Golden Sibanda recently in Victoria Falls
THE Chamber of Mines of Zimbabwe (CoMZ) has projected the mining sector to grow by 10 percent this year, on the back of an 8,5 percent expansion last year, driven by improved mineral production and price recovery on global markets across most minerals.
Mining is a strategic sector for Zimbabwe, accounting for about 60 percent of the country’s foreign currency earnings.
Zimbabwe is targeting $3,7 billion from mineral exports this year.
The mining sector accounts for between 12 and 16 percent of the country’s gross domestic product (GDP) of about $16 billion and is primed to anchor the country’s short-term to medium-term growth.
CoMZ president Batirai Manhando told delegates attending the 79th edition of the chamber’s annual general meeting in Victoria Falls last week that 10 out of 14 minerals recorded increases in volumes in the first quarter this year over the same period last year.
The chamber’s AGM was held under the theme “Unlock Value, Maximise Benefits, Growth Perspectives for the Zimbabwe Mineral Resources Sector”.
The event was oversubscribed given high renewed interest by local and foreign investors following nearly two decades of isolation of the country by the global community.
Amid the growing confidence in the Zimbabwean mining industry, Mr Manhando said that most mining entities had ramped up production.
“Notable increases are in gold up 53 percent, coal 46 percent, nickel 18 percent, and cobalt 13 percent,” he said.
In 2017 the mining industry grew by 8,5 percent from 8,2 percent a year earlier driven by price recovery in gold, nickel and chrome,” Mr Manhando said.
Average capacity utilisation in the mining industry in 2017 increased to 71 percent from 64 percent in 2016 with notable growth registered in chrome, which grew from 31 to 80 percent, diamond 58 to 70 percent, coal 26 percent to 58 percent, compared to 2016.
Mr Manhando said that the mining industry continued to be bogged down by challenges that include low exploration, capital shortages, inadequate foreign currency allocations, high energy tariffs, infrastructure bottlenecks, suboptimal fiscal framework and increased labour costs among other challenges.
He said while some key milestones were achieved in resolving challenges in the industry, generally, most key legislative matters were yet to be finalised or remained largely outstanding.
Mr Manhando said the sector was operating below capacity due to shortage of capital to fund operations.
“Most operators are using antiquated equipment, which have severely undermined the efficiency and cost effectiveness of the sector,” he said.
At the beginning of this year the chamber said that its members collectively needed an estimated $7 billion over the next five years to ramp up production and sustain existing operations.
“The figure has lately been revised upwards to as much as $11 billion with the renewed interest in our sector,” Mr Manhando said.
The sector is projected to grow to an $11 billion industry by 2022 and is seen bigger at $18 billion by 2030.
But the growth projections are subject to the sector accessing fresh capital investment to expand existing projects as well as start new production with confidence and policy consistency touted as pivotal to unlock the funding.
The Chamber of Mines president said that the mining industry continued to be drawn back by a high cost structure made up of high electricity tariff, high cost of funding, high labour costs, and the high cost of materials and consumables.
Mr Manhando said fees and charges which needed to be reviewed holistically remained outstanding while royalties were still not deductible for computation of taxable income. Royalties also remained high and well above regional peers, thereby compromising competitiveness of the mining industry, he said.
“Our quest is for the Government to provide stable, competitive, and optimal fiscal framework for the mining industry and simplify the fiscal regime from the high multiplicity of tax heads, tax regulatory instruments and collecting agents to a few tax heads, instruments and agents in order to reduce the burden of compliance.”
Mr Manhando also bemoaned lack of investment into the mining sector as well as little exploration stressing the point that despite Zimbabwe holding huge mineral potential, the country remained largely under-explored, especially using modern methods.
“Since 2000, our industry has received less than optimal investments in mineral exploration, both green field and brown field,” he said.
According to S&P Global Market Intelligence Report for 2017 on mineral exploration trends non-ferrous metals expenditure increased to $8,4 billion from $7,3 billion. Africa attracted 14 percent of that budget mostly to DRC, Burkina Faso, Tanzania and South Africa.
“If our mining industry is to sustain growth, we must as a matter of priority focus on attracting a significant portion of the Africa targeted exploration capital,” Mr Manhando told delegates at the AGM.