Mining sector low hanging fruits: Key takeaways from Mine Entra
ZIMBABWE’S mining sector is registering unprecedented growth, for the first time in history, with earnings jumping to US$5,2 billion in 2021 from about US$2,9 billion in 2017, as positive gains continue to be realised from the Government’s economic reform agenda. In 2019, Zimbabwe set out on an ambitious drive to more than quadruple the mining sector revenue by hauling minerals worth US$12 billion by 2023. Launching the US$12 billion mining industry roadmap, President Mnangagwa said gold is expected to contribute US$4 billion, platinum US$3 billion while chrome, iron, steel, diamonds and coal will contribute US$1 billion each. Lithium is expected to contribute US$500 million while other minerals contribute US$1,5 billion.
Under this drive, the Government expects that by 2030, the mining industry will be generating upwards of US$20 billion. During the recent 25th edition of the Mining, Engineering and Transport (Mine Entra) at the Zimbabwe International Exhibition Centre in Bulawayo, which bounced back after two years of absence due to the Covid19 pandemic, official statistics indicated that the mining sector is poised to clock US$8 billion in earnings this year, having already surpassed US$6 billion last month.
Running under the theme: “Explore, Extract, Expand — Towards Sustainable Mining Value Chains,” the premier expo attracted about 202 exhibitors of which 33 were participating for the first time. Three foreign nations exhibited and these are China, South Africa and the United Kingdom.
Over 2 800 business visitors also participated in the Mine Entra Expo which facilitated several focused dialogue sessions and innovative platforms that cater for specific segments within the mining industry.
With clear signs that the US$12 billion mining sector target is achievable by 2023, there is need to address some of the few low hanging fruits, with one being to embrace modern technologies to scale up capacity and business competencies in line with global best practice.
Rapid advances in technological innovation, including through automation, digitization, and electrification, are having a fundamental impact on the mining sector. A few technologies reshaping the sector include autonomous vehicles, automated drilling and tunnel boring systems, drones and smart sensors among others.
President Mnangagwa who officially opened the 25th edition of Mine Entra Conference, rallied the mining industry players to ramp up production and embrace modern technologies to scale up capacity and business competencies in line with global best practice.
He said the stage was now set for the extractive sector to drive modernisation of the country’s economy through backward and forward linkages that stimulate localised production of the supply chain.
Since the advent of the Second Republic, President Mnangagwa said he has had the privilege to commission various signature mining projects in the areas of exploration, extraction and expansion.
These include the expansion of Zimplats and Unki Mines; the re-opening of Eureka Gold Mine; Shamva Gold Mine; Rio-Zim Cam and Motor Biox Gold Plant Expansion Project; Radnor Mine; and most recently, the Sinomine Bikita Minerals Lithium project, among others.
“Many more will be coming on stream between the next 12 to 24 months. To date, concrete initiatives are in place to legislate and issue the related incentives to further grow the industry. Equally, my Administration remains emphatic in calls for the development of capabilities that propel value addition and beneficiation, riding on ICT driven processes,” said President Mnangagwa.
“It is indeed encouraging that as of last year, and despite the negative effects of the Covid19 pandemic, the mining sector performance amounted to US$5,2 billion from US$2,9 billion in 2017. Well done to the sector stakeholders for a commendable performance.”
“The importance of natural resources and in particular minerals towards driving sustainable socio-economic development cannot be over emphasised. The US$12 billion target is, therefore, within reach and set to see the realisation of a diversified, integrated, modern and industrialised economy synonymous with a prosperous society.”
Despite unforeseen shocks in the mining sector some induced by the Covid-19 pandemic, Mines and Mining Development Minister, Winston Chitando, remains certain, judging by the continued momentum across key sub-sectors, that the country’s mining sector remains on course to generate US$12 billion revenue by the year 2023.
The mining industry is one of the country’s economic mainstays with the sector contributing about 70 percent of the country’s foreign currency earnings. Time and again, as well as at the Mine Entra, Minister Chitando has said the US$12 billion mining industry by 2023 will be achieved.
“The mining sector remains well on course to generate US$12 billion revenue by the year 2023 thereby contributing significantly towards the attainment of the national vision of Zimbabwe becoming a Prosperous Upper Middle-Income Economy by 2030. We want to take this opportunity to applaud the private sector for working closely with the Government for the journey walked so far in the Mining Sector. A US$12 billion mining industry by 2023 will be achieved.”
He said the mining industry continues to witness significant growth due to major investments in some of the key low hanging fruits such as exploration, value addition and beneficiation, the opening of new mines, the resuscitation of closed mines, and the expansion of existing mines across the various mineral subsectors.
Minister Chitando said the mining sector was expected to drive the country’s economic growth towards an upper middle-income economy by the year 2030 as enshrined in the National Development Strategy 1 (NDS1).
“The main minerals that are going to lead growth of the mining sector include gold, platinum group metals (PGMs), ferrochrome, steel, nickel, diamonds, lithium, coal and hydrocarbons. There is need for the mining industry to refocus its strategies and work hard towards ensuring an accelerated and sustained growth of the sector which ultimately leads the country to fully benefit from our mineral resources.”
Among other key low hanging fruits, the supply of the mining sector consumables needs attention. Statistics show that local mines have turned to foreign suppliers for 80 percent of their consumables with only 20 percent of their budgets being spent on the domestic suppliers.
At stake is US$2,4 billion in potential opportunities for local suppliers, which is now being transmitted offshore, stated Chamber of Mines of Zimbabwe (CoMZ) president Mr Collin Chibafa during the Mine Entra.
He said: “We are exporting jobs, scarce foreign currency that we do not have, our wealth and this is an unattainable situation. So, my advice to my colleagues who are suppliers to the mining sector, miners are price takers, our customers determine the price of the goods that we sell, therefore we cannot afford the more than 100 percent increase in prices in US dollars terms that we have seen in the recent past.”
Mr Chibafa said there was need to change the business model and focus on low margin: high volume.
“At the moment there is a tendency to focus on high margin but few goods being sold. We should not be middlemen, it’s cheaper for a mining company to import themselves than for you (supplies) to import and sell to a local mining company. Let us seek to manufacture locally, be price competitive and build Zimbabwe by making things ourselves.”
One other key low hanging fruit is the formalising of small-scale and artisanal miners as informal mining in Zimbabwe is believed to be one of the biggest contributors to minerals being smuggled out of the country, and that is a cause for concern which should be addressed as a matter of urgency.
According to official statistics, Zimbabwe is estimated to be losing at least US$100 million worth of gold every month from smuggling.
Zimbabwe Miners Federation (ZMF), which represents small-scale and artisanal miners is on record saying 84 percent of small and artisanal miners are not registered.
“Now when you talk about 1,5 million people these are the people that are still on the illegal side only 40 000 people are registered in terms of the Mines and Minerals Act, so we are look at plus or minus 82 percent unregistered miners. We have been talking to Government so that they formalise these people,” said ZMF chief executive officer (CEO) Mr Wellington Takavarasha in a recent interview.
He said was a need to formalise small and artisanal miners, turn their operations into formal practices for it to benefit more from mainstream market and Government initiatives, while at the same time contributing to curbing mineral leakages.