Zero greenfield investments for Zim's mining sector

Harare – Investors are increasingly taking a backseat on Zimbabwe's mining sector, with the industry seeing no greenfield investments this year, the chamber of mines said on Wednesday, although brownfield investments have been coming in, mainly from gold and platinum miners.

The two precious metals have also sparkled for Zimbabwe, with output for gold and platinum rising 13% and 20% to 16 tonnes and 10.8 tonnes respectively. Revenue for gold surged 22% to $648m, while income from platinum firmed 4% to $298.5m.

“We have not seen much in the green-field projects investment,” Isaac Kwesu, chief executive officer of the chamber of mines of Zimbabwe said on Wednesday. “Notwithstanding the challenges we are having in the mining sector, we have seen some pockets of investment in brownfield projects.”

Notable investments in existing operations, either to expand or boost production have come from Zimplats, a unit of Impala Platinum – which is carrying out a refinery upgrade at Selous – and from RioZim boosting its gold operations.

Freda Rebecca, owned by Asa Resources and Blanket gold mine, owned by Caledonia, have also invested in boosting capacity in the year to date period.

However, according to the chamber of mines, “part of the funding investments” into the Zimbabwe mining operations “may be from debt rather than equity” as investors change strategy to manage the Zimbabwe situation.

Anglo Platinum is investing into a smelter facility, while Mimosa is reportedly engaging RioZim to use its Empress Nickel Refinery to treat its platinum concentrate.

The chamber was hopeful that Zimbabwe will scrap or defer further a 15% duty on exports of platinum that is not beneficiated, with the tax – initiated to force platinum producers to build refineries – currently set to be effected in January 2017.

“Our tariff regime for electricity is very high. Gold tariff is at 13 cents per megawatt hour,” Kwesu said.

He added that the high cost of electricity was raising operational costs for miners, with the chamber now pushing for a tariff below 5 cents per megawatt hour for some sectors such as ferrochrome producers.

Fin24 reported this week that Eskom was owed as much as $18m in electricity bills arrears by Zimbabwe and that the country faced black-outs if this was not settled.

The chamber of mines has been providing financial support to the Zimbabwean power utility, Zesa to ensure sustainable power supplies and to avoid crippling black-outs.

“Were Zesa has been having challenges, we have been supporting them. If they want prepayments and lump sums (of money for payment) we have been helping,” said Kwesu.

Other key challenge arrears for miners in Zimbabwe are expensive funding, high mining fees and foreign payment bottlenecks because of the cash crunch afflicting the southern African country.