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Zimbabwe Shutdown, implications on Mining

Zimbabwe Shutdown, implications on Mining

Great Dyke Investment

President Emmerson Mnangagwa announced that Zimbabwe will shut down for 21days from Monday the 30th of March 2020 as the country joins the rest of the world in trying to minimise transmission of the deadly Coronavirus that has claimed thousands of lives globally since its outbreak.

By Keith Sungiso

 The President Announced the following:-

 “Starting Monday March 30, 2020, and subject to further review, Zimbabwe will be under a total lockdown for a period of 21 days,” Mnangagwa said.

 “This means all our citizens are required to stay at home except, of course, in respect of essential movements relating to seeking health services, to purchase and procure food and medicines and other critical services supplies.”

Covid-19 aka Coronavirus, Transmission

For COVID-19, each person with the virus can go on to infect around 2.5 people. If each of those people go about their day as normal, and infect another 2.5 people, within a month, 406 people would be infected just from that first infection.

Thousands of people with either no symptoms or very mild symptoms have been spreading the virus unaware that they were even infected. This means that before health experts were aware of the problem and started to recommend control measures, the virus had already spread to multiple countries.

Social Lock-down (In this case shutdown)

In the absence of treatment or a vaccine, ceasing most human contact is the only way to stop the spread of the virus. Essentially, the less contact people have with each other, the less the virus can spread. Given the rapid spread of the virus, social lockdown is urgent to bring overall transmission down, and see whether testing followed by isolation could be effective – this is all in an attempt to ‘flatten the curve’ or reduce infections and spread cases out over a longer time frame to avoid overwhelming health systems.

Since the announcement by Mnangagwa messages started flooding our inbox with miners asking about the implications on mining the shutdown will have.

Implications on Miners

Shipping minerals overseas halted

Due to Coronavirus outbreak countries globally have banned incoming and outgoing flights to and from almost all countries Zimbabwe included. This has disrupted the international shipping of minerals. South Africa’s Rand Refinery halted shipping gold to London because of a lack of commercial flights said it is exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market. The refinery, which has operated since 1920, sources gold from countries including Ghana, Tanzania, and Mali.

Gold Buyers will not be able to move around

Gold buyers will not be able to move around buying therefore if ASM miners decide to stay at their mines and continue with operations no one will come to buy. This will force operating gold miners to stock their gold, and stockpiling of mined gold is increased security risk for any mine.

Mineral prices crash

The price of any mineral is moved by a combination of supply, demand, and investor behavior. Many mining giants have cut down, halted or are in the process of halting operations. Copper prices hit their lowest level since January 2016, with three-month copper futures on the London Metal Exchange (LME) touching $4,371 per metric ton. That’s down from a high of around over $6,340 in mid-January. On the 19th by 6.30 a.m. London time, copper prices were trading around $4,548. This past week, gold fell from $1,590 to $1,455 before recovering around $1,500. The fall is approximately 8.4 in percentage terms, which is very high compared to average weekly movements.

An Idle mine is costly to resume

Halting operations at mine shafts with water issues will cause flooding and risks shaft collapse. Operating mines continuously pump out the water to alleviate this problem. Halting operations will intricate the resumption of operations. South African based SP Angel mining analyst Johan Meyer referring to that country’s lockdown said “The lockdown could result in some major capital expenditure to reopen certain deep-level shafts,” the same goes for our own mines both small and large scale.

Income is affected

As the shutdown begins on essential services as mentioned by the government to be Police, Army, Hospital staff, selected grocery shops for the rest this means business is at a standstill. Source of income will no doubt for the next 21 days will be zero to most. The national purse is also on the firing line.

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A local politician said, “While the lockdown appears to be noble, in our Zimbabwean context, it becomes a heavy blow to the same human life that ought to be saved if no further measures to cushion livelihoods are put in place,”.

No doubt millions will suffer but from the look of things, the need to combat the disease seems to outweigh the need to keep hustling.

Deals will be delayed

Zimbabwe has many exciting mining deals this year and one highly anticipated is the Chiadzwa deal with AIM-listed Vast Resources. Vast is currently working on the JV agreement between its majority-owned Katanga Mining and Zimbabwe Consolidated Diamond Company (ZCDC) regarding the Chiadzwa Community Diamond Project. It was revealed that Vast had “received official communication from the Ministry of Mines and Mining Development to the effect that all internal processes leading to the conclusion of the Joint Venture are expected to be finalised in March 2020.

However days back the President stated all government departments and ministries will only have a third of their staff at work after the confirmed cases of Covid-19. The virus claimed the life of prominent journalist Zororo Makamba who days before his death had visited government offices. Some Government officials including the Presidental Spokesperson Mr George Charamba had to be moved to self-quarantine and the government is currently at full throttle trying to minimise Covid-19 impact. We have seen government suspending several high-level events and meetings and it is highly probable several projects and deals will be delayed due to the world-wide pandemic of Covid-19 that has 7 confirmed cases locally.

Conclusion

It is of extreme importance for miners to understand the pandemic that is the Covid-19 virus aka Coronavirus and its severe implications should stern measures be not taken to stop its spread. Coronavirus is highly contagious and the best way to stop it is to minimise contact with the infected and the best way to ascertain that is a complete lockdown since some carriers do not even show symptoms.

It is worrying that some people are still taking the threat of Coronavirus lightly undermining social distancing in the name of earning a living. Although it is of great concern that incomes will be lost for the duration of the shutdown prevention may be the better option than contracting a disease that will likely spread like a wildfire and has the potential of killing many who contract it.

There are many implications to the shutdown but as Mining Zimbabwe we encourage everyone to comply with the government directive and stay at home. We will continue with our mandate of keeping miners updated with current affairs. This is also the time for us to conversate about pressing issues in the mining industry through various platforms.

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