Mining industry bosses foresee difficult year ahead
ZIMBABWE’S mining industry executives expect a largely difficult operating environment in 2022, which they see being characterised by a number of policy impediments, low investments and key infrastructure bottlenecks among the key factors.
The sentiments of the captains of the mining industry were measured on the Mining Business Confidence Index (MBCI), which has a calibration spanning a continuum of -100 and +100, with the lowest score depicting less confidence and the highest showing strong confidence.
According to a survey report, as was the case last year, sentiment on variables that include investment competitiveness, access to capital, access to foreign currency, mining policy environment and country risk remained negative.
The industry executives, however, project mineral output to increase substantially, largely driven by external factors that include strong demand backed by higher global metal prices and increased capacity utilisation.
The executives of the mining houses are confident that mineral output would grow in 2022 and the majority of the respondents are planning to increase individual production next year by between 3 percent and 100 percent. Approximately 58 percent of the mining houses surveyed indicated that they intended to increase mineral production by up to 40 percent while 40 percent of respondents expect to ramp up output by more than 40 percent.
Mining is strategic to Zimbabwe’s economy as it generates more than three quarters of the country’s total exports. The Government intends to grow the sector from a US$2,7 billion industry in 2017 to a US$12 billion industry by 2023.
Zimbabwe is home to more that 60 exploitable minerals, but currently commercially extracts about 10 including gold, platinum group metals (PGMs), chrome, nickel, diamonds, coal, lithium and nickel.
Notably, half the surveyed mining gurus believe that Zimbabwe’s economy would recover or grow in 2022 while the balance are of the opinion that the economy would either remain flat or, worse, contract in the coming year.
The survey sponsored by the Chamber of Mines of Zimbabwe (CoMZ) showed that the mining industry, though bullish about output and global metal prices and growth in capacity utilisation, is less confident about new investments, infrastructure, access to forex, energy provision and access to and cost of capital.
“Most respondents indicated that they are facing difficulties in raising external capital to fund their projects, with some reporting that they had put on hold some of their projects due to capital shortages,” the report says.
Zimbabwe’s mining houses also believe that the operating environment next year would also be negatively impacted by the fiscal regime and mining policy environment as well as country risk to remain a major stumbling block.
“As was the case for 2021, mining executives are less confident about the prospects of a competitive investment environment in 2022, with 70 percent of respondents expecting the investment environment to remain depressed as in 2021,” CoMZ said in its outlook report released this week.
The industry also believes Treasury’s fiscal regime would remain sub-optimal in 2022 with key issues highlighted as undermining viability including royalty beneficiation taxes and misaligned rural district council charges.
Access to forex, the miners said, was expected to continue to be a factor in light of the reduced foreign currency retention levels for exports, loss of value from RBZ exports surrendered portion, disqualification of mines from the auction market and delays in payments for gold deliveries.
“Almost all respondents indicated that the foreign exchange retention at 60 percent was inadequate to meet their requirements. They indicated that the retentions were under pressure from requirements to pay royalty, electricity bills, taxes and some statutory obligations in foreign currency as well as widespread preference for US dollar by suppliers,” CoMZ said. ◆ Read full article at www.business
weekly.co.zw.