Mining sector needs US$7bn
ZIMBABWE’s mining companies need over US$7 billion to recapitalise their operations over the next five years to raise production and reach optimum capacity.
It is expected that when fully capitalised, the industry will generate $18 billion from exports annually and create hundreds of thousands of jobs in the process.
According to a State of the Mining Industry latest survey report, the sector is encountering difficulties in raising requisite capital to ramp up production, challenges the new Government is working flat-out to address.
Zimbabwe has 60 mineral occurrences, according to official Government reports, the major ones being diamond, platinum, gold, nickel and lately lithium, among others, that can be fully exploited for quick economic turnaround.
The Chamber of Mines of Zimbabwe said the sector, which has been devoid of meaningful investment over the past two decades, needs the fresh capital investment to ensure that positive growth and viability is maintained.
Government has singled out the mining and agriculture sectors as keys to future economic development for the country. To ensure maximum benefits, value addition before exporting must be prioritised.
The mining sector is also expected to increase its contribution to the country’s total export earnings to above 69 percent from 60 percent in 2016 and 69 percent in 2017 and its contribution to economic growth will anchor discussions during the Mining Investment Conference.
Reads part of the report: “In 2017 State of Mining Industry Survey, the mining industry requires in excess of US$7 billion in investment in capital for sustenance and the growth of the industry. It is important to realise the requirement for investment in infrastructure that supports growth in mining.”
It is believed that US$2 billion will be channelled towards gold production with platinum taking US$2,2 billion, ferro chrome US$400 million, nickel US$350 million, coal US$400 million and diamonds US$500 million.
As such, most minerals are expected to record increased output in 2018, compared to 2017.
The report revealed that production could have been higher with the provision of better power supplies, funding and reliable equipment.
“In 2018, the mining sector is expected to record an output boom, with survey findings showing that 90 percent of respondents are planning to increase output by more than 10 percent, catapulted by increased capitalisation.”
The future looks very bright as the mining houses move to reduce costs of production.
It will also move towards aggressive value chain optimisation to reduce excessive use of consumables.
Due to a rebound in commodity prices, coal, gold, chrome, iron ore, nickel, and diamonds are expected to be the main attractions this year.
Meanwhile, Mines and Mining Development Minister Winston Chitando told The Sunday Mail Business that a stable operating environment has provided better opportunities for planning and execution of mining 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,” he said.
“The country has immense potential and is under-explored. Zimbabwe has the second largest known deposits of platinum, quality coal, gold, chrome, and diamonds,” Minister Chitando said.
He said there are efforts to improve the ease of doing business and render the mining sector in Zimbabwe internationally competitive.
This comes at a time when President Mnangagwa is spearheading engagements with the international community to improve relations.
Such improved relations act as a base for attracting investment into the economy.
He said efforts by the Government are being complimented at sectorial level.
He said given its abundant mineral resources, the mining sector has massive potential to contribute to the much-needed sustainable economic growth.
The country is blessed with a large amount of minerals, making it an investor’s paradise.
The country has more than 60 minerals and research shows that Zimbabwe has six out of 10 of the world’s most valuable minerals.
This massive resource base creates lucrative opportunities for investors in exploration, mining and beneficiation.
The new Government has raised hopes for investors in the mining sector due to a number of pro-business policies it has crafted.
Given the open door policy and realignment of the Indigenisation and Economic Empowerment Policy, many investors have realised opportunities in the mining sector.
The new indigenisation policy now allows investors to hold more than 49 percent stake in mining most minerals, except for diamonds and platinum – where the 51/ 49 percent empowerment policy still applies.
To check business sentiment about the prospects of the mining sector and economy in general in the next 12 months, Minister Chitando said the mining industry’s representatives, Chamber of Mines of Zimbabwe (CoMZ), uses the mining business confidence index (MBCI).
The index is interpreted on a scale of -100 to +100, with the lowest score representing the least level of confidence and the biggest score representing the highest level of confidence.
The perception on political risk has improved in view of the new Government. Most investors are expressing confidence on the new political dispensation.
Economist Mr Luckson Zembe said: “President Mnangagwa’s has raised hopes not only in the mining sector but all sectors of the economy due to his proactive approach to business as he continues to assure the investors of safety of their property and investment.
“Such approach to business will certainly raise confidence in the economy as a whole.”
Given the conditions laid down, the country’s mining sector is likely to surpass the set target of US$3,5 billion mining export earnings this year.
On various occasions, President Mnangagwa has said the country is open to investment and is willing to do all it takes to improve the economy.