The Africa Review
30th June 2021
Welcome to the revived African Review! This is part of our new monthly rotation between the regions. Last week I brought you news from North America, and this week it's Africa's turn.
There are lots of rumblings in Zimbabwean mining, so this week we’re going to take a look at what has been happening in this resource-rich country in recent times.
The first thing to note about the mining sector in Zimbabwe is that the government announced last year that it plans to turn mining into a US $12 billion industry by the year 2023. As it stands, mining is responsible for something like 60-65% of Zimbabwe’s exports, and is the second biggest contributor to GDP after agriculture. The government’s plan is ambitious but achievable, and several measures to encourage investment were announced as part of this package. These include lowering corporate taxes, making royalties deductible against income tax, and introducing a sliding tax scale for gold miners. Overall, the aim is to achieve the 2023 goal mostly by ramping up production of key commodities, which in Zimbabwe means gold, platinum, chrome, diamond, coal and lithium. There are also plans to aggressively value-add to the raw commodities. However, the government also hopes to reclaim some of the “leakage” that plagues the mining industry in the country – that is, mine products (especially gold) which are mined informally and sold outside the country, bypassing both taxation and the authority of the government-run Fidelity Printers and Refiners (FPR), which is the country’s sole gold buyer.
It’s FPR that is making much of the news in Zimbabwean mining this week, as the central bank announced that large gold miners would be allowed to bypass the body and directly export bullion in limited circumstances. Those circumstances amount to months where producers have above-average production, in which case the extra portion can be exported. Farai Masendu, the director of exchange control at the Reserve Bank of Zimbabwe, predicted that this would allow producers to secure gold loans and thereby enhance their production of the precious metal.
This will come as a relief to many in the gold industry in Zimbabwe, since although FPR is the only permitted buyer, refiner and exporter, it has often had trouble in settling its accounts, leaving miners short-changed for significant periods. The ability to directly export a portion of their products will allow miners to partially offset that risk, and it also indicates good things for the industry because it is a further sign that the central bank is serious about easing up its control on the gold industry.
It’s not all good news out of Zimbabwe at the moment, though. Things seem to have gone awry with David Brown, the CEO of the country’s Kuvimba Mining House, on whose shoulders the government has put many of its hopes of a mining-driven economic revival. Brown is stepping down and says that his transition away from executive positions is one that was always planned and agreed to, but it’s a blow for the company, given Brown’s experience and accomplishments to date.
Appointing a new CEO is going to bring some murky water to the surface at Kuvimba, as well. Zimbabwe is famously plagued by corruption, and the government is generally seen as not being serious about tamping down on it at all. The government claims it owns a total of 65% of the gold, platinum, nickel and chrome producer, but an investigation by Bloomberg revealed that, at least until at least the 11th of May, many of Kuvimba’s supposed assets were in fact linked to Kudakwashe Tagwirei, a businessman and presidential advisor who the USA sanctioned for corruption last year. This was in the face of claims made in January by Mthuli Ncube, the Zimbabwean finance minister, that these assets were controlled by the government, through Kuvimba. It’sall a bit of a mess.
For those willing to wade through red tape and a good dose of funny business, though, things look bright for Zimbabwe’s mining industry. The government seems very serious about its plans to boost outputs and investment, and of course there is no shortage of mineral wealth to be uncovered in this African nation.
Around the Traps
It might not be hot off the press any more, but we still think that this video from Origin Exploration, who are looking for gold in Liberia, is one of the best we’ve seen in the business! You can check it out here if you can’t play it below.
Tanzanian Gold Corp. (TSX:TNX, NYSE:TRX) has discovered three new gold-bearing structures on the Buckreef Gold project, which total 2.9 km of strike. Grab samples graded up to 37.52 g/t, which is pretty remarkable, and the new structures are located about 500 m from the property’s Main Zone. Follow-up drilling and field work are planned for this year and next. Read the news release here.
Central African Gold (TSXV:CAGR, FSE:BC2, OTXCB:NDENF) is making moves into the DRC, with the acquisition of an interest in the Musefu Gold Project. It’s a huge land package (924 square kilometres) in a heavily under-explored area where CAGR believes necessary infrastructure spending is imminent. Historical drilling has produced up to 28.38 g/t Au, which is nice. Read the NR here.
That’s it for this African Review, have a good week everybody!
- Jane Lockwood