Overview of Zimbabwe’s Mining Sector

1. THE CHAMBER OF MINES OF ZIMBABWE Overview of Zimbabwe’s Mining Sector ALEX MHEMBERE PRESIDENT CHAMBER OF MINES OF ZIMBABWE

2. Presentation Outline • Zimbabwe’s mineral resources • Contribution of the mining sector to Zimbabwe’s economy: • Where have we come from? • Where are we now? • Where to for Zimbabwe? Mining as the cornerstone for economic growth • Conclusion

3. THE CHAMBER OF MINES OF ZIMBABWE Mining Sector Overview

4. Importance of the Mining Sector “The mining sector will be the centrepiece of our economic recovery and growth. It should generate growth spurts across sectors, reignite that economic miracle which must now happen…we need to explore new deposits, developing new greenfield projects in the mining sector. Above all, we need to move purposefully towards beneficiation of our raw minerals.” President R.G. Mugabe inauguration speech

5. Structure of the Sector • More than 40 different minerals • Diverse mining sector • +800 operating mines • Ranging from artisanal and small scale mines to world class mines

6. THE CHAMBER OF MINES OF ZIMBABWE Contribution of the Mining Sector to Zimbabwe: Where have we come from?

7. Mining, the Driver of Economic Growth • The mining sector has to date been the most dynamic sector of the Zimbabwean economy, leading the 2009-2011 rebound with average annualised growth of 35%. Aug 2013

8. Value of Mineral Exports Positive correlation between export growth and mineral export growth

9. Exports by Category RBZ, MOF, Zimstats

10. Gold Price vs. Zimbabwe Production

11. Nickel Price vs. Zimbabwe Production

12. Coal Price vs. Zimbabwe Production

13. THE CHAMBER OF MINES OF ZIMBABWE Contribution of the Mining Sector to Zimbabwe: Where are we now?

14. Mineral Output Performance • Mineral output for 2013 expected to surpass 2012 production Source: Ministry of Mines, Chamber of Mines

15. GDP Contribution Aug 2013

16. Direct Tax Contribution Aug 2013

17. Employment in the Mining Sector People Employed in the Sector Aug 2013

18. Corporate Citizenship of Mining Companies • Contribution of mining companies goes beyond paying taxes • Towns and cities have been built around mines (e.g.Bindura, Hwange, Kwekwe and Zvishavane) • New local enterprises have been developed through linkages to mining operations • Schools and hospitals have been established by mines • Sports teams have been established by mining companies (e.g. Hwange FC, FC Platinum) July 2013

19. THE CHAMBER OF MINES OF ZIMBABWE Where to for Zimbabwe? Making Mining the Cornerstone of Economic Growth

20. Making Mining the Cornerstone of Economic Growth With the new thrust of mining as the cornerstone of economic growth, it’s imperative to: • Resuscitate existing mining operations • Develop new mines • Beneficiate mineral output • Establish linkages between the mining sector and other sectors of the economy, particularly manufacturing

21. Gold Production (kg), 1980-2012 Resuscitation of Existing Mines Source: COMZ 2012 and RMG 2012

22. Resuscitation of Existing Mines Coal Production (tonnes), 1980-2012

23. Resuscitation of Existing Mines Nickel Production (tonnes), 1990-2012

24. Resuscitation of Existing Mines

25. Development of New Mines • - Capital - Knowledge - Innovation Required for all Stages Refineries Feasibility Studies • Exploration & evaluation • Design, planning & costing Smelter • Drying, smelting • Converting Shaft sinking • Drill, blast, clean, support • Equip Concentrator • Mill • Flotation Development • Footwall off-reef and on-reef • Drill, blast, clean, support Transport • Shaft hoisting • Surface rail transport Stoping • Drill, blast, clean, support • Underground rail transport

26. Beneficiation The Chamber of Mines is in full support of the Government’s call for beneficiation of mineral output • Down-stream beneficiation - Downstream value addition involves a range of activities including large-scale capital-intensive activities such as smelting and refining as well as labour-intensive activities such as craft jewellery and metal fabrication. • Mining beneficiation – capabilities of the mining company in the areas of smelting or concentration • Manufacturing beneficiation – when manufacturing companies have capabilities to produce a final consumer product • Side-stream beneficiation - Refers to inputs, namely capital goods, consumable and services, into the value chain Supported by mining companies in Zimbabwe as well as policy makers To a large extent, mineral beneficiation is already taking place in the country

27. Asbestos Beneficiation Manufacturing beneficiation took place with the manufacture of asbestos cement products Between 1965 and 1978 asbestos was the country's principal mineral in terms of the value of output Productionpeaked in 1974 at 281kt. 2012 production was 29.5tonnes. Shabanie and Mashaba Mines have been operating below capacity There will be a picture of the mine here

28. Chromite Beneficiation • Beneficiation in chromite mining has been taking place through the production of ferrochrome • Production: 2012 production was 31.82% down on the previous year at 408,475.81 tons. • Most of the smaller smelters remained under care and maintenance during 2012, with ZIMASCO being the only smelting facility operating

29. Coal Beneficiation • Mining beneficiation is taking place with the use of coal in power stations • Most potential in the sector has remained under-utilised • Productionaveraged over 5mt/yr in the 1990s but fell to 1.9mt in 2009 before recovering to 2.8mt in 2010 and 4.6mt in 2011 • Hwange Colliery Company continues to be the largest coal producer with additional production coming from Makomo Resources and Galpex. There will be a picture of the mine here

30. Gold Beneficiation • Mining beneficiation for gold mining has been taking place through Fidelity Refiniries • Productionhas rapidly recovered to 14.7tons in 2012 compared to 3.6 tons in 2008 since adoption of the multi-currency system in 2009, production • Artisanal and small scale miners play a large role contributing to gold output

31. Iron and Steel Beneficiation • Mining and manufacturing beneficiation used to take place for iron ore mined at Ripple Creek and Steel produced in Redcliff • Productionpeaked in 1992 at 1.46 Mt, and then fell to zero in 2008 There will be a picture of the mine here

32. Nickel Beneficiation • Mining beneficiation took place at the Bindura Smelter and Refinery complex • Bindura Nickel Corporation, the primary producer for nickel placed its smelter and refineries on care and maintanence in 2008 • For the past 4 years, most nickel production has been from platinum mining operations as a byproduct. • Production:Peaked in 1994 at just over 13,000 tonnes There will be a picture of the mine here

33. Platinum Beneficiation • Three operating mines in Zimbabwe; • 2 producing concentrate • 1 producing matte after smelting • Potential exists for further beneficiation and work is already in progress in this regard

34. Building Linkages • It’s critical that linkages with other sectors are created, especially manufacturing • Zimbabwe’s manufacturing sector has been hamstrung over the past 15 years, therefore capacity for manufacturing beneficiation is limited

35. Capacity Utilisation in Zimbabwe Manufacturing Source: CZI State of Manufacturing Survey,

36. Case Study: Building Linkages July 2013

37. THE CHAMBER OF MINES OF ZIMBABWE Prospects for the Mining Industry

38. Future Prospects for the Mining Industry Despite constraints, the sector is poised for marked growth in the next 5 years with World Bank (2012) forecasting positive outlook under two scenarios: 1. Base Case ( current policies and costs) • Gross revenues and fiscal revenues of the mining sector to increase by 63 and 87 percent in 2018, respectively, to $4.8 billion and $729 million. 2. Optimistic Case ( assumes investment capital of around $5 billion and optimal policies) • Gross revenues and fiscal revenues of the mining sector to increase by 274 percent and 307 percent in 2018, respectively, compared to 2011. • The increase in gross revenues and fiscal revenues compared to the base case projections for 2018 are 130 percent and 118 percent, respectively

39. THE CHAMBER OF MINES OF ZIMBABWE Conclusion

40. Conclusion - Zimbabwe is endowed with abundant mineral resources • indeed mining can become the cornerstone of an economic turnaround • We need to resuscitate existing mines on care and maintenance to pre-1998 levels • We need to invest in exploration and new mining development • We need to focus on value addition and beneficiation • We need to focus on linkages To achieve this, we need to address the following issues: • A common national vision • Policy consistency. Mining Policy in progress. To now focus on economic & Industrial Policies. • Competitive fiscal regime • We need to attract investment to the sector • Improve critical infrastructure, i.e. electricity, roads and water supply

41. THE CHAMBER OF MINES OF ZIMBABWE ENDSThis presentation based on personal views of presenter and does not necessarily represent the views of the Chamber of Mines of Zimbabwe or any other person or organization