Zimbabwe’s mining industry is engaging the government over the volatile operating environment which has pushed most of the resources firms to the brink.
The multibillion dollar industry, projected to grow by 8% this year, is the country’s largest foreign currency earner, accounting for more than 70% of forex earnings.
“We are engaging the government on various issues affecting us which range from volatile exchange rate which pushes up cost of doing business, forex retention levels and taxation among a plethora of challenges,” the Chamber of Mines of Zimbabwe CEO, Isaac Kwesu told Business Times this week.
“Government should work closely with the mining industry to address structural bottlenecks weighing down the performance of the mining sector and unlock the full potential of the industry. This will maximise its contribution to the socio-economic development of the country.”
Kwesu said a low retention threshold of 60% was adversely impacting the sector.
“The emerging demands have seen mining companies utilising between 15% and 30% of their export proceeds to meet local taxes, levies and electricity payments,” he said.
“The remaining foreign currency is insufficient to fund their operations. Mining houses are losing more than 50% of the value of the surrendered portion of export proceeds that is liquidated at the official auction market rate. This situation is resulting in loss to mining companies translating to at least 20% of gross revenue.”
Kwesu said the electricity supply remained erratic and this has disrupted production despite miners paying bills in foreign currency.
He said the shortages and delays in accessing foreign currency to import critical inputs and supplies is affecting production, leading to the inability to restock critical raw materials and equipment. This impacted on production.
The mining sector, he said, was facing huge challenges on the rising cost of doing business due to the volatile exchange rate.
“Given that we are only paying 50% of our statutory obligation in local currency on the liquidated 40% of the total revenue, this obviously impacts severely on costs and the viability of mining operations,” Kwesu said.
In its latest report, the Chamber of Mines said the sector requires about US$10bn in new capital in the next five years to ramp up production.
Despite these severe headwinds the mining sector is confronted with, some mining houses are undertaking projects worth over US$2,1bn to boost production.
These include Zimplats, Unki, Mimosa and Caledonia.
“Various projects in the mining sector are expected to boost the industry’s output in the outlook following investments in various minerals,” the Chamber of Mines of Zimbabwe said in its latest report.
Zimplats approved a capital investment strategy with a budget of US$1.8bn to be implemented over 10 years beginning in 2021.
About US$1.2bn has already been approved for implementation.
“These projects include maintaining current production levels through mine replacements and upgrades worth US$516m, expanding production levels through growth projects, including the development of a new Mupani Mine, the replacement production source for Rukodzi and Ngwarati mines which will deplete in 2022 and 2025 respectively and Bimha Mine redevelopment.”
Unki Mine has since completed the concentrator expansion project which has resulted in a steady production ramp-up.
The project will result in increased concentrator capacity to 210,000 tonnes per month from 179,000 tonnes per month currently being processed.
Unki is also planning to expand its current 8.5 MW smelter which has a capacity of smelting 62-kilo tonne per annum and will be upgraded to 12.5 MW during 2022 and 2023.
Mimosa Mining is also carrying out an expansion project at North Hill to increase the life of mine as well as contribute towards the attainment of critical mass for local beneficiation.
The company is also carrying out various projects to optimise its operations including a concentrate handling facility and reported a US$40m expenditure.
Great Dyke Investments (GDI) completed the first boxcut and excavation work. Once completed, GDI is expected to produce 3.45m tonnes of PGM ore per year at full throttle.
Karo has completed an exploration and resource delineation and the project is now at the implementation stage. The project is expected to mine approximately 14.4 Mtpa of the run of mine ore.Bravura carried out exploration and feasibility studies in 2021 and is planning to go into mine construction in 2022 and production to start in 2023.
Todal is currently undertaking resource estimation, aeromagnetic survey and drilling. Metallurgical testworks on communication, variability and flotation are expected to be finished by 2022 and a pilot plant to be built by 2023.
Caledonia Mine invested approximately US$67m in its central shaft at Blanket Mine which was commissioned in March 2021 and production target of 80,000 ounces of gold is expected from 2022 and beyond with costs expected to fall on the back of economies of scale.
Freda Rebecca is ramping up production of both open pit and underground resources with an expected increase in production of up to 8,000 ounces in 2022.
How Mine injected US$5m on a shaft sinking project which opened up new mining areas.
Production ramp-up and exploration activities around the mine with an anticipated production increase of around 13% in 2022.
RioZim is finalising its US$17m BIOX Plant Project before the end of 2021 and output from the plant will materialise in 2022.
Gold production is anticipated at 140 kilogrammes per month during the first phase of the project and 200 kilograms per month after completion of Phase 2. Pan African Mining is expanding the dump retractor.
Eureka Gold Mine is resuming operations. Its plant is expected to boost gold production with a monthly average production of 115 kg per month.
Golden Reef Mining is ramping up production at all their mines to result in an increase in monthly gold output of 60 kg/ month, from about 20 kg/ month.
Turk Mine is upgrading its main shaft to increase annual gold production by 140 kg and planning to implement a heap leach project to tap into some surface resources and add to gold output in 2022.
Golden Quarry Mine reopening and production ramp-up is underway with an expected output of 12kg per month by 2022 and dewatering of the mine is underway. – (BusinessTimes)