Zim mining headed for bleak 2016 – chamber

Photographer: Naashon Zalk/Bloomberg News. Photographer: Naashon Zalk/Bloomberg News.

The Chamber of Mines of Zimbabwe (COMZ) is anticipating little improvement in production and prices for most metals mined in the country, despite an easing in power supplies after Zimbabwe inked a deal to import power from Eskom.

Following media reports in Zimbabwe that the power import deal agreed with Eskom was secretive, the power utility confirmed this week that it is exporting excess electricity to Zimbabwe in line with provisions of the Southern African Power Pool protocol.

The power import deal from SA appears to have been spearheaded by miners in Zimbabwe, which include units of Impala Platinum (Implats) [JSE:IMP], Aquarius Platinum [JSE:AQP] and Anglo American Platinum [JSE:AMS]. Mining companies pay a tariff of 12 cents per kilowatt hour, which Fin24 understands is now to be lowered.

“Electricity supplies have improved. The only issue is the tariff which should be negotiated again. I think something is going on right now regarding the tariffs,” COMZ chief executive officer Isaac Kwesu said in an interview.

The chamber is due to release a state of the mining industry report at the end of January. It is expected that the report will detail the constraints the industry is facing together with opportunities for growth, as well as highlighting the gold mining industry as “probably the only growth area” for the sector, according to sources.

However, Kwesu said the “the outlook for the industry may be the same if not worse” than in 2015. Last year mining companies grappled with policy uncertainties, power outages and lack of access to capital.

“Nothing really is encouraging from the commodity price outlook and we still anticipate that prices will remain depressed,” he said. Depressed commodity prices forced companies in the industry to stop or delay expansion programmes as they sought to preserve cash.

Regulatory uncertainties in Zimbabwe also saw some platinum mining companies in Zimbabwe, including Mimosa – jointly owned by Implats and Aquarius Platinum – and Anglo Platinum’s Unki mine temporarily suspend exports of semi-processed platinum, as they sought clarity on implementation of a levy on unrefined exports of the precious metal.

The government has since clarified this, giving Unki and Mimosa less than two years to finalise establishment of smelters inside the country. Anglo Platinum has already confirmed that it is investing in the Zimbabwean smelter, although guaranteed power supplies are likely to be an issue when the smelters become operational because of the crippling power shortages Zimbabwe suffers from.

Finance Minister Patrick Chinamasa said in December that he anticipated growth of about 2.5% in the mining sector this year. Mines and Mining Development Minister Walter Chidhakwa said on Thursday that the government would turn to its mineral wealth this year to offset drought woes, with the state likely to start tightening the screws on miners for more revenue.

Source: Fin24