Zimbabwe hopes to keep some of the country’s mines going during the 21-day coronavirus lockdown. But the trouble is how to get the output to market, in the face of disruption of supply routes and lockdowns in key markets.
Coal mines are already exempt from the lockdown, as they are classified as energy suppliers. On Sunday, Mines Minister Winston Chitando said other mines could remain open by applying for special exemptions via the Chamber of Mines and the Zimbabwe Mining Federation, which represents small-scale miners.
“Mining operations which face (lockdown) implementation challenges are requested to apply for partial exemption to the Ministry of Mines and Mining Development through the Chamber of Mines and Zimbabwe Miners Federation,” Chitando said.
“The applications should indicate clearly the nature and modus of operation during the lockdown period and the measures which will be taken to safeguard employees and other stakeholders from the potential spread of the COVID-19 virus. Once the application is lodged with the Chamber of Mines or Zimbabwe Miners Federation, the mining company in question may be allowed to continue operating pending a response from Government.”
Many Zimbabwean businesses were shut on Monday, after President Emmerson Mnangagwa ordered a “total lockdown” after Zimbabwe recorded seven positive cases of COVID-19 and one death from the virus.
But the government is wary of completely shutting down mining, which earned the country US$2.91 billion in exports in 2019, accounted for 55.2% of total exports. The Chamber of Mines has warned that the country could lose US$400 million in revenues and a 60% drop in quarterly mineral output to the virus.
Already short of foreign currency, Zimbabwe hopes keeping some mines open will narrow the losses.
However, even if Zimbabwe does keep its mines open, the mines will find it hard to sell their minerals. Supplies of key inputs have been cut off, demand for commodities has collapsed, and travel bans make it hard to ship commodities.
“The platinum and nickel industries have not been spared of the logistical complications arising from the lockdown in South Africa and other markets. There are difficulties in transporting PGMs (platinum group minerals) and nickel concentrates to South Africa due to the new South African measures on COVID-19,” the Chamber of Mines says.
Gold producers around the world are also facing shipping delays due to travel restrictions.
The Rand Refinery in South Africa, the only refiner in Africa certified to sell gold to the global market, has shut down its smelter. However, it continues to refine gold, but at reduced capacity, according to CEO Praveen Baijnath.
The refiner processes gold from countries such as Ghana, Tanzania, Democratic Republic of Congo, Mali, Namibia, Guinea and Zimbabwe.
“A complete shutdown of the refinery would have had a domino effect on the production on the continent,” said Baijnath.
Supply disruption
According to the Confederation of Zimbabwe Industries, about half of the country’s industries have suffered disruption to supplies, due to lockdowns in major source markets such as China and South Africa. Between January and February, factory output in China fell 13%, pointing to depressed demand for raw materials from countries such as Zimbabwe, and difficulties for Zimbabwean operations to import essential inputs from China.
“The lockdown is expected to have knock on effects for Caledonia as the supply chain for the procurement of a significant portion of mining consumables and capital equipment for the Blanket Mine in Zimbabwe comes from South Africa,” Caledonia, which runs the Blanket Mine in Gwanda, said in a statement.
Anticipating supply disruption, the mine had stocked up on consumables ahead of lockdowns in South Africa.
Mines say, to survive the crisis, the government must waiver payroll tax for the quarter, allow taxes in local dollars, and grant them a break from paying mining royalties.
The Chamber has also proposed a cut on power tariffs. “The Chamber is also appealing for a reduction in electricity tariff for ferrochrome producers in light of the depressed prices and their need to remain in business.”
Miners also want a suspension of duty on personal protective equipment (PPE).
