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Prospect seeks SEZ status for lithium project



PROSPECT Lithium Zimbabwe

PROSPECT Lithium Zimbabwe (PLZ), a unit of Australia Stock Exchange-listed Prospect Resources Plc, has applied for special economic zone status (SEZ) for its multi-million dollar Arcadia Lithium project near Harare that was commissioned by President Mnangagwa yesterday.

President Mnangagwa told delegates at the official ground-breaking ceremony that lithium was one sub-sector targeted to leapfrog Zimbabwe’s industrial and economic development to middle-income status by 2030.

Several senior Government officials attended the ceremony, among them Vice President Constantino Chiwenga, Mines and Mining Development Minister Winston Chitando, Transport Minister Joel Biggie Matiza, Chief Secretary to the President and Cabinet Misheck Sibanda, Deputy Chief Secretary to the President and Cabinet (Presidential Communications) George Charamba as well as many senior diplomats including from China and Australia.

Prospect Lithium Zimbabwe executive director Paul Chimbodza told The Herald Business in an interview after President Mnangagwa had commissioned the lithium project, located 38 kilometres east of the capital, Harare, that the mining company was looking to secure an SEZ certificate soon.

The Prospect Lithium Zimbabwe Arcadia project will hoist Zimbabwe, currently the world’s 5th largest lithium producer with only a single mine operating, to a much higher production ranking and earn the country hundreds of millions in annual foreign revenue and other value chain activities export earnings.

This comes as lithium has gained global prominence as the most valuable mineral for the future given its use in a number of areas including medicines and ceramics, but more importantly manufacture of electric vehicle batteries. This also comes amid growing global push for green energies.

Phase 1 of the Arcadia lithium project, expected to earn Zimbabwe $3 billion over a 12-year life of mine (LOM), is anticipated to go into full production in the next 12 to 14 months. This will follow the initial investment of $165 million. Seventy per cent of initial lithium was sold upfront.

Half the funding required for the project has already been raised while processes to secure the balance of the required capital outlay, which comes on the back of the successful completion of a definitive feasibility study, is in progress.

“We have been working with Government; you may be aware that the Special Economic Zones Authority is a new baby on the block and we are continuously engaging them and they have got all our documentation.

“We are hoping that not in so long a time to come we will have our SEZ licence in place and some of the SEZ senior management were actually at this function (ground-breaking ceremony yesterday) here,” Mr Chimbodza said.

SEZ, Mr Chimbodza said, was important for Zimbabwe given the cocktail of economic and business incentives awarded to companies in such targeted specific export-oriented sectors, industries or sub-sectors.

“It (SEZ application) is mainly to do with incentives that Government has put in place. Special Economic Zones are designed by their nature to bring in incentives in terms of tax holidays, work permits if you are going to need any external workforce, but importantly SEZs are specifically for export-oriented products.

“So, it is a sign of approval for our investing community for Zimbabwe to start establishing and operationalising these special economic zones because they bring in a lot of these issues (incentives) that make a lot of business sense from a commercial point of view,” he said.

Minister Chitando said the Arcadia lithium project, which has the potential to become Africa’s largest hard rock lithium mine, will produce petalite and spodumene.
“Arcadia is deemed to be the largest hard rock lithium project in Africa,” he said.

“In terms of production, Zimbabwe in 2017 was the 5th largest (lithium) producer in the world. This principally comes from Bikita Minerals (Masvingo), which produces petalite. Arcadia is deemed to produce two (types of lithium), petalite and spodumene (varieties of lithium).”

Currently, only Bikita Minerals is producing but there are four other promising projects under development namely Kamativi, Zulu in Bulawayo and Lutope (Hwange).

To support the development of this strategically important sub-sector Minister Chitando said together with the miners he was working to develop a lithium development policy.

Based on the proposed 2,4 million tonnes per annum mining and processing operation, the DFS indicates that Arcadia will be a strong financial, high margin project with current forecast Life Of Mine (LOM) revenue of $2,93 billion and average annual EBITDA of $106 million over an estimated 12-year mine life.

The Herald

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Zimbabwe agrees to pay $3.5 billion compensation to white farmers



Zimbabwe White Farmers

Zimbabwe agreed on Wednesday to pay $3.5 billion in compensation to Zimbabwe white farmers whose land was expropriated by the government to resettle black families, moving a step closer to resolving one the most divisive policies of the Robert Mugabe era.

But the southern African nation does not have the money and will issue long term bonds and jointly approach international donors with the farmers to raise funding, according to the compensation agreement.

Two decades ago Mugabe’s government carried out at times violent evictions of 4,500 Zimbabwe white farmers and redistributed the land to around 300,000 Black families, arguing it was redressing colonial land imbalances.

The agreement signed at President Emmerson Mnangagwa’s State House offices in Harare showed white farmers would be compensated for infrastructure on the farms and not the land itself, as per the national constitution.

Details of how much money each farmer, or their descendants, given the time elapsed since the farms were seized, was likely to get were not yet clear, but the government has said it would prioritise the elderly when making the settlements.

Farmers would receive 50% of the compensation after a year and the balance within five years. Finance Minister Mthuli Ncube and acting Agriculture Minister Oppah Muchinguri-Kashiri signed on behalf of the government, while farmers unions and a foreign consortium that undertook valuations also penned the agreement.

“As Zimbabweans, we have chosen to resolve this long-outstanding issue,” said Andrew Pascoe, head of the Commercial Farmers Union representing  Zimbabwe white farmers.

The land seizures were one of Mugabe’s signature policies that soured ties with the West. Mugabe, who was ousted in a coup in 2017 and died last year, accused the West of imposing sanctions on his government as punishment.

The programme still divides public opinion in Zimbabwe as opponents see it as a partisan process that left the country struggling to feed itself. But its supporters say it has empowered landless Black people. Mnangagwa said the land reform could not be reversed but paying of compensation was key to mending ties with the West. Reuters

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Old Mutual’s Share Price Is Focus in Zimbabwe’s Currency War



Old Mutual Shares Zimbabwe

The share price of one of Africa’s oldest insurers is taking centre stage in Zimbabwe’s battle to bring order to its chaotic foreign-exchange system.
In the latest in a series of attempts to stabilize its currency, the government wants to eradicate the Old Mutual Implied Rate.

The gauge, used by domestic companies to determine the future cost of goods and services, calculates a potential forward rate for the Zimbabwe dollar by measuring the difference between Old Mutual Ltd.’s share prices in Johannesburg, London and Harare.

The indicator is among many “contrived phantom exchange rates” in use that “conspire to defeat fiscal policy,” the government said in a June 26 edict that halted trading on the Zimbabwe Stock Exchange and stopped most mobile-banking transactions.

The OMIR is one of the multiple exchange rates Zimbabweans use daily to navigate the nation’s myriad economic challenges, including annual inflation of almost 800%.

A perennial shortage of cash means anyone who has physical banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate.

That’s resulted in a widening gap between the official rate of 63.7 per U.S. dollar, and the amount at which it trades on the streets of Harare, which is now at 100.

“People have relied on making money from buying and selling Zimbabwe dollars, and not from any real production,” said John Robertson, an independent economist based in Harare. “It’s what has created these distortions.”

The OMIR also feeds into the black-market Zimbabwe dollar rate, which the nation’s bourse uses, along with the official rate, to determine the value of stock prices.

Old Mutual, founded in Cape Town in 1845, is not involved in determining the rate. Market participants take the company’s share prices in South Africa, the U.K. and Zimbabwe, convert each of them into the U.S. dollar, which should typically trade near par.

The finance minister, however, in March restricted trading in the shares of Old Mutual and two other companies by making the stocks no longer fungible or regarded as being equal in value to those traded on other exchanges, in a bid to prevent outflows caused by the dual listings.

Despite the move, investors poured into Old Mutual, using it as a proxy to the U.S. dollar because of its offshore listings, pushing the Zimbabwe-listed stock up 90% since the beginning of May. The shares in Johannesburg and London were little changed, resulting in the implied rate doubling to 122 as the gap between the securities widened.

Zimbabwe’s benchmark industrial index has risen more than sevenfold this year, reaching a record on June 24, and giving the overall bourse a market value of about 229 billion Zimbabwean dollars ($3.6 billion). None of the stocks in the 57-member index has declined this year as Zimbabweans seek a haven from runaway price increases and the weaker currency, which has slumped to 63.7442 per U.S. dollar after a 25:1 peg put in place since March was abandoned.

Suspend Listing
Authorities now want to eliminate the OMIR before allowing any trading to resume on the Zimbabwe Stock Exchange, people familiar with the matter said, asking not to be identified because the talks are private. The OMIR was the focus of various meetings on Monday between members of Zimbabwe’s stockbrokers’ association, the stock exchange, the Securities and Exchange Commission and the Treasury, the people said.

Measures being considered to include suspending Old Mutual’s shares from the Harare-based bourse, having the securities traded only in dollars, or moving the listing to the Victoria Falls Stock Exchange, a market that will only trade in foreign currency once it opens later this year, the people said.
Nick Mangwana, the government’s spokesman, referred queries to the finance ministry. Several calls and text messages sent to Finance Minister Mthuli Ncube and central bank Governor John Mangudya seeking comment weren’t answered.

“There has not been any official communication from authorities in Zimbabwe to Old Mutual,” the Johannesburg-based company said in an email “We have asked our local subsidiary to reach out to our stakeholders in Zimbabwe to try and understand the circumstances around ZSE closure and other related matters.”

Discussions over the halting of trade on the stock exchange are ongoing and the outcome is still uncertain, SEC Chief Executive Officer Tafadzawa Chinamo said by phone. Zimbabwe Stock Exchange CEO Justin Bgoni said on Sunday that the bourse would wait for guidance from regulators.

In comments at a briefing after a cabinet meeting on Tuesday, the finance minister said that stockbrokers should assure their clients that their investments in the stock market are safe and that the bourse will reopen once investigations are complete. Bloomberg

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Zimbabwe government suspends mobile money transactions



Nick Mangwana

Zimbabwe government has, with immediate effect, suspended all monetary transactions on phone-based mobile money platforms to facilitate investigations that will lead to the arrest and prosecution of people responsible for sabotaging the economy.

In a statement this evening, Secretary for Information, Publicity and Broadcasting Services, Mr Nick Mangwana, said the measures will include the suspension of all trading on the Zimbabwe Stock Exchange.

The suspension will be in place until mobile money platforms have been reformed to their original purpose and when all the present phantom rates have converged into one “genuine rate that is determined by market forces under the foreign currency auction system which was launched by the Reserve Bank of Zimbabwe” on June 23. Operational modalities and details of the envisaged measures will be announced by the relevant monetary, regulatory and law enforcement authorise in the next few days.

The government will ensure that prudent measures are put in place to mitigate and prevent any collateral damage that the interventions may cause to the innocent public that was using the mobile money platforms. The Herald.

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