Murowa Diamond mine production hit by continued power cuts

ZIMBABWE’S Murowa Diamond Mine has recorded a 40-percent decline in production in 2007, due to frequent power cuts, equipment failures and a delayed expansion programme due to uncertainty over new laws on mine ownership in the country.
 
The mine, which is 78-percent owned by London-based mining firm Rio Tinto Plc, produced 145,000 carats in 2007, compared to 240,000 carats in the previous year, the company said in a statement to shareholders yesterday.
 
While a decline in the grade of diamonds had been expected, the company said it had not anticipated the extensive impact of electricity outages, which have been increasingly common in the economically devastated southern African nation.
 
State power utility ZESA has been unable to guarantee electricity to residents and industry.
 
"Besides the anticipated decrease in grade with depth and the delay in the implementation of the expansion project, production was adversely affected by ZESA power outages and contractor mining fleet breakdowns due to lack of spares," the statement said.
 
A number of miners, including Rio Tinto Zimbabwe, entered a deal late in 2007 to import power directly from Mozambique to overcome the electricity crisis.

They pay for their supplies in foreign currency.
 
Rio Tinto has said it intends to spend US$200 million to raise Murowa's production, but it wanted assurances the investment will be safe amid plans by President Robert Mugabe's government to place the control of all mines in the hands of indigenous Zimbabweans.
 
As part of moves to indigenize the mining sector, the government introduced a bill to change the ownership of foreign-owned firms last year.
 
Rio Tinto Zimbabwe chairman, Eric Kahari warned that Murowa could start winding down in 2009 without the expansion.
 
Rio Tinto, Anglo Platinum the world's largest platinum miner, Implats and Aquarius Platinum are among the major foreign mining firms with interests in Zimbabwe.
 
The mining sector has overtaken agriculture as the largest employer in Zimbabwe, accounting for about 4 percent of gross domestic product and contributing over 40 percent of all foreign currency inflows into the country.