Teething challenges weigh down on mining US$12bn milestone
ZIMBABWE mining industry’s full potential is being weighed down by a host of challenges including foreign currency shortfalls and a fragile power supply system, the Chamber of Mines of Zimbabwe has said.
The mining industry is the country’s major economic mainstay through which the Government pins hopes on for the attainment of an upper middle-income society by 2030.
It is against this background that the Government in 2019 launched a US$12 billion mining economy by the end of this year to add impetus towards the national vision.
Last year, the mining sector improved by 10 percent with the gold sector recording an impressive growth of 18,3 percent underpinned by strong performance across all key minerals hinged on firm commodity prices.
Official figures from the Chamber of Mines of Zimbabwe (CoMZ) indicate that in 2022, the mining industry generated a record of US$5,6 billion in mineral exports representing 80 percent of national exports.
Speaking at the 2023 second quarter gold mobilisation workshop in Harare on Wednesday, CoMZ technical affairs manager, David Matyanga, said the mining industry continues to face challenges that have resulted in the growth of the sector not being above what will be recorded this year.
“So, the challenges are foreign currency shortfalls, a fragile power supply sector, capital shortages and a high cost structure in the mining industry.
“As a result of these challenges the competitiveness of the gold mining industry and indeed that of the mining industry as a whole has been dented,” he said.
The mining industry needs forex to meet their operational requirements such as importing mining consumables and spares for plant and equipment while power is also vital in running both surface and underground machinery.
As of yesterday, the Zimbabwe Power Company (ZPC) indicated that the country was generating 853MW against a national demand of 2 200MW at peak.
“In resolving these challenges, we believe that the mining industry will record significant growth and the gold industry in particular will record significant growth beyond what it has largely done in 2022,” said Matyanga.
Last year, he said official figures from Zimbabwe’s sole buyer of the yellow metal produced in the country, Fidelity Gold Refineries, indicate that a total of 37,3 tonnes were delivered showing an 18,3 percent spike from the 2021 figures.
In the outlook, Matyanga said the mining industry is projected to grow by 10,4 percent in 2023 and that growth would be hinged on the ongoing expansion projects and investments in the mining sector as well as enhanced capacity utilisation across the industry.
Average capacity utilisation in the mining industry for 2023 is projected at 84 percent compared to 81 percent in 2021 while mineral export earnings for 2026 are expected to be above US$6 billion.
“As a Chamber of Mines we believe that the gold mobilisation exercise contributed significantly to the achievement of these results. In terms of the strategies to enhance gold output which was the major issue, we believe that the development of a competitive operating environment for the gold industry is key as it guarantees viability of the sector.
“Whenever viability is guaranteed, there is growth and development. The second strategy is to address energy infrastructure challenges and to sustain operations and growth in the gold sector and other sectors within the mining industry,” he said.
Matyanga underscored the need to address foreign exchange shortfalls pointing out that presently the mining industry retains 75 percent of its foreign currency earnings and this CoMZ believes is insufficient for the industry to address the challenges it is reeling under.
“We believe that the widening disparity between the official exchange rate and the parallel market rate is enhancing the loss of value that exporters are experiencing when they surrender their 25 percent of the export earnings to the Reserve Bank,” said Matyanga.