The ManicaPost
Rumbidzayi Zinyuke Syndication Writer
The mining industry, which has sustained the Zimbabwean economy for almost a decade now, has shown resilience despite depressed mineral prices that characterised the better part of 2016.
The industry remains one of the major driving forces behind the anticipated economic turnaround in 2017.
According to Finance and Economic Development Minister Patrick Chinamasa’s 2017 National Budget statement, the economy should register a moderate GDP growth of 1,7 percent on the back of improved international commodity prices.
While prices of most commodities have been down in the past 10 months, gold, platinum, chrome and nickel registered a modest output growth in that period.
It is on this background that the Budget projected a growth of 0.9 percent in 2017.
While this growth is significantly lower than the high growth rates that have been registered in the mining industry before (9 percent in 2012 and 10,1 percent in 2013), it is an improvement from the -3,4 percent registered in 2014 and 0,4 percent in 2015, when global prices reached all-time lows.
It, however, is a drop from the 6,9 percent growth projected for 2016.
The Zimbabwe Chamber of Mines believe that the 2016 mining industry growth will be anchored on increased mineral output in platinum (15 percent), palladium (16 percent), gold (10 percent) and nickel (10 percent).
The State of the Mining Industry Report released recently shows that the increased output could be a result of a bump in the sector capacity utilisation.
“Average capacity utilisation for the mining sector increased from 60 percent in 2015, to 64 percent in 2016.
Platinum sector continues to operate at full capacity, while gold recorded an increase to 79 percent, from 77 percent in 2015,” the report said.
However, declines in capacity utilisation levels were recorded in respect of coal, which went down from 50 percent to 30 percent as well as nickel which dropped from 55 percent to 41 percent.
The industry has also registered growth in the small-scale and artisanal sub-sector whose contribution to overall production, especially in gold, has been increasing.
In his State of the Nation Address, President Robert Mugabe expressed his pleasure in the improvements registered in the mining sector in 2016, of note, the increased gold production by artisanal miners who benefitted from a US$100 million support facility for the sector.
Small-scale minerals have also been noted as the major contributor to the diversification of Zimbabwe’s mineral production base as they have taken to production of minerals whose production have become insignificant or totally stopped. These include minerals like antimony, barytes, bauxite, iron pyrite, kyanite, talc, agate, amethyst, tourmaline among others.
It is important to note that despite being endowed with more than 40 minerals, 90 percent of Zimbabwe’s value of mineral output was accounted for by only five key minerals in 2016.
While the future for the mining sector is still brighter than other sectors of the economy, there are still many challenges that interfere with production and ultimately output.
The cost of power is one of them.
The Chamber of Mines says that miners, especially in the gold sector, have indicated that the current tariff is too high and should be reviewed downwards.
There seems to be a general consensus among miners that electricity tariffs should be aligned to regional benchmarks.
With the current tariff of about US$0,12/KWh and anticipated increased demand for electricity to 140 MW in 2017, the industry could be faced with more challenges.
And the situation might not get any better if the local electricity authority is granted permission to increase tariffs to cater for the cost of importing electricity.
Despite all these challenges, the overall Mining Business Confidence index for 2017, though negative, has improved from last year at -14, compared to -37.9 recorded for 2016.
The industry needs to also pool in investments of over $3 billion if it is to keep registering growth.
And the enactment of the amendments to the Mines and Minerals Act and the on-going review of special mining grants will ensure increased performance of the industry in the coming years. — Zimpapers Syndication.
