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Chitando’s return: Steel deals, exploration on the agenda

Our senior business reporter Freeman Makopa (FM) caught up with Chitando (WC) to discuss issues surrounding the mining industry. Here are excerpts from the interview:

MINISTER of Mines and Mining Development, Winston Chitando made an abrupt return to the portfolio on April 25, after an 8-month stint at the Ministry of Local Government and Public Works. A former mining executive, Chitando is back to lead the country’s mainstay mining industry which he believes has untapped potential. Our senior business reporter Freeman Makopa (FM) caught up with Chitando (WC) to discuss issues surrounding the mining industry. Here are excerpts from the interview:

FM: Congratulations on your re-appointment as the Minister of Mines. You should be looking at things from a fresh perspective?

WC: It is always important to start by taking a step back to look at the overall vision or game plan, which is the Upper Middle - Income economy target by 2030. This is premised on the growth in the gross domestic product (GDP) per capita. From a mining perspective, we are working hard to ensure that we play a key role in the achievement of this milestone.

FM: Let’s discuss the work that you are doing

WC: There are several initiatives, such as the issue of exploration. New mines can only be born from exploration. We can look at existing mines, we can look at brownfield projects. But new mines born from exploration. Examples are the Arcadia Mine project. It came out of an exploration programme. We also have Sabi Star Mine, and Zulu Mine, which also came out of exploration programmes. Exploration has been one of the areas we have been looking at to discover new mines. It is important to note that we do have over 60 minerals, but minerals which are being actively mined are probably around 10 or so. Exploration will ensure that there is optimal extraction of our resources to give the mining sector the impetus required to play its rightful role in the economy.

FM: What else are you looking at?

WC: There are some low hanging fruits, which have been embarked on over the last few years, which are mostly brownfield and expansion projects. We have a lot of expansion projects in the platinum, gold and other sectors. These are low - hanging fruits. We will continue to work with companies with these low-hanging fruits so that they expand to contribute to the vision of becoming an Upper Middle Income economy.

We have seen a lot of mining projects taking place. Others are being planned. Some are under implementation. The one which probably is most known is the Manhize steel project.

FM: That one should be key

WC: The Manhize steel project entails the fact that there is a coal resource in Hwange, which is being extracted. It entails value addition of the coking coal to coke. That coke and part of the coking coal are then transported to Manhize. And we also then have high carbon ferrochrome at Afro-Chine in Selous, whereby high carbon ferrochrome is produced.

A significant amount of it finds its way into the steel industry worldwide. We will now see a proportion of high carbon ferrochrome from Afrochine finding its way to our own steel industry at Manhize. It is an integrated mining value addition park where we see the value addition of the iron ore which is sitting in Manhize itself, and the metallurgical coal in the Hwange area. There is some bit of limestone, which is also required. It is a value addition process.

FM: Manhize has replaced Zisco Steel. Am I right?

WC: This is a very important question. Zisco Steel has a separate shareholding structure from the other steel projects coming. Zisco Steel falls under my colleague, the Minister of Industry. They do have a programme for the resuscitation of Zisco Steel, which is underway. Then we do have other programmes to establish several steel projects in the country. There are least three other steel projects, one of them under construction, and two which are being worked on in terms of evaluation and coming up with project programmes. We are looking at Zimbabwe becoming a fairly significant producer of steel. Zisco Steel continues.

FM: There have always been worries over the mining tax regime

WC:  I am not sure what observers see in terms of calculations. I think they should come with the numbers and demonstrate how it (taxes) is making it unprofitable. We have a good fiscal set up, which is conducive for most projects. Look at the establishment of the steel sector. Look at what is happening in the gold and platinum sectors, what is happening in coal. Surely,  those things would not have been happening if we had a (hostile) tax regime. Where people have specific proposals and they want to engage, the government is ready to engage.

FM: Tell us about investment levels

WC: It is a bit of a difficult question. I would have to sit down and give you some numbers. But we do have quite a number of projects.

FM: What is your ministry doing to incentivise foreign investors?

WC: We already have the incentives. Let me put it this way. I have said it a number of times and I will say it again in this discussion. Zimbabwe is one of the best mining jurisdictions in the world. We have very clear policies. There is policy clarity and a conducive fiscal climate. We also have working systems. In terms of exports and imports, it is very clear what to do. We have systems in terms of a working banking sector. We have one of the best labour force you can ever get. We have a very peaceful environment. Those are incentives on their own.

FM: Does Zimbabwe have an adequate lithium resource to satisfy the global market?

WC: The lithium industry in Zimbabwe is in the growth phase. Current players like Bikita are in a growth phase. Acadia is in its growth phase. Sabi Star is still in its growth phase. I will call this growth and consolidation. Kamativi is in the growth and consolidation phase. Zulu is in its growth phase. It is a growing industry. As the industry grows, the government is very clear on what is required for lithium.

FM: What is required?

WC: It is for us to make electric vehicles in Zimbabwe.  That is the objective. We want to produce solar panels in Zimbabwe. But that is a process and that process is underway. If you are aware, I think the government signed the Mines to Energy Park in Mapinga, which is precisely for that.

We want to produce up to the battery stage, and produce other  final products from lithium. The government is very clear where it is going. But it is clear that there is a growth factor which is taking place.

As you grow and volumes increase, you go to various levels of value addition. We are well on track for Zimbabwe to fully optimise its lithium resources to become a significant player in the lithium space.

FM: Tell us about access to loans for small scale players

WC:  We have largely worked on the mining industry loan fund. But watch this space. There are some major interventions in terms of the provision on supporting the small-scale mining sector in the next two months.

FM: Tell us about the Cadastre system. How far are you with that?

WC: We had a pilot trial in Manicaland Province for the implementation of the Cadastre system. Some challenges were noted, which are being worked on. We really hope we can announce a new date for implementation very soon.

FM: How much do you expect from the mining sector this year?

WC: This year there won't be significant change, mainly because of very depressed metal prices.

Apart from gold, every mineral prices are subdued. So, were it not for expansions, we were going to witness a decline in revenues. But because of those expansions that will make us remain afloat. What is most important is we have established capacity. So, the volumes are up, but the unit metal prices are low at a time the volumes have gone up.

FM: Any new developments on the Minerals Act?

WC: Mine is the Minerals Act. The draft has been done and we expect that it will be tabled in Parliament in the next month.

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