HomeLocal NewsExploration is the future of mining for Zim: RioZim CE

Exploration is the future of mining for Zim: RioZim CE

As mining company RioZim gradually returns to profitability after years of struggling to settle its debt obligations with various financiers, the mining firm is confident that by end of this year, it would have secured US$1,2 billion required to implement its Sengwa Thermal Power Station project set to generate 2 400 megawatts of electricity. Zimbabwe Independent business reporter Tinashe Kairiza (TK) spoke to RioZim chief executive Bhekinkosi Nkomo (BN, pictured) this week about the resource concern’s strategies and plans to boost production at its various mining projects dotted around Zimbabwe. Below are the excerpts:

TK: Recently you announced plans to undertake an exploration project for diamonds in Chivi, Masvingo, how much have you committed towards that?

BN: The exploration programme is not only limited to Chivi, as a group we sat down and said what is going to drive our group. So exploration was identified as the engine that is going to drive the group’s growth strategy. So exploration is happening all over the country.

At Renco Mine, Murowa, Cam & Motor and Dalny we are doing exploration, but we are now also doing exploration for chrome. We are saying that you do not need to do blind mining. We want to mine from proven resources. That is what will sustain an exploration. Our plan is to replenish depleted resources at the rate of 2:1 through exploration.

We want to stop blind mining, especially at Murowa we want to expand the life of the mine. We want to then create bankable resource bases. We also want to be able to access credit; by the time we finish our exploration, we want to change our business models.

At Independence in 1980, the price of gold was very low and it was not paying to mine a higher grade of gold per tonne. It was not making sense. Now the price of gold is going up, so we are converting our business model on the plant processing side from high-grade low-volume to high-volume low-grade so that we feed more ore and recover more gold.

We have invested in cutting-edge technology and we have also recruited highly trained personnel. We have also invested a lot towards carrying out exploration activities across all operations and Chivi just happens to be one of them.

What we are doing now is to engage the government and say listen, because exploration is so important, why do you not come up with incentives for mining companies carrying out exploration. Exploration is the future of mining, so we are asking for duty incentives and tax incentives. There is need to incentivise mining firms to undertake exploration.

The government under the new dispensation has been very receptive to this engagement. We are also saying ground rentals on mining firms exploring for diamonds should be removed because diamonds are a rare occurrence. What we have done so far is to import cutting-edge technology and for Murowa alone we have spent US$3 million. We were thinking that to carry out comprehensive exploration in the other areas we would spend between US$20 million and US$25 million

TK: You intend to apply for additional land if the project can be transformed into a viable commercial entity, what additional hectarage have you applied for?

BN: We never said we are applying for additional land. We are carrying out exploration on claims and land we already have.

TK: Let us talk about the Sengwa project, you intend to set up a 2 400MW power station and US$1,2 billion is required to implement this project. How much have you raised so far and are you considering engaging foreign partners?

BN: The first phase of the project is estimated to require circa US$1,2 billion. This will include setting up the 2 350MW generators, evacuation power lines, housing and community village infrastructure and coal mine set up.
The project will result in the construction of a mine to mouth ultra super critical thermal power station with maximum efficiency and the lowest emissions in phases of 700MW up to a total of 2 800MW.

Currently, we have undertaken extensive exploration work completed at a huge cost which delineated a resource circa of 1,3 billion tonnes of coal and is capable of supporting a thermal power station of up to 10 000 MW for over 40 years. We have already secured long term power generation and transmission license.

RioZim is currently engaging with various regional off-takers who are part of the Southern African Power Pool for purposes of concluding power purchasing agreements. We are pleased to note that investor appetite for the Sengwa project has improved.

As I speak, we have five expressions of interest for the Sengwa, but because we are under the confidentiality phase we cannot name them suffice to say these are investors with capacity to finance the project.

TK: Are there any timelines as to when you would have secured funding for this project?

BN: Given what we are seeing now, we believe that by the end of 2018 we would have secured an investor and then from there you are talking about 36 months to install the plant.

TK: Before the Essar-Ziscosteel deal collapsed, you were in talks with the Indian firm to mobilise resources towards the Sengwa project, would you consider pursuing a similar arrangement with the Chinese investors eying to take over Ziscosteel?

BN: No, the reality at the moment is that the deal has not been closed. The new investors have not yet approached us. At the moment, the investors we have told you about are the ones we are working with.

TK: At some point it was reported that Nigerian billionaire Aliko Dangote was also interested in partnering RioZim on the Sengwa project, is he one of the investors who have expressed interest in this project?

BN: Well, as I said, we are not in a position to disclose the identity of the investors we are engaging, but when we are done with the negotiations we should be able to tell you. However, all the companies which have come through have capacity to do this project are coming through.

TK: Murowa Diamonds recently returned to profitability, posting a US$1,4 million share profit, what has been driving this recovery?

BN: Basically, the Murowa growth and turnaround strategy was backed by developing a mine plan which required heavy investment on stripping and increasing plant processing capacity from 70 tonnes per hour to 190 tonnes per hour. We also introduced owner mining which replaced contract mining thereby reducing mining costs significantly. We have invested our time in building a team of experienced individuals at the mine. We are now investing in exploration equipment to increase the life of mine.

TK: Cam and Motor is one of your key resource assets, what strategies have you put in place to ensure that production at the gold mine is restored to peak levels?

BN: As you might be aware, Cam and Motor plant was fully commissioned in January 2017. In 2017, Cam contributed 46% to the group’s gold output. As a new plant we will ensure that the plant operates optimally and to capacity. We do have three resource types of ore at Cam and Motor, namely oxides, transitional and sulphides with each type requiring a different method to extract the gold.

In H2 2017, the group commenced the construction and installation of a floatation plant in order to effectively treat the significant of the mixed and sulphide reserves at Cam and Motor. The project was however delayed due to foreign currency shortages and commissioning is now scheduled for Q2 2018.

The company has also embarked on obtaining a solution which is environmentally friendly for recovering gold from the concentrate output from the floatation circuit. As a company we are focussed on increasing gold production at lowest cost and generating foreign currency.

TK: The Indigenisation Act was recently amended, would this development trigger shareholders to channel more resources towards your investments in Zimbabwe?

BN: Government has announced several policy measures and reforms in its effort to improve the ease of doing business. One of the policies being the Indigenisation Act as you have rightfully said. However, our diamond business is still affected by this policy which is likely to impact its ability to raise funds for growth.

We have engaged the government and other regulatory authorities on finding the best way to attract investors and capital.

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