Positive Developments in the Mining Sector

Despite the ongoing issue of indigenisation, there has been some positive news from the mining sector recently. Mwana Africa, which is quoted on the Alternative Investment Market (AIM) in London and which holds a 53% shareholding in Bindura Nickel Corporation, has announced that it will raise US$ 35 million through a share offer that will bring China International Mining Group Corporation in as a shareholder. Part of the funds raised will be used to re-start operations at BNC’s Trojan Nickel Mine and concentrator in Bindura, which were put on care and maintenance in 2008.

Blanket Mine, owned by Caledonia Mining Corporation, announced a seventh successive increase in quarterly production for the fourth quarter of 2011. Production increased by 8% in volume terms. Turnover for the year increased by 150% to US$ 55,7 million and gross profit increased by 358% to US$ 29,1 million.

Metallon Gold Zimbabwe, a subsidiary of Metgold Ltd, which is South African owned but domiciled in the UK, has announced plans to restart operations at its How Mine South open pit mine outside Bulawayo.

It has been reported that there are currently 19 coal exploration projects in progress in Zimbabwe. However an industry expert has told a Zimbabwe coal conference that the future of the coal mining industry in Zimbabwe will depend on the construction of more thermal power stations to utilise low grades of coal.

Apart from indigenisation, Government has been pressing the platinum mines in Zimbabwe to establish a refinery in the country to process the mineral rather than send it to South Africa for processing. The cost is estimated to be US$ 2 billion. Zimplats has confirmed that it will commit to establishing a refinery “once issues to do with the indigenisation policy” are finalised. It has already set aside US$ 500 million for the project. Platinum production in Zimbabwe will have to be increased to make a refinery viable and both Zimplats and Mimosa have announced plans to increase production.

Gold production in Zimbabwe in 2011 was 12,8 tonnes. Platinum was 10,8 tonnes, palladium 8,2 tonnes, nickel 8 000 tonnes and chrome 600 000 tonnes. Coal production declined slightly to 2,56 million tonnes. Gold production for 2012 is forecast to remain unchanged at 13 tonnes. Mineral exports in 2011 totalled US$ 2,1 billion and are forecast to grow to US$ 2,6 billion in 2012. In value terms platinum accounted for 41,1% of exports, gold 38%, chrome 13,3%, coal 7,7% and diamonds 3,4%, although that last figure is certainly understated.