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Subdued platinum prices dent US$400m on Zimbabwe’s Afreximbank loan repayment

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ZIMBABWE’S repayment of a US$400 million loan borrowed from the African Export and Import Bank (Afreximbank) could suffer a huge blow after the country’s major platinum miners downsized operations due to tumbling prices of the mineral also known as “white gold” on the international market.


Last December, The NewsHawks reported on the government’s plan to repay a US$400 million loan from the Afreximbank using part of the proceeds realised from platinum sales.

The southern African country is currently ineligible to access concessional funding from international financial institutions such as the World Bank and the African Development Bank after defaulting on repayments at the turn of the millennium.

In the absence of such funding, Zimbabwe now largely depends on domestic resources such as taxes, Treasury Bills, grants and bilateral loans from regional lenders.

The terms of the Afreximbank deal included an interest rate of 10.216%, arrangement fees 2.75%, commitment fee 0.5% and default interest of 12.216%.

The loan which has no grace period will be repaid monthly and should be fully serviced by 2029. Softening commodity prices, high royalties, unfavourable energy tariffs and unpredictable policy environment have hit hard the country’s platinum mining sector.

This month, the country’s major platinum miners — Zimplats and Mimosa — announced job cuts after warning that the current business environment was adversely affecting their operations.

Zimbabwe has the third-largest known platinum reserves in the world after South Africa and Russia.

The mineral is mainly used for manufacturing catalytic converters in the automotive industries. The devices are vital in reducing carbon emissions.

Independent economist Prosper Chitambara says the under-performance of exports due to depressed commodity prices would affect Zimbabwe’s ability to pay its foreign obligations.

“We are also expecting that agriculture is not going to do well as well. So that is going to affect our exports overall and ultimately our current account even the balance of payment support, so it is going to weaken our ability to be able to pay our foreign obligations, including the Afreximbank loan as well as other arrears,” Chitambara told The NewsHawks.

“This year is going to be a very challenging year on account of a number of external factors, in particular the El Niño-induced drought and also the softening of global commodity prices.”

According to Zimbabwe’s Public Debt Report, total public and publicly guaranteed (PPG) debt stood at US$17.7 billion, as at the end of September 2023, of which external debt amounted to US$12.7 billion (72%) and do[1]mestic debt of US$5.0 billion (28%).

“Government, in February 2023, secured a US$400 million loan from Afreximbank for budget support and the financing of trade-re[1]lated infrastructure,” the Public Debt Report reads.

“The US$400 million Afreximbank loan is repaid using 35 percent of Zimplats’ export proceeds, which are managed by RBZ.” The Chamber of Mines of Zimbabwe says the royalty for platinum, which went up by 180% from 2.5% to 7%, is impacting neg[1]atively on the viability of platinum projects. Platinum producers contend that the increase in thr platinum royalty resulted in a 5% average increase in overall production cost.

“The situation has been worsened by slowdown in PGMs prices. Rhodium price declined from around US$13 000/ounce in September last year compared to the current average of around US$4 000/ounce,” a report by the Chamber of Mines reads.

“Palladium prices also declined from US$2 200/ounce in September last year, to the current averages of around US$1 200/ounce. The platinum producers are operating at full capacity and, unlike other mineral sub-sectors, they have little scope to ramp up production to cover for revenue losses due to softening PGMs prices.

“Resultantly, the contribution of the platinum group metal miners to the economy has been declining over the last 12 months. Given the current situation and to restore viability, as well as maximise the contribution of the platinum industry to the economy, we appeal for a royalty of around 3%. The royalty can be reviewed in line with movements in platinum prices up to a maximum of 5%.”

While the Reserve Bank of Zimbabwe says mineral exports remained subdued during the quarter ending December 2023, weighed down by depressed global commodity prices, the apex bank said this would not spell doom on the industry.

“Despite the threats of declining revenues due to depressed commodity prices, platinum mining houses remain steadfast in their investments to support mine development, exploration and improvement in operational efficiency to sustain PGMs output,” says the central in in its quarterly update.

“Notable investments by platinum houses during the quarter under review included establishment of new concentrator plant, refurbishment of plants, construction of solar power plants, construction of furnaces and storage facilities.”

According to the World Platinum Investment Council, Zimbabwe is on track to ramping up output of the white metal to an all-time high of 502 kilo ounces (koz) following massive investment by one of the country’s top miners.

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Zim Central Bank says new currency will definitively gain in value

On an annual basis, broad money grew by 708,87 percent in December 2023, against prior year comparative, but new RBZ Governor Dr John Mushayavanhu says money supply will only grow in line with growth in reserves made up of precious metals, including gold and US dollar cash
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ZIMBABWE marked an epochal moment in its history when it introduced a new currency, Zimbabwe Gold (ZiG), on April 5, taking a giant step towards bringing a lasting solution to exchange rate volatility, which, for nearly half a decade, has driven inflation and made saving in the domestic unit difficult.

This is the third time Zimbabwe has switched currencies since scrapping the domestic unit in 2009, amid the ravages of inflation in a country that had gone through fundamental changes in its agricultural land ownership, was buckling under the weight of sanctions and was closed to sources of cheaper external funding.

In the realm of international trade, the dominance of major global currencies such as the US dollar, the euro and the yen has been undisputed for many years.

However, there is a growing recognition of the benefits associated with conducting trade using local currencies.

By bypassing the need for constant conversion into a foreign currency, trade in local units offers numerous advantages. They include enhanced economic stability, reduced dependence on foreign exchange and increased autonomy for any country.

As inflation continued to wreak havoc on Zimbabwe’s currency, the annual rate climbed to 55,3 percent from 46,7 percent in February 2024, reflecting the pass-through effects on prices, which track the movement in the exchange rate.

In light of the high inflation challenges emanating from exchange rate volatility, many observers have wondered how just the change in the national currency could turn the situation around.

But Zimbabwe’s monetary authorities expect the new currency and policy measures they are rolling out to restore confidence in the local unit and go a long way in fostering simplicity, credibility, certainty and predictability in the country’s monetary and financial system.

New Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu last week shared his perspectives on how ZiG and the monetary policy intervention he announced just over a week ago in the 2024 Monetary Policy Statement (MPS) will transform Zimbabwe’s financial affairs.

The country’s new currency will operate alongside several foreign units in the multi-currency regime, legislated to run until 2030, including the US dollar, the pound sterling, the euro, the South Africa rand and Botswana pula.

ZiG shall, the RBZ said, at all times be anchored and fully backed by a composite basket of reserves comprising foreign currency and precious metals (mainly gold) received by the apex bank as part of in-kind royalties and kept in its vaults.

Foreign currency balances will accumulate through market purchases from the 25 percent export surrender requirements, as well as the sale of some precious metals received as royalties.

What has changed?

Responding to questions during an interview with Zimpapers Television Network (ZTN)’s “Beyond the Dollar”, Dr Mushayavanhu said the basket of precious commodities, mainly gold, plus the foreign exchange holdings the bank has, would change the game.

“We are bringing in a new concept in the form of a new currency, which is backed by reserves. RTGS, bond notes were not backed by reserves. This is why they were behaving the way they were behaving.

“So, we decided we have to bring in a new currency, which has a new basis for exchange rate determination and I did explain in the Monetary Policy Statement that the exchange rate for the ZiG is going to be determined by the basket of commodities that is anchoring it.

“Over and above that, it is also going to be determined by the market.

“We had a situation, as I said earlier, RTGS, bond notes were not backed by anything, so we cannot link ZiG to the old currency; it’s a different currency altogether,” he said.

Dr Mushayavanhu said while the bond notes were at some point backed by a US$200 million facility from Afreximbank, the amount of local currency in circulation was exceeded, exposing the local currency to forces of depreciation.

As part of RBZ’s commitment to transparency under his stewardship, Dr Mushayavanhu said the bank opened its vault for all to see that the institution indeed had the gold to back the domestic currency.

“For the first time in the history of the bank, we opened the vault of the central bank for all to see what it is that we have and we did that in the presence of His Excellency, the President of Zimbabwe, and on that day we said we have 2,5 tonnes of gold, which are worth US$185 million as of that day (April 5, 2024) and we have US$100 million Nostro balances, making a total of US$285 million, backing ZiG worth US$80 million.

“Further to that, in the Monetary Policy Statement and Statutory Instrument 60 of 2024, that brought about ZiG, we have mentioned that at least once a year, we are going to be audited and the auditors must confirm how much gold we have, how much other precious metals we have and how much by way of Nostro balances we have to back ZiG, and that is going to be an ongoing process,” he said.

Dr Mushayavanhu pointed out that before even taking the trouble of bringing external auditors, as a show of transparency, the manner the central bank would conduct its business would go a long way in rebuilding the market’s confidence.

“Our behaviour, the way we manage things should convince the Zimbabwean public that the reserves are there. When there is more money in circulation, you feel it, (because there will not be too much money in circulation), and you are not going to see that happening.

“In fact, my fear is that the opposite will happen; we might end up having deflation and we may have to do something, otherwise . . . ,” Dr Mushayavanhu said.

On several occasions since taking over the reins at the RBZ, the Governor pledged his commitment to ensuring the bank strategically manages money supply growth through a disciplined culture, in sync with improved economic activity and increased reserves in the form of precious minerals (mainly gold) and foreign currency balances.

Under a market-determined exchange rate system, the bank will periodically intervene in the market, using foreign exchange reserves from the export surrender component, to maintain a balance between domestic and foreign currency liquidity so that the exchange rate stays stable and at the desired level appropriate to support sustainable economic activities.

The bank will also have other monetary policy instruments such as interest rates and open market operations at its disposal to keep the exchange rate in the desired direction.

“In our case, we have said any further increase in the amount of money in circulation can only happen if we have the reserves,” Dr Mushayavanhu said.

The central bank chief warned economic agents against disposing of their local currency holdings, saying the new unit would likely be in short supply soon, essentially as a result of measures in the MPS.

Dr Mushayavanhu said while it was his wish for all economic players to be disciplined, he had little power to force them to do so. However, he issued a warning against errant conduct, saying “the fundamentals of ZiG will force them” to behave in a disciplined manner.

“What do I mean by that? If anyone wants to bet against ZiG and sell it to the central bank, we will buy; we can buy all of it. We have enough reserves to buy it, all the ZiG in the market, but you will be aware that there are certain measures that we announced in the Monetary Policy Statement.

“We have agreed with the Treasury that come the June QPDs (quarterly payment dates), companies are going to be required to pay 50 percent of their QPD obligations in ZiG. So, they are going to have to look for ZiG and here is the math.

“The ZiG currently in circulation is equivalent to just under US$80 million.

“The Treasury, on a quarterly basis, collects plus or minus US$300 million equivalent. Fifty percent of that is US$150 million; there is not enough ZiG in the whole country to meet that 50 percent.

“So, ZiG is going to be valuable, whether you like it or not,” Dr Mashuyavanhu said in a tacit warning against careless disposal of a currency economic agents will need in bulk soon after.

The bank last week said it had both operational and instrument independence through its board of directors and Monetary Policy Committee (MPC).

Further, the bank’s board provides the necessary oversight while the MPC is empowered to formulate and prescribe policies independently.

The bank is also protected against interference by provisions of the RBZ Act.

Source: Sunday Mail

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Disputed penalty gives Man U draw at Bournemouth as CL qualification slips further away

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BOURNEMOUTH, England — Manchester United needed two penalty decisions to salvage a 2-2 draw at Bournemouth in the English Premier League on Saturday, although the point did little to boost its chances of Champions League soccer next season.

United was largely outplayed and trailed 2-1 when a shot by Kobbie Mainoo from outside the area was deflected onto the arm of Adam Smith. Referee Tony Harrington pointed to the spot even though the ball was traveling away from the goal and the Bournemouth player had little time to react.

Bruno Fernandes converted the 65th-minute penalty for his second goal of the game to secure a point for United, but it was another unconvincing performance from Erik ten Hag’s side that is unlikely to quell speculation about the manager’s future.

Harrington initially awarded Bournemouth an injury-time penalty when Ryan Christie collided with United defender Willy Kambwala as he was running into the box, but a VAR review ruled the foul happened just outside the area.

United still has a slim chance of securing Champions League qualification but couldn’t take full advantage of fifth-placed Tottenham’s loss at Newcastle earlier. United is 10 points behind fourth-placed Aston Villa and Tottenham with six rounds to go. The Champions League’s new format next season means five teams from the Premier League could qualify for the competition.

Man City earns big win over Luton despite rotating squad. Newcastle routs Tottenham at home again
Dominic Solanke gave Bournemouth the lead after shrugging off Kambwala to break into the area and then slotting a low shot past André Onana.

Fernandes equalized by volleying in his second effort from close range but it took only Bournemouth five more minutes to restore its lead as Justin Kluivert was allowed to waltz into the United area unchallenged and beat Onana at his near post.

Milos Kerkez had a great chance to make it 3-1 before halftime but headed against the crossbar, and United was then on the right side of the two penalty decisions in the second half.

Bournemouth was in 12th place, safe from relegation but seemingly with little chance of earning European qualification.

Source: AP

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Man City earns big win over Luton despite rotating squad. Newcastle routs Tottenham at home again

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LONDON — With some of Manchester City’s regular starters rested, Jeremy Doku and Mateo Kovacic made sure the defending champion didn’t miss a beat in the English Premier League title race.

Kovacic and Doku scored in the second half as Man City pulled away for a comfortable 5-1 win over relegation-threatened Luton on Saturday despite manager Pep Guardiola perhaps having one eye on Wednesday’s game against Real Madrid.

Gaurdiola rested a handful of players — including key midfielder Rodri — but saw the replacements fill in convincingly. Kovacic made it 2-0 in the 51st with a thunderous strike from the edge of the area, while Doku earned the penalty that led to the third goal, scored the fourth himself and assisted on the fifth.

“You cannot play the same people (in every game), it is impossible,” Guardiola said. “Everyone has permission to score and it’s so important.”

The win lifted City into first place, two points ahead of title rivals Arsenal and Liverpool, who both play on Sunday.

It was also a perfect preparation for Madrid’s visit for the second leg of their Champions League quarterfinal, after a 3-3 draw in Spain this week. Kevin de Bruyne missed that game with an illness but was back in the starting lineup against Luton, as was goalkeeper Ederson.

And with the three-way title race in the league looking set to go down to the wire, Guardiola knows this was just one of many must-win games the team will face before the end of the season.

“Try and extend (the title race) one more week, one more week, one more week,” Guardiola said. “Today we will sleep top of the league, see tomorrow, and we know what we have to do.”


For the second year in a row, Newcastle handed Tottenham quite the drubbing at St. James’ Park.

After beating Spurs 6-1 at home last April, Newcastle routed Ange Postecoglou’s team 4-0 to damage the visitors’ hopes of a top-four finish. Just like last year, Alexander Isak netted two of the goals to take his season tally to 17 in the league and 21 overall this season.

Anthony Gordon made it 2-0 just 95 seconds after Isak opened the scoring, and added two assists.

“Playing football is really fun at the moment, especially when we have days like this,” Isak said.

It wasn’t a fun day for Tottenham defender Micky van de Ven, though. The center back was partially at fault for the first two goals as he slipped both times and let Isak and Gordon go past him inside the area.

The big loss meant Tottenham dropped below Aston Villa into fifth, behind on goal difference.

Newcastle was sixth, 10 points behind Villa and Tottenham.


Two penalty decisions helped Manchester United earn a 2-2 draw at Bournemouth, although any chance of qualifying for the Champions League seems to be quickly slipping away.

Tottenham’s loss gave United a chance to cut the gap but Erik ten Hag’s team was 10 points behind fourth place with six games to go, after four league matches without a win.

“We know when you come into the final stage of the season, that is not enough,” Ten Hag said. “But the truth is, today we didn’t deserve more.”

Indeed, this was another performance that suggested this United was still far, far away from challenging Europe’s elite.

Only a soft penalty in the 65th minute helped Bruno Fernandes equalize with his second goal of the game. Referee Tony Harrington pointed to the spot when a deflected shot hit the arm of Adam Smith in the area.

Harrington then awarded Bournemouth an injury-time penalty when Ryan Christie collided with United defender Willy Kambwala as he was running into the box, but it was overturned after VAR ruled the foul happened just outside the area.


The relegation battle tightened as Nottingham Forest and Burnley couldn’t take full advantage of Luton’s loss, with both settling for a draw.

Forest drew with Wolves 2-2 despite Morgan Gibbs-White scoring against his former club after being set up by a corner from U.S. international Gio Reyna, who made his first start for the club. Matheus Cunha scored twice for Wolves, including a 62nd-minute equalizer.

A mistake by goalkeeper Aro Muric cost Burnley in a 1-1 draw with Brighton. Josh Brownhill capitalized on a poor back pass by Carlos Baleba in the 74th minute to give Burnley the lead but Muric then let a routine pass from Sander Berge slip in under his foot.

That left Burnley still six points from safety in 19th place while Forest was 17th, one point above Luton.

Last-placed Sheffield United inched ever closer to relegation after losing 2-0 to Brentford, which ended a nine-game winless skid.

Brentford sat seven points above Luton with five games remaining.

Source: AP

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