AfDB projects 4,6pc Zim growth Zimplats minerals output down
THE African Development Bank ( AfDB) has given the most optimistic forecast thus far of economic rebound in Zimbabwe this year after the lender projected the domestic economy to grow by 4,6 percent.
The regional banking group, however, noted that the anticipated economic expansion, after it projected contraction of 12,8 percent for 2019, will depend on the correct policy interventions being instituted for macro- economic stability and recovery.
Finance and Economic Development Minister Mthuli Ncube projected in his 2020 national budget that the economy will rebound by 3 percent this year from drought and cyclones ( Idai and Kenneth) induced decline of 6,5 in 2019.
The World Bank and International Monetary Fund have also projected growth for Zimbabwe, although revised down from initial forecast of 3,8 percent to 2,7 percent this year, assuming better rains, improved power supply and higher commodity prices.
AfDB believes Zimbabwe’s economy may rebound with GDP growth of 4,6 percent in 2020 and 5,6 percent in 2021 if appropriate corrective measures are taken especially to restore macro- economic stability.
Recovery in agriculture, mining and tourism sectors will be backed by increased public and private investments. Dialogue with civil society and political actors is also expected to result in a social contract that drives recovery.
However, agriculture, which is expected to improve on account of better rains this season, might still be affected by erratic and below normal rainfall being received in some areas, while seed producers also say seed sales this year declined.
The multi- lateral African lender said agriculture shrank about 15,8 percent in 2019 due to cyclone Idai, prolonged drought, livestock diseases, and currency shortages reducing the availability of inputs.
“Vast natural resources, fairly good public infrastructure and a skilled labour force give Zimbabwe an opportunity to join supply chains in Africa and increase trade in the African Continental Free Trade Area,” AfDB said.
AfDB said headwinds such as high and unsustainable debt and fiscal deficits, cash shortages, limited foreign exchange and persistent shortages of essential goods are hampering meaningful economic recovery.
And as the economy saunters under the weight of a litany of constraints, Government has faced extreme challenges to allocate enough resources for development spending and social service provision continue to be constrained.
AfDB said as the Zimbabwe dollar depreciates, local creditors lose the value of both their loans and payments on goods and services supplied to Government and external debt service becomes more expensive.
The bank forecast Zimbabwe’s GDP to have contracted by 12,8 percent in 2019 due to poor performance in mining, tourism, and agriculture. Foreign currency and electricity shortages affected mining and tourism.
Despite a global mineral price recovery, production in Zimbabwe dropped below 2018 levels. Austerity measures through the Transitional Stabilisation Program 2018– 20 and attendant monetary reforms constricted economic
RESOURCES group, Zimplats Holdings Limited’s six elements (6E) production for the quarter to December 31, 2019 totalled 115 908 ounces, which was 18 percent below same period in the prior year.
The 6E comprise of platinum, palladium, gold, rhodium, ruthenium and iridium. Quarter on quarter, 6E production fell 23 percent.
“6E metal production in final product decreased by 23 percent from the previous quarter mainly due to an increase in concentrate stocks and the build-up of inventory in the furnace on start-up after the 122-day major rebuild shutdown.
“The furnace inventory build-up is expected to reverse during the financial year and it is anticipated that all the concentrates stock-piled will be smelted before the end of the year,” said Zimplats in a report for the quarter under review.
Platinum was the biggest contributor to total 6E production, although it fell 19 percent to 53 107 ounces from 65 605 ounces in the same period in the prior year.
At 45 367 ounces, palladium was 24 percent before the previous quarter and 16 percent below same period last year.
Gold was also on the downside, recording 6 705 ounces, which represented a 14 percent decline from same period in 2018 and 22 percent slower quarter on quarter. The other 6E metals, rhodium, ruthenium and iridium all recorded declines in production both year on year and compared to the previous quarter.
Silver had a fine run with a 25 percent jump to 12 836 ounces from 10 292 ounces in the previous quarter and 11 percent above same period in the prior year.
Quarter on quarter, nickel, copper and cobalt fell 33 percent, 40 percent and 72 percent respectively.
Total ore mined increased marginally from the previous quarter. At 1 803 tonnes, ore mined for the quarter was 8 percent higher than 1 673 tonnes achieved in the quarter ended 31 December 2018.
Zimplats attributed this growth to improved fleet productivity and additional tonnage from Mupani Mine, which is still under development.
Tonnes milled went down 2 percent from the previous quarter due to lower running time. Running time for the quarter was constrained due to the planned mill reline shutdown at the Selous Metallurgical Complex concentrator.
On the financial side, total operating cash cost worsened 5 percent to US$93 million from US$88 million in the previous quarter.
Zimplats said: “Costs for the previous quarter were low as the furnace was down on its major rebuild.”
Operating cash costs per 6E ounce increased by 30 percent from the previous quarter due to the 23 percent decrease in 6E ounces produced.
Despite the obtaining challenging operating environment, mining firms are expected to stand the heat on the back of their foreign currency exposure as well as other export oriented firms.
One of the main challenges affecting the economy is inflation, poor energy supplies as well as limited access to foreign currency for companies to retool, procure essential raw materials or meet their foreign obligations.