VICTORIA FALLS, Zimbabwe, (Reuters) - Zimbabwe mining companies can pay for electricity in foreign currency to guarantee supplies, the energy minister said on Friday, a day after he indicated there could be deeper power cuts in the country because of low dam water levels.
Power is critical for Zimbabwe’s mining sector, the southern African nation’s biggest foreign currency earner and what President Emmerson Mnangagwa has said will be the major driver of the country’s economic recovery.
Energy minister Fortune Chasi had said on Thursday that the country’s largest hydroelectric plant, Kariba Dam, will suspend output in 14 weeks if water levels continue to fall at the current rate.
State utility Zimbabwe Electricity Transmission and Distribution Company (ZETDC) this month announced the worst rolling power cuts in three years. Though mines have been spared so far, analysts say the cuts will hurt economic revival efforts.
“Exporting mining firms can also enter into foreign currency payments arrangements with ZETDC on a back-to-back arrangement with regional utilities to enable the utility to secure more imports,” Chasi told mining executives at an annual meeting of the Chamber of Mines in Victoria Falls.
Power imports are cushioning platinum mining companies against the electricity cuts, but gold mines could face production cuts because they continue to rely on an unstable national grid, industry officials have said.
Zimbabwe is seeking to exploit its platiunum reserves more quickly. The metal has been in strong demand for use in catalytic converters to limit car emissions, but automakers are increasingly looking to shift to electric cars powered by lithium batteries.
In Harare, Bravura Consortium on Friday signed an agreement with the government to spend more than $50 million on platinum exploration and mining in Zimbabwe.
Bravura, which is owned by Nigerian billionaire Benedict Peters, will carry out surveys and drilling in the next 12 months to quantify the platinum at Serui, west of the capital, after which a mine will be designed and constructed, mining minister Winston Chitando told Reuters after a signing the agreement.
Zimbabwe is pressing platinum miners, including local operations of Anglo American Platinum and Impala Platinum Holdings to build a base metal refinery. Zimbabwe currently exports unrefined platinum to South African refineries.
Platinum miners have previously said that a shortage of power was hindering plans to build a refinery. Zimbabwe produces 1,100 megawatts (MW) of electricity a day against demand of 1,500 MW. (Writing by MacDonald Dzirutwe Editing by David Evans and David Goodman)