Government has made a commitment to provide the necessary facilitation to Zimbabwe’s largest gold producer, Metallon Corporation, whose operations are being hampered by foreign currency shortages.
The London head-quartered gold mining group has since given assurances that it was in the country for the long haul, as prospects appear brighter under President Mnangagwa’s leadership.
Metallon Corporation, which has been in Zimbabwe for slightly over a decade and half, owns How Mine, Shamva, Mazowe and Redwing mines, after recently disposing of Arcturus Mine to Harare lawyer Tawanda Nyambirai’s TN Securities. Metallon produces about 50 percent of Zimbabwe’s gold output.
The mining group is reported to have recently rolled out a massive retrenchment exercise across its mines in Zimbabwe to contain ballooning costs.
Government’s pledge forms part of measures to enable Metallon achieve optimal production in line with the grand plan to increase national bullion output to 100 tonnes by 2023, which is key to Zimbabwe’s vision to become a middle income State by 2030.
As of August 29, the country’s gold output stood just five tonnes shy of the 2018 full-year target of 30 tonnes and slightly higher than the 2017 production of 24,8 tonnes, which in turn was four tonnes higher than the 2016 output of 21,4 tonnes.
Government efforts come hot on the heels of reports that the mining group, owned by South African business tycoon Mzi Kumalo, had closed its flagship mine – Mazowe – amid mounting operational and debt constraints including salary arrears. Mazowe Mine has reportedly since been put under care and maintenance.
Reports also suggested that Metallon owed about $30 million to various creditors including local authorities, the National Social Security Authority (NSSA) and suppliers.
The South African business tycoon has been in the country, holding talks with Mines and Mining Development Minister Winston Chitando and senior Government officials yesterday.
He will hold further talks with Minister Chitando next week and in October for parties to keep hands on the pulse. All these efforts form part of efforts to find ways in which the Government can help keep the gold mining group to operate profitably and sustainably.
Minister Chitando said the commitment to facilitate Metallon’s needs to reach optimal production was part of a broad vision to upscale production of Zimbabwe’s single biggest export earner and for that to happen the support of all stakeholders was key.
He said discussions with Metallon were firstly on plans to operate to installed capacity and secondly to operate to the full potential, which exists within their large asset base.
“The discussions have progressively gained momentum though nothing final has come out of them yet, but the whole idea is for Metallon to operate at full potential for the benefit of all stakeholders.
“Metallon, as a company holds the largest gold reserves in the country, about 8 million ounces, which potentially could also increase and the whole idea is per the vision of the President (Mnangagwa) for Zimbabwe to achieve middle economic status by 2030,” he said.
To that end, Minister Chitando said the objective was to have all mining assets, including Metallon Corporation, operating to their full potential, which was the spirit of the discussions he held with the London-based South African mining magnate.
“The discussions have been to get to 15 to 17 tonnes of gold production per annum, as part of Government’s milestone target of 100 tonnes per annum by 2023. So that has been and that is the spirit in which the discussions have been and are taking place. He said Government had also engaged Metallon’s financial advisors with a view to demonstrate Government’s commitment to support foreign investment, so that foreign investors keep tracking to this country.
On his part Kumalo said Metallon was in Zimbabwe to stay and continue doing business, but to grow the business required the full support of the Government.
“We started this discussion with Minister Chitando in February and continued around May in London with various advisors, investors and bankers. I think this arose out of the fact that President Mnangagwa supported by Minister Chitando said ‘Zimbabwe is Open for Business’.
“And for me who has been here for 16 years it was quite important because in the past Zimbabwe was not open for business so you have a new regime, a new Government that decided that Zimbabwe deserved better. So I made an arrangement to meet with the minister in Cape Town during the mining conference,” he said.
Kumalo said he impressed on the minister that the mining group had 8 million ounces of unexploited bullion in Zimbabwe and did not want to keep it underground, but wished to exploit the reserves and create substantial employment.
“But that is going to take some real organisation, real pain we need the support of the minister on foreign currency shortages to get our supplies in. We pointed and invited the minister to come and see what we have done at Mazowe to move from processing capacity of 11 000 tonnes to 70 000 tonnes per month,” he said.
Kumalo said Metallon Corporation’s plan between now and 2023 was to move from 1,8 million tonnes of ore per annum to 9million tonnes. “That will take us from the current 120 000 ounces that we are supposed to produce next year to 550 000 ounces per annum by 2023. For that, we need the (Government’s) support.”
The Metallon majority shareholder said given the way the Ministry of Mines and Mining Development was now organised, the gold mining group was confident that it was going to be able to achieve its targets within the set time-lines.
“We are here to stay, we are here to do business, we have welcomed the invitation of the president that Zimbabwe is open for business,” Kumalo said.