MINING companies have described the current year as a period of negative and positive halves.
On the one hand, the government saved its miners from total collapse under the heavy saddle of fiscal demands and on the other, it softened demands that platinum miners speedily build a base metals refinery inside the country.
The mining sector has continued to be a major mainstay of the economy with mineral exports accounting for 52% of the country’s total exports worth $2.4bn as of end-October, 2014.
The major international mining companies all have a presence in Zimbabwe, but their growth plans and expansion programs appeared to falter under the weight of a difficult operating environment, with softer commodity prices also contributing to this.
It has mostly been the gold mines – Blanket, owned by Caledonia and Freda Rebecca owned by Mwana Africa – that have outlined and acted on their expansion plans.
Mwana Africa is additionally raising funds to re-open its nickel refinery operation.
“Capital injections by mining houses, rebound in international gold prices as well as production ramp-up at Freda Rebecca Mine will support higher gold production of 16,000 kg in 2015, up from the 14,500kg estimate for 2014,” said finance minister, Patrick Chinamasa.
The government has already established Fidelity Printers, a unit of the Reserve Bank of Zimbabwe (RBZ) as the sole buyer and marketer of all bullion produced in the country.
However, there has been increased volatility for local platinum miners such as Zimplats, Unki and Mimosa which are owned by Impala Platinum, Anglo American Platinum and Aquarius Platinum respectively.
Johan Theron, the Implats spokesperson, said 2014 could best be described as a year of two halves, with Zimplats, delivering a “strong operational performance” and “progress in developing the Phase 2 expansion at the Ngezi mine” being made.
However, on the downside, the company encountered ground support problems at the Bimha mine which resulted in the closure of the mine. Zimplats has estimated that it will lose about 70,000 ounces from its 2015 target of about 240,000 ounces.
Implats and Aquarius Platinum – which jointly own the Mimosa mine – decided against sinking a second shaft at the mine, choosing instead to utilise the existing shaft and on reef development to extend the life of mine to about 20 years.Advertisement
Jean Nel, CEO at Aquarius Platinum, said in an October 31 commentary that: “Operationally, our 50%-owned Mimosa mine, is in excellent condition and merits expansion” which could cost as much as $20m in the next five years.
The issue of a platinum group metal (PGM) refinery this year added onto the uncertainty platinum miners were already facing. Mimosa and Unki have already said they are not planning to build their own refineries.
However, Zimplats has set aside money for refurbishment of an old refinery infrastructure at its Selous Metallurgical Complex, with the first phase having capacity to treat its own material.
The government says it is “satisfied with the progress being made by the platinum producers to comply” with demands for increased mineral beneficiation inside Zimbabwe. The 15% levy on exports of platinum that is not fully beneficiated has since been extended to December 2016.
Sibonginkosi Nyanga, an analyst at the Johannesburg based Imara SP Reid, said “billions of dollars required to set up a local platinum refinery could go to waste if government fails to assess the real implications” of its political decision.
“The depressed state of the platinum market will make the economies of scale required to build a smelter in Zimbabwe tough for platinum producers to approve, especially as expansion of the mines required to fill such a smelter are proving hard to justify,” said Nyanga.
A new platinum mine in Darwendale “will bring an additional 250,000 ounces” within the next 36 months.
Apart from gold and platinum mining, the coal mining sector also saw key developments, chief among them an announcement by Hwange Colliery that it will invest $40m in new working capital as well as the acquisition of mining equipment.
Hwange plans to acquire additional concessions that will avail additional coal reserves and augment the company’s capacity to meet demand from the Hwange Power Station as well as coke demand from iron and steel furnaces as well as chrome smelting plants.
Zimbabwe is additionally amending mining legislation to modernise its legislative framework and will consolidate mining revenue collection as separate collections by local authorities, state institutions such as the Environment Management Agency as well as the state revenue agency, Zimra.
A new mining bill will be finalised in 2015 and will also lay the foundation for the consolidation of diamond mining companies in the Marange and Chiadzwa areas.