. . . as industry increases capital requirements

THE mining sector has increased its capital requirements by 53 percent to US$392 million from US$211 million in a bid to ramp up production and sustain operations.

The move come at a time when the mining sector is pushing for increased production and exports.

Mining sector’s revenues are consumed by high costs associated with mineral production, therefore high capital requirements are required to improve productivity.

According to Chamber of Mines of Zimbabwe 2017 State of the mining industry survey report, “Mining players faced difficulties in raising capital for both sustenance and ramp-up production.

“However, the mining industry injected US$211 million in 2017 for both sustenance and ramp-up (but this) was not adequate to service the whole sector. There’s need to increase the capital requirements to improve productivity.

“To improve their operations, the industry requires around US$392 million in 2018 to sustain operations and improve production,” reads the report in part.

The sector needs the capital to ensure that positive growth and viability is maintained in the mining sector.

Most minerals are expected to record increased volumes of production after good performances in the past two seasons due to strengthening international commodity prices.

Chamber of Mines said production could have been higher with the provision of better power supplies and funding.

“The future looks very bright and mining will continue to be prominent. Coal, gold, chrome, iron ore, nickel, and diamonds are expected to be the main attractions this year.

The new dispensation had provided better opportunities for planning and execution of projects.

“Investor interest is still high as evidenced by the number of business enquiries for investment opportunities. Supplier-miner relations have improved considerably with some credit being availed to producers,” CMoZ said.

Gold and platinum, which are the highest revenue and export producers, require the biggest chunks of capital to ramp up production.

According to the Chamber of Mines, it is estimated that to achieve self-sufficiency in electricity, about US$10 billion may be required for the various electricity generating projects.

The country has immense potential and is under-explored as Zimbabwe has the second largest known deposit of platinum, quality coal, gold, chrome and diamonds, but the lack of funding has affected production in the country.

Zimbabwe’s mining sector has been trailing behind the rest of the world in terms of mineral exploration and development and has lost out on major commodity booms enjoyed elsewhere, mainly as a result of the “lost decade” between 1998 to 2009.

The mining houses have not been able to sustain increased production even in cases where they have had limited access to lines of credit in support of recapitalisation.

The industry remains fragile notwithstanding output growth, still have a high-cost structure compared to other mining jurisdictions. The operating costs are characterised by a high electricity tariff, expensive funding and sub-optimal fiscal charges.