The prospect of a few new mining projects in the second half of 2014 – promoted by beneficiaries of mining leases and claims ceded to government – is among the few encouraging aspects of a mining industry still facing tough times, according to SRK Consulting country manager in Zimbabwe, Arimon Ngilazi.
“These leases have to be developed without delay if the beneficiaries do not want to risk losing them,” said Ngilazi. He cautioned, however, that many small claim holders found it difficult to raise the funding for proper studies to be done on their mining properties.
“The smaller companies are obviously keen to get their claims professionally assessed and ‘packaged’ to attract investors, but seldom have the resources to fund the work,” he said. “It is generally only those mining companies capable of sourcing external funding that have been able to weather the lack of capital financing on the local market.”
He said there are opportunities to grow the mining sector if the investment regime can be made more attractive. The mining sector is the biggest contributor to Zimbabwe’s economy, accounting for about 15% of gross domestic product and nearly 50% of state revenue.
“The liquidity crunch is the biggest challenge facing the country,” said Ngilazi. “Many prospective mine developers are unable to fund the feasibility and other studies for the projects they would like to initiate; and many of those who do manage make a start, still struggle to meet the costs they have incurred in their efforts to build a mining enterprise.”
Ngilazi said that much of SRK’s work in Zimbabwe is in the platinum sector.
“We have recently won a bid to conduct the geology and mining prefeasibility and feasibility studies for a platinum mining client over the next year and a half,” he said. “Through our Harare office, we have also been providing another large client with geology and resources estimation services for pre-feasibility and feasibility studies, complementing other services provided by the SRK Johannesburg office. Other clients have generally been small players in the gold sector.”
Much of the increased platinum activity on Zimbabwe’s Great Dyke is from companies seeing an opportunity in the aftermath of the strike which affected South African platinum producers. However, the impact of this activity on the average citizen has been limited, and the economic situation in Zimbabwe continues to deteriorate.
There are also challenges related to the poor condition of Zimbabwe’s infrastructure, affecting mines and citizens alike; water provision, for instance, is severely constrained by ageing and unreliable infrastructure, and the state lacks the funds for maintenance or developing new sources. Although many mines are remote from municipalities or even rural centres that might be supplied with piped water, there are some that are supplied with surface water from local dams.
While most mines tend to take care of their own infrastructure, the basement aquifers they often draw from generally give low yields due to low recharge and permeability. This means they are susceptible to a drop-off in yield due to drought, so sufficient groundwater might not be available locally to supply the needs of mining operations.
Zimbabwe: Ceded leases light up otherwise gloomy sector
DRDGOLD gold production up 13%, boosting revenue
Universal Coal to raise R244m to fast-track second coal operation