Mines appeal to Mthuli over ZESA failure to honour power deals, warn of 30% output drop

Zimbabwe mining

Zimbabwe’s mining industry has appealed to the government for help, saying output is slumping as the state-owned power company fails to honour electricity-supply contracts.

Zesa Holdings has broken its promise to “ring-fence” supplies to miners, Zimbabwe’s Chamber of Mines wrote in a letter to Finance Minister Mthuli Ncube. With some companies lacking power for three days a week, mineral production will fall by as much as 30% this year, it said.

The chamber, which represents most medium and large-scale miners, asked Ncube to intervene to ensure the utility meets its obligations. Earlier this month, the finance minister said mineral exports would help revive an economy hobbled by years of mismanagement. The miners said that a reliable power supply is essential to meeting the government’s target of boosting those exports to US$12 billion by 2023.

“We are also appealing for increased power allocation to the mining sector in line with anticipated increased mineral production in 2020,” the chamber said in the letter.

Zesa disputes the chamber’s account, saying that miners are paying less than a third of the US$11 million they agreed to pay each month for electricity. “The mines haven’t met their side of the bargain,” Patrick Chivaura, Zesa’s acting chief executive officer, said by phone from the capital, Harare.

Power Shortages

Zesa is producing less than half the 2,200 megawatts Zimbabwe needs. Most consumers get about six hours of electricity a day after a drought left the utility’s Kariba South hydro-electric plant without water, while upgrades to its Hwange thermal plant have also slashed output.

The chamber said power shortages will slow any recovery in Zimbabwe, which has the world’s third-largest platinum reserves and the second-biggest chrome deposits. It also mines gold, diamonds, lithium, nickel and coal.

The chamber wants miners to be allowed to retain 100% of their foreign currency earnings, instead of the current 55%. The central bank, the sole buyer of gold, should also speed up payments to companies that are waiting for as long as four weeks, according to the letter.