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Mimosa engages RBZ on forex retention

Mimosa Mining Company (Mimosa) is engaging the central bank and ministry of mines for a more favourable foreign currency retention regime, managing director Fungai Makoni has said.

With foreign currency shortages crippling the economy, the government resolved to retain 45 percent of foreign currency earned by miners and feed into the market through the interbank system. Another decision to allow corporates only 30 days to utilise their foreign currency before it is converted to local currency at prevailing interbank rates is also the subject of contestation.

This has resulted in smuggling of minerals such as gold and use of informal channels to sell and receive payments with official figures indicating a 9 percent slump in forex receipts in the first nine months of 2019 after underperformance in gold, platinum, tobacco and tourism.

“We need more foreign currency for our business because certainly the business largely depends on inputs that are imported like machines, equipment and spares,” Makoni said after a tour of the mine in Zvishavane last week. “In terms of the retention, we think it could be better, but it’s something we are engaging with the RBZ through the Ministry of Mines and the Chamber of Mines.

“Where we feel that there could be better retention to support the mining industry.”

Recently, the company purchased a production plant for US$10m from South Africa. The plant is being dismantled and shipped to Zvishavane where it will be assembled for production. The new plant is expected to optimise recovery by about 1.2 percent or 200 000 ounces. The losses arise from inefficiencies given the plant is operating 10 percent above capacity.

 “We are operating at 10 percent above capacity. Our plant the name plate is 185 00 per month and we are doing 210 000 tonnes,” Makoni said. “We have options to expand but what is critical is to remove inefficiencies. Over the years we have been incrementally increasing our production, say one percent this year two percent next year.

“Where we are now we are running above capacity and we are no longer recovering as efficiently as we should do. We want to optimize current production platform and get as much as we can out of what we are currently doing.”

After optimisation, Mimosa will then do feasibility studies for expansion and cost estimates, Makoni said. Mimosa holds about 6 percent of the platinum resource in the country and is part of a broader strategy to achieve a US$12bn economy by 2023, led by gold, platinum and chrome.

“We believe we still have far to go, a fair amount of resource, although we have the smallest between our two colleagues Zimplats and Unki we believe we still have value to extract,” said Makoni, adding the mine’s resource life span even after expansion could hit 20 years.

Mimosa produced 2,668kg of platinum between January and September worth US$65.8m according to the Ministry of Mines. Zimplats produced 5,757kg while Unki produced 1 844kg. Business Times

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