Tobacco production increases

Tobacco production is expected to continue on the recovery path in the current 2011/12 season, with output projected to reach 150 million kgs from 131million kgs produced in the 2010/11 season the Tobaco Industry and Marketng Board (TIMB) said today.

1) TIMB said the conservative projection of 150 million kgs is on the back of funding limitations as well as erratic rainfall being experienced throughout this season.

The 2011/12 tobacco selling season opened on the 15th of February 2012. As at 29 February 2012, tobacco worth US$26 million had gone under the hammer at the country’s four auction floors.

This figure is an increase from the 5,2 million kgs worth US$15 million sold during the same period last season.

The current season has also seen an improvement in the average price of tobacco, averaging US$3,59 per kg compared to US$2,93 for the comparable period last

season. Below is a summary of the tobacco sold at the four auction floors.

In addition to the tobacco sold under the auction, a total of 5 million kgs of tobacco was sold under the contract system, earning US$18 million at an average price of US$3.61 per kilogram. – Rebecca Moyo

2) The Hwange Colliery Company acquired new underground mining equipment from South Africa as part of its recapitalization efforts.

The arrival of the new equipment is set to increase production efficiency in the underground mines.

The company said this will in turn boost production of coal, which is used by Hwange and small thermal power stations (Bulawayo,Munyati and Harare) to generate electricity which is in short supply.

Power companies are generating a lmost half of the national electricity requirements (1002 megawatts as at 14 March 2012) against a peak demand of 2100 megawatts. The Zimbabwe

Power Company, a subsidiary of ZESA Holdings,has applied for permission to increase tariffs for those firms, which it has agreements to supply uninterrupted electricity, the majority of which are in the mining industry. The application is still under consideration by the Zimbabwe Energy Regulatory Authority (ZERA), a regulator in the energy sector.

If the tariff is approved, it will increase production costs of ring-fenced companies in the mining sector.

The supply of electricity will further deteriorate by up to 175 megawatts if the supply from Hydro CahorraBasa of Mozambique is cut off due to an unsettled US$80 million outstanding debt. ZESA embarked on disconnecting defaulting customers who owe it more than US$400 million in outstanding bills. Customers who had their electricity disconnected had to pay a minimum of 25 percent of their total bills and the balance to be paid over a period of 6 months, in line with an approved payment plan with ZESA.

On the indigenization front, the Zimbabwean government signed a memorandum of understanding (MOU) with Caledonia mining firm in which the firm agreed to sell 51 percent of its stake in Blanket Mine in line with the country’s indigenization policy.

The National Indigenization Board will receive 16 percent whilst 15 percent will be allocated to the employee share ownership trust, 10 percent to the Gwanda Community and the remaining 15 percent will be allocated to locals.

However, the Zimbabwe Platinum (ZimPlats) a subsidiary of Implats (Impala Platinum), a South African holding company, is still engaging with the Government over the indigenization of Mimosa Platinum Mining Company in which it is in joint venture with Aquarius Platinum of South Africa.

While some mining companies are complying, the implementation of the indigenization law has generated policy debate and fuelled uncertainty among some foreign investors.

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