZ Governor Dr Gideon Gono issued a policy that is similar to this new monitory policy where banks and other legalized individuals were the only ones permitted to buy or sell foreign currency in an effort to stabilize the dollar, however, the policy failed to meet expectations, the country experienced a very high inflation, paper money was printed up to 100 Trillion, illegal forex dealers gained ground and became powerful until the Zimbabwean dollar was scrapped in 2009.

 

Mining firms operating in Sub-Sahari Africa urged to invest in renewable energy

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Mining firms operating in Sub-Sahari Africa urged to invest in renewable energy

A report published by Fitch Solutions states that due to the prevalence of off-grid remote mineral deposits in Sub-Saharan Africa and the fact that traditional grid-power tends to be unreliable in those mines, mining companies operating in the region should invest in renewable energy.

According to the market research firm, off-grid mines could benefit from reducing their dependency on diesel while taking advantage of the favourable climate conditions in the area.

“In SSA, the remote location of many important mineral deposits in combination with the underdeveloped state of power and transport infrastructure means that there are a large number of mines that are not connected to national or regional electrical grids. As a result, many of these mining operations are highly dependent on diesel-generated power, which is expensive to transport and subject to significant volatility in terms of pricing,” the report reads.

Fitch’s own forecast predicts global diesel prices to average $96.2/bbl by 2022, up from $89.6/bbl this year.

In the analyst’s view, miners’ dependency on the fossil fuel would be significantly reduced if they adopted renewable power, something that a few companies such as Newmont, IAMGOLD, and B2Gold, who are operating in remote locations in Sub-Saharan Africa and have invested in solar power, are already experiencing.

“In all cases these projects are hybrid in nature, meaning they combine solar and/or wind power, and in many instances energy storage, with diesel or HFO (heavy fuel oil) through microgrids that are not connected to the state-grid. Decentralised power generation in the form of hybrid microgrids has advantages beyond price, allowing miners not only to reduce their exposure to expensive fossil fuels but also make use of them as back-up power when solar or wind power is unavailable,” the report states.

Fitch’s experts also suggest that grid-connected mines would also benefit from incorporating renewables to their power mix, as they can play a role as potential remedies to the challenges associated with the unreliability of conventional grid power across the region, where power outages and exorbitant electricity prices are commonplace.

“Key mining countries that are highly dependent on hydropower, such as Zambia, the DRC or Namibia are prime examples of markets where grid-connected mines can benefit from adopting renewables. In Zambia for example, severe drought over 2016/17 highlighted the risks associated with the country’s over-dependence on hydro-power, as it resulted in a tariff dispute between the government and the country’s major copper miners,” the market researcher exemplifies.

Poor corporate governance and financial management of the domestic power sectors in countries where miners operate are also highlighted as major risks that should lead companies to avoid relying on their grids.

From a more positive point of view, Fitch says that favourable climate conditions in Sub-Saharan Africa should push more miners towards renewables. “Africa receives more hours of sunshine during the course of a year than any other continent on earth, meaning solar will remain the renewable power of choice for miners looking to reduce their exposure to fossil fuels,” the firm’s analysis explains.

Mining.com

South African miner Sibanye raises loss estimate by $100 million-plus

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South African miner Sibanye raises loss estimate by $100 million-plus

South Africa’s Sibanye-Stillwater expects its full-year attributable loss to be more than $100 million greater than guidance in a trading statement last week, it said on Wednesday, after a review of tax changes in the United States.

Sibanye now expects a headline loss per share of 1 cent, compared with 12 cents in 2017

The gold and platinum miner’s shares fell into negative territory on the news that it expects the loss to reach 2.5 billion rand ($177 million) rather than 1 billion rand because of the tax changes.

“A further review of the effects… has resulted in an amendment to deferred tax,” it said in a stock exchange announcement.

“This change has no impact on the 2018 cash flows and is expected to unwind over the life of the Stillwater operations.”

Sibanye, which produces platinum and palladium in the United States, said it now expects a headline loss per share of 1 cent, compared with 12 cents in 2017. It had been forecasting headline earnings per share of 65 cents.

Headline earnings per share is a key profit measure in South Africa that strips out one-off items.

The company said a number of tax changes were made in New Jersey in the six months to December, the most significant of which resulted in tax being calculated together on all of the company’s U.S. entities.

This resulted in a revised deferred tax rate for Sibanye of a little less than 1.5 billion rand.

“We will further investigate tax planning alternatives to minimise this additional deferred tax,” Sibanye’s statement said.

Reuters

New Mines bill includes provisions to regulate artisanal miners

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New Mines bill includes provisions to regulate artisanal miners

JUSTICE minister Ziyambi Ziyambi has told Parliament that the forthcoming Mines and Minerals Bill will include provisions that will regulate the conduct of artisanal miners, and ensure their safety when carrying out underground mining activities.

The minister was responding to questions in Senate last week after Manicaland Senator Keresencia Chabuka asked him to explain government policy on small-scale mining in light of the Battlefields disaster, where 24 artisanal miners perished underground after drowning.

The mine collapsed after a dam burst its wall and water flooded the mineshafts.

The incident has also raised serious concerns over the safety of miners and disaster management responses by government’s Civil Protection Unit.

“The Ministry of Mines is in the process of capacitating small-scale miners to work in groups or syndicates, and they will be given equipment to ensure that their mining activities become safe,” Ziyambi said.

“I am sure that Parliament is aware of the Mines and Minerals Bill that was brought back to Parliament, and now it will also touch on issues of artisanal miners and regulate their conduct so that they can mine safely.”

The Mines and Minerals Bill was brought before Parliament in 2015 to amend the previous 1961 law, which had become outdated.

In 2018, both Houses passed the amendments, but President Emmerson Mnangagwa refused to sign it into law after stakeholders complained that their input had not been included, adding that the amendments did not include issues of prospectors.

The Bill has been left for further consideration so that it includes issues pertaining to artisanal miners, the mining cadaster system as well as those to do with exploration.

“The challenge with artisanal miners is that even when they are told that there is danger, they continue to mine in those mines. For example, at Eldorado Mine in Chinhoyi, they go there at night, despite the fact that the mine has been condemned,” Ziyambi said.

The minister was further asked by Mashonaland Senator Tapfumaneyi Wunganayi to explain why government was failing to close the mines, or even place guards to ensure that illegal mining activities were curbed.

“When these areas close, they are well secured to ensure that no one enters, but you know the country we live in, there is a lot of corruption taking place and they can pay the guards, then later on when there is a challenge, they let us know. Now we are putting in place measures to ensure they mine safely,” Ziyambi said.

NewsDay

New monetary policy: What does this mean to the miner?

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New monetary policy: What does this mean to the miner?

In an endeavor to eradicate an inflationary environment in Zimbabwe that can be said to have possibly been caused by the previous monetary policy which its aim was to stabilize the bond and create a stable economy, the Reserve Bank of Zimbabwe governor John Mangudya announced the new monetary policy yesterday that is meant to restore value to money.

Rudairo Dickson Mapuranga

According the policy all gold miners of particular interest small scale and artisanal miners will receive foreign currency retention of 55 percent from the 70 percent which they has been complaining to be not enough, other miners for example chrome miners et al will receive 50 percent retention from their productions.

Effects of the policy to the miner

The miner who has been lamenting for 100 percent USD retention is being rewarded the 100 percent or something close to indirectly, the miner is going to receive part of their money in RTGS pegged at a market rate of the day, which will be totally different from the previous one which was dictated at 1:1 without respecting the market forces.

The ability to retain our mineral value remains the key point no matter what the market changes to when you convert RTGS to USD the mineral will retain its value, under the old policy all minerals at 50 percent RTGS lost 39 percent of its value at 1:1 making it not feasible to mine, under the new policy the market rate might ensure the minerals will retain their value in equivalent to USD.

Possible reasons for the policy

Miners have been accused of fueling the black market with USD, a practice that does not violates the country’s monitory laws but kills the economy. The government recently legislated Statutory Instrument 122A of 2017, Exchange Control (Amendment) Regulations, 2017 (No.5), which criminalises the illegal trading in foreign currency.

With the introduction of Bureau de Change some black market forex traders might be forced to register to become legal thereby reducing the risk of foreign currency being in the hands of unregulated individuals who would change the rates whenever they think it is necessary to.

However, with the introduction of the February 2019 monetary policy, it would be unrealistic for miners to facilitate forex to the black market, when they have access to foreign currency at the bank, the bond might  phase out since people will be primarily be working with RTGS and forex. If miners will get their RTGS money in the equivalent market rate, the economy and value of money might be respected.

What changed?

The small scale and artisanal gold miners who were receiving a retention of 70% and were at the same time crying for 100 percent USD will now be getting less than what they have been getting when it comes to USD but in actual fact the value might have been increased from the previous assertion.

The negative side of the policy to the miner

The policy although created to give value to money might again cause a massive inflation, due to little exports in the country, forex might be scarce thereby promoting unscrupulous movement of money from the banks to the black market, the new monetary in actual fact might strengthen the position of the black market trade and money laundering than curbing it.

All in all, the policy might just be reducing value to money instead of giving value, fly rocketing of prices might follow.

Vast Resources partners Chiadzwa Trust

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Vast Resources partners Chiadzwa Trust

AIM-listed Vast Resources, which presently operates gold mines in Zimbabwe, has been granted mining rights under a joint venture arrangement with the Chiadzwa Community Development Trust to explore and mine diamonds in Manicaland.

“The Chiadzwa Community Development Trust has in principle been granted the right to mine diamonds in joint venture on the Heritage Concession (Block T1A of the Marange Diamond Fields) and has appointed Vast as its joint venture partner in the exploration and mining of diamonds in the area,” said the company in an update on its website.

It said further details regarding the project would be released to the market in due course.

In 2016 companies that previously mined diamonds in the Chiadzwa area of Marange were merged as Government established the Zimbabwe Consolidated Diamond Company (ZCDC) with a view to promoting transparency in the Manicaland gemstones operations.

Government is in the process of finalising a diamond policy to ensure the mining sub-sector harnesses its full potential and benefits the masses.

Last December, Cabinet approved the Zimbabwe National Diamond Policy, which is expected to regulate the diamond mining sector and ensure accountability in the mining, processing and selling of the precious mineral.

The policy will see only ZCDC, Murowa Diamonds and other companies to be approved by Government undertaking diamond exploration and mining in the country.

The policy covers all stages of the diamond value chain, namely exploration, mining, processing, valuation, marketing, beneficiation, value addition as well as issues of security and law enforcement.

It is also hoped that under the envisaged diamond policy, any other entity or person with diamond mining title will be allowed to approach any one of the approved companies for joint venture arrangements.

Under the proposed diamond policy, private players will also participate in value addition after cleaning and sorting and after obtaining the necessary approvals.

Ten percent of diamonds will be reserved for local value addition.

The Chronicle

Hwange Colliery sets community development example

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Hwange Colliery sets community development example

In an effort to promote the education sector in Zimbabwe which has been affected by recent economic woes, Hwange Colliery Company stepped up the ladder by donating 100 beds to Neshaya Secondary School in Matebeland North situated in Makwa area under Chief Whange’s jurisdiction.

Dickson Rudairo Mapuranga

Pupils at the boarding school were reported to be sleeping on the floor due to lack of beds, after hearing the plight of children at Neshaya School  the colliery hospital set aside beds for the children.

The head of the school Sibongile Sibanda with smiles all over her face appreciated the move by the colliery company saying that the pupils’ school performances will as a result increase due to the fact that the pupils will have a comfortable rest, a psychological image.

“We really appreciate this goodwill gesture by Hwange Colliery Company Limited to our students.  As a result of good sleep they will certainly get desirable and decent examination results.  Good rest results in a fresh mind in the morning which can subsequently produce the much needed positive results” said Sibanda.

Sibanda also thanked the colliery company for giving students from the school apprenticeship and school of nursing programmes, she added appreciating the relationship between the company and the school hoping it will last longer.

“We also thank the company for absorbing students from this school in their programmes like the Apprenticeship Intakes and School of Nursing programmes and it is my fervent hope that the good relationship between ourselves will continue going forward” said Sibanda.

The Colliery’s Corporate Affairs Manager Mrs Rugare Dhobbie highlighted in her remarks that the donation was an onset of more to come from the organisation.

“This is the beginning of mutually beneficial partnerships with schools in the district; the Company will take advantage of periodic visits to all the five traditional Chiefs in Hwange district to assess pressing educational challenges of the communities” said Dhobbie.

Dhobbie said that the company was moved by the reports that pupils at the school were sleeping on the floor, as stakeholder of the community they could not just watch such things happening in their society.

“Upon engagement with Hwange Colliery Company Limited, we were informed by the school administration that some school kids at this quasi boarding facility were sleeping on the floor. Our Management could not let the situation go on bearing in mind that this school carries the hopes of tomorrow and our future leaders in the district as well as the nation of Zimbabwe” said Dhobbie.

Dhobbie encouraged the school to develop the cooperation and very good relationship it has with the office of the chief.

“We would also like to take this opportunity to encourage you to increase your already existing cooperation with the office of Chief Whange in coming up with solutions for other challenges here in Makwa village.” she said.

Deputy Minister visits GMSC in Mt Darwin

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Deputy Minister visits GMSC in Mt Darwin

In a bid to boost gold production in Zimbabwe, the government initiated the development of Gold Milling Service Centres (GMSC), last week the deputy minister of Mines and Mining Development Hon Polite Kambamura visited the proposed centre in Mt Darwin which will be co-owned and operated by Zimbabwe Mining Development Corporation (ZMDC) led by Richard Taure and Mt Darwin Miners Association, chaired by Christine Munyoro.

This kicks off part of a national familiarization tour in which the Deputy Minister Hon Polite Kambamura is visiting some of the proposed sites on which a total of 10 Gold Milling Service Centers will be established.

The Gold Milling Service Centers are a Government’s initiative to boost Gold Production throughout gold producing areas within Zimbabwe.

The Ministry of Mines and Mining Development is planning to have a $12 billion dollar mining industry by 2023 to fulfill the Country vision of becoming an upper middle income economy.

The figure was deduced from plans to capacitate extraction of various minerals found in the country.

As part of the road map to fulfill the vision the Gold Sector is being capacitated as part of the strategy to increase productivity output to 100 tonnes, the Ministry has rolled out the Gold Service Centre Project which will be managed by a Joint Venture Company between ZMDC and Mt Darwin Mining Association.

The project is aimed to empower local miners through equipment hiring and hire purchase facilities from the centre, capacitation of mines, milling services, technical services such as  Geologists, Mining Engineers, Transport, and provision of gold buying services under one roof.

The goal is to ensure small scale miners are well equipped while ensuring safe and sustainable mining practices takes place within the region. The success of the project is hinged on the local miners supporting the service centres.

Stakeholders Reserve Bank of Zimbabwe via Fidelity Printers and Refiners, Ministry of Mines Mashonaland Central Provincial Office led by Mr Malcom Mazemo, Ministry of Mines: Research and Value Addition led by Dr. Mercy Manyuchi, and the Zimbabwe Miners Federation Mashonaland Central Province led by Masango Mahlahla & National Leadership led by Henrietta B. Rushwaya will provide support to ensure the project is a success.

 

 

Liberia mourns dozens

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Liberia mourns dozens

Liberian President George Weah declared Monday a day of national mourning after more than 40 people were killed in a mudslide at an alleged illegal mine in the north of the country.

The national disaster management agency has been searching for survivors since the incident in Nimba County last weekend, but the region is inaccessible and getting the necessary equipment there is posing a challenge, a spokesperson said.

The president also declared the region a national disaster zone and ordered authorities to isolate the area, provide security and prevent illicit mining.

“It is totally depressing for our country at a time my government is endeavoring to create an enabling environment for our people to improve their lives,” said Weah. He assured victims’ families that the government would provide support and assistance.

Bloomberg News

Petra Diamonds appoints new CEO, share prices rises

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Petra Diamonds appoints new CEO, share prices rises

African miner Petra Diamonds named a new chief executive on Monday as it works to cut debt and generate free cash flow after first-half core earnings were hit by lower diamond prices.

The news helped lift its shares more than 8 percent by 1010 GMT. The broader mining market was little changed.

Analysts said appointing Richard Duffy, who has held finance posts in his 27 years in the mining industry, would benefit the company as it sought to cut debt. He has previously worked at Anglo American and AngloGold Ashanti.

Petra’s stock had fallen about 30% this year as the company sought to cut borrowing after heavy capital investment in infrastructure and opening up a new section of ore at its flagship Cullinan mine

Petra’s stock had fallen about 30 percent this year as the company sought to cut borrowing after heavy capital investment in infrastructure and opening up a new section of ore at its flagship Cullinan mine in South Africa. Diamond prices meanwhile have dropped below historical annual averages.

The company said on Monday adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 6.4 percent to $75.6 million in the six months to Dec. 31, from $80.8 million in the same period a year earlier.

The company stuck to its production forecast of 3.8 million to 4.0 million carats for fiscal 2019.

“The focus to generate free cash flow remains paramount for the company,” said outgoing CEO Johan Dippenaar, whose departure was announced in September.

Duffy takes over on April 1.

Dippenaar said the company had delivered “solid production” but recognised the impact lower value diamonds had in the six months to the end of December and said the company was working to boost production from a new section of ore.

The aim was to lower the net debt to EBITDA ratio to 2 by the middle of 2020 from 3.3, he said.

A low ratio is seen as an indicator of financial health in the capital-intensive mining industry.

Petra Diamond’s chief financial officer and chief operating officer are expected to stay in place. But Dippenaar said the company was “committed to further changes in the board during this calendar year”.

RBC Capital Markets, which rates the stock “sector perform,” welcomed the appointment of Duffy and noted “positive pricing improvements” as provisional results from a February diamond sale showed a 1 percent rise on the previous six months.

Analyst Tyler Broda said Duffy was “a very solid hire” with experience including in finance roles. Broda said Duffy’s experience “should be an asset as PDL (Petra) delivers on its investments and begins to de-lever the balance sheet”.

Reuters

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