The Sunday News
Dumisani Nsingo, Senior Business Reporter
THE country’s major chrome smelting companies are readying to bring their furnaces on line buoyed by anticipated growth in the chrome industry following a surge in the international price of the mineral.
Mines and Mining Development Deputy Minister Fred Moyo said a number of ferro-chrome smelting companies were working on increasing their capacity buoyed by the increase in demand and price internationally.
“Chrome prices are improving and I hope that will spur us but logistics have to improve to move the product to Maputo, Mozambique. It’s not very easy because it involves two railway lines NRZ (National Railways of Zimbabwe) and CFM Mozambique and we also need to deal with the ports for facility space and then timing of vessels if they come through.
“We would rather sell (Free On Board) FOBs price of chromite and ship it after completion but the improvements are there.
We hope the smelters will start switching on, Afrochine Smelting (Pvt) Limited is on two furnaces and should be bringing the third one in September. Zimasco (Zimbabwe Mining and Smelting Company) is on two, I expect them to bring the third one anytime from now and two will be left,” said Deputy Minister Moyo.
Indicating “FOB port” means that the seller pays for transportation of the goods to the port of shipment, plus loading costs.
The buyer pays cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination.
Deputy Minister Moyo said there was a company that has expressed an interest to invest into another chrome smelter, Maranatha while there was African Chrome Fields in Gweru, which was also running.
He, however, said the only challenge remained in addressing the country’s electricity tariffs and other production costs that were rendering the price of the mineral uncompetitive on the international market.
“The only challenge in the country is that companies are battling to manage the tariff of 6,7 (per kilowatt) but there is some plan we are working on and I hope it comes out so that we give the smelters a more competitive tariff. Remember we sell to the international market.
“If those who are buying the mineral say we will get this ferro-alloy for a $1, everybody who is selling in the world must accept a $1, so you must look back and say if we are going to win that contract getting $1 what is our electricity tariff and what is the electricity tariff of our competitors,” quizzed Deputy Minister Moyo.
The country is mostly marketing high carbon ferro-chrome, which sells at around $0,80 per ounce and is used by steel makers instead of the low carbon ferro-chrome which fetches high prices due to high production costs.
Low carbon ferro-chrome costs around $1,30 per ounce and is used for the production of aeroplanes and specialised chemicals and medicals.
Zimasco is estimated to be owing small-scale chrome miners about $10 million. However, the company has since handed over 50 percent of its claims to Government while it was engaged in negotiations with ZimAlloys.
“At least what they produce and take to Zimasco is under a lease arrangement. The challenge is to say are they being paid a fair price because they don’t have the capacity to negotiate for a fair price. So the Government must ensure there is fair play.
“That’s why we wanted to give them claims to mine on their own because if they have their own claim they can bargain by refusing to supply. If you are given claims on tribute, you can only sell to that particular individual,” said Deputy Minister Moyo.
He said plans were underway to handover the claims to small-scale miners through a Special Purpose Vehicle to trade.
“It’s also important for companies with claims to try and cooperate with small-scale miners, its part of empowerment. It’s part of their responsibility to get support for social licences to operate.”
Zimbabwe Miners Federation chief executive officer Mr Wellington Takavarasha said exciting times had started to roll in the chrome industry following a surge in international prices.
“The prices have picked-up of late, the market was somehow close or subdued in terms of international prices but over the past two months we have seen them increasing and as we speak there are smelters that are having chats with South African clients,” he said.
Mr Takavarasha said there was a need for the Government to expedite the handing over of claims to small-scale miners by Zimasco and ZimAlloys as the two companies were holding on a lot of vast concessions for speculative purposes.
A letter seen by Sunday News Business addressed to ZMF chief executive officer, showed that Portnex, a company which took over the western area of Zimasco was not paying small-scale miners for chrome ore delivered in time as per contractual agreement.
According to the contract agreement signed by the majority of small-scale miners in Lalapanzi, Shurugwi and South Dyke, Portnex is supposed to be paying twice a month for ore delivered. All ores delivered from the beginning of the month to mid-month is supposed to be paid at the end of the same month while ores delivered from mid-month to end of month will be paid the following month by 15.
“The bulk of ores delivered to Portnex as from early April 2016 to date has not be paid at all or only a part payment was made to a few individuals. On inquiring from their finance department daily false promises are made that payments will be made tomorrow which never materialises.
“On further inquiry, the management at the smelter is saying they are not able to pay us as their monies are being held by RBZ (Reserve Bank of Zimbabwe). As small-scale miners, we are totally worried as we now have a company which took our ores under false pretence and is now not paying us,” read part of the letter.
@DNsingo
