Mines ramping up for US$12 billion

THE Chamber of Mines of Zimbabwe has elected Unki Mine chief finance officer (CFO) Colin Chibafa (CC) as its new president.

Chibafa took over from Mimosa Mining Company corporate affairs executive Elizabeth Nerwande.

But the Unki CFO comes in at a time when the industry faces several problems.

The challenges were compounded by the outbreak of Covid -19 last year.  Members will be banking on him to negotiate with government and push for policies that will help the industry ride over the problems.

Our business reporter Fidelity Mhlanga (FM) had a wide ranging interview with Chibafa, where he shared his vision.

Below are excerpts from their discussion…

  1. Congratulations on your appointment as Chamber of Mines of Zimbabwe president. As you assume this office what are the pertinent issues affecting the industry that you intend to address?
  2. Thank you. My tenure coincides with a difficult and disruptive Covid-19 pandemic, which has continued to weigh down the performance of the mining industry over the past 18 months.

Added to the above are domestic challenges facing the mining sector. These challenges include inadequate foreign exchange retentions, high cost structures, a fragile power situation and capital shortages.

I am happy to inform you that my predecessor, madam Nerwande made good engagement progress on these strategic matters with government and other key stakeholders.

Thus, during my tenure, I would want to leverage on and consolidate the gains made so far in addressing the above constraints as well as creating an optimal operating environment for the mining sector.

  1. You have been the CoMZ’s senior vice president before this, which means you are already aware of what is happening. Have you engaged with government yet and what has been the response?
  2. The chamber has been engaging on the above matters and a lot has been achieved in that respect. The chamber will continue with its engagement strategy.

FM: Throughout last year and the years before there has been concern about delayed payments to gold producers by Fidelity Printers and Refiners. Are there serious moves towards addressing this?

CC: Over the past two years and in the greater part of the first half of 2021, gold producers have been facing prolonged payment delays for gold delivered to Fidelity Printers and Refiners.

The recent changes in the marketing of gold where Fidelity Printers and Refiners and the producer jointly export the gold have seen some improvements in payments turnaround.

As Fidelity Printers continues to fine tune the new system, we hope that delays will be a thing of the past.

As a chamber, we will continue to engage Fidelity and authorities for timeous payments for gold deliveries.

FM: Tell us about progress towards attaining the US$12 billion dollar mining economy by 2023. We are only 18 months away

CC: The mining industry is supportive of government’s vision of a US$12 billion mining sector by 2023.

Most operators are working hard to ramp up production and attain their production targets in line with their capacities. We will continue to work closely with government in resolving matters that continue to threaten the achievement of the target.

FM: Do you think this milestone is still attainable given the time left?

CC: Our hope is that if the individual mining companies’ targets are met, the envisaged US$12 billion milestone can be achieved.

The opening up of new mines as well as the resuscitation of previously closed mines will contribute towards the attainment of the target.

FM: In his presentation at the just ended Chamber of Mines of Zimbabwe mining conference, President Emmerson Mnangagwa indicated that little progress has been made in beneficiating minerals such as diamond and gold. What is the chamber’s plan with regards to this?

CC: The chamber is supportive of the need to increase the export revenue derived from mining.

Beneficiation of the country’s mineral exports is one method of achieving this. Our members are at various stages of beneficiation and together with government we need to jointly address the various impediments to value addition.

FM: Reading through annual reports of mining firms, a clear trend that emerges is that the industry has been facing working capital shortages. How is the chamber dealing with this?

CC: Mining is capital intensive and growth for the sector requires significant long-term funding from lenders and shareholders.

We applaud government efforts to create a stable and predictable operating environment that will allow miners to focus on mining. This will de-risk the industry, allowing lenders and shareholders to commit the significant amount of capital required for growth.

Capital shortages remain the key constraint undermining the unlocking of the full potential of the mining sector.

The Chamber of Mines will continue to engage government with a view to addressing all impediments to capital raising for the mining sector. Allowing gold producers to export their product to international markets will allow them to be able to raise long term offshore funding.

FM: The Minister of Mines indicated that he will sit down with the Chamber of Mines to mobilise gold loans. What’s your view on this?

CC: This is a welcome development and will go a long way in closing the funding gap for the gold industry.  We are looking forward to working closely with the ministry of Mines to ensure that the gold industry benefits from this initiative and contributes significantly to the socio-economic development of the country.

FM: A few days before you held your annual general meeting and conference, reports emerged that several miners had their funds withheld offshore because of US sanctions. This is bad news for the industry and the affected miners

 CC: Affected miners have engaged their bankers on this matter and as a chamber we have raised the matter with the government.

We are informed that the relevant authorities are working round the clock to make sure that mining companies are not affected in future.

FM: How much has been trapped offshore?

 CC: These are confidential matters between miners and their bankers. We do not have details of the amounts involved.

FM: In what way has the Covid-19 crisis affected the mining sector? Is the sector prepared to deal with a third wave?

CC: The mining sector was not spared from the global Covid-19 pandemic.

However, we applaud government for allowing mines to continue operating during the Covid-19 imposed lockdown on condition they complied with the requisite prevention protocols.

As a result, mines operated at reduced levels to contain the spread of the virus.

Covid-19 is still with us and miners are incurring additional costs to comply with the protocols.

The industry is still fragile and could be negatively impacted should the third Covid–19 wave materialise.

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