Mining revenue falls 7,1 percent
A CHAMBER of Mines of Zimbabwe (CoMZ) State of the Mining Industry Survey has indicated that revenues in the sector fell by 7,18 percent in 2015 to US$1,8 billion, from US$1,95 billion recorded in the prior year.
Declining revenues were driven by low output and subdued international commodity prices.
The mining industry has also been affected by power outages and high electricity tariffs.
High royalties, taxes and fees have compounded the mining industry’s crisis.
The report said except for gold which recorded a 20 percent growth to US$737 million in 2015 from US$616 million in prior year, there was a marked decline in the value of minerals.
It added that revenue from nickel sales declined by 30 percent to US$142 million from US$202 million in 2014 while diamond revenues recorded a 46 percent slump to US$180 million.
Platinum dropped by 23 percent to US$381 million in the period under review from US$495 million in 2014.
The mining sector which has been the backbone of the economy since 2009 when the country dollarised, recorded negative growth of -3,4 percent and -2,5 percent in 2014 and 2015 respectively.
The survey’s chief consultant, Albert Makochekanwa, a senior economics lecturer at the University of Zimbabwe, said capacity utilisation in the mining sector also went down to 60 percent in 2015 from 74 percent in 2014.
Makochekanwa said average mineral grades also went down due to lack of investment in the past few years.
The struggling industry, estimated to require in excess of US$4 billion in fresh capital, has failed to access funding for recapitalisation and new projects.
The crisis confronting mines has been compounded by a slowdown in Chinese consumption, which has wreaked havoc in the sector.
China is the world’s biggest consumer of most of the minerals and metals. The Asian giant’s slowdown, coupled by weak economic recovery in Europe and sluggish growth in the Unites States, has severely undermined demand for commodities and affected prices.
CoMZ chief executive officer, Isaac Kwesu said the situation was dire because prices have gone down to levels below production costs.
“Our industry is going through difficult times especially with depressed international prices,” said Kwesu.
“The majority of our mining houses are struggling to break even, meaning that viability has been compromised.
“The cost of production has gone up. For the second year running, the sector has recorded negative growth after another in 2014.
“We hope this year will be the turning point as long as fiscal issues that affect performance are addressed. Price remains the most hindrance and…prices will remain depressed this year and probably into 2017. And again, this is a big dent to our mines that are struggling to break even,” he said.