Mining sector remains fragile
BULAWAYO — The Chamber of Mines of Zimbabwe (CoMZ) has said the country’s mining sector remains fragile due to depressed mineral prices on the international markets.
The depressed mineral prices had combined with liquidity challenges on the domestic market, as well as power and capital shortages, which have resulted in many mining companies struggling to break even.
The sector, which however remains the highest contributor to the gross domestic product accounting for 10 percent, and contributes 50 percent to the country’s export earnings and more than 50 percent of foreign direct investment.
CoMZ’s president, Toindepi Muganyi, told delegates at the Mining, Engineering and Transport (Mine Entra) conference that all was not well in the mining industry, with the sector having contracted by 2, 5 percent for the second year in running in 2015.
Total mineral revenue declined from US$1,9 billion in 2014 to US$1,86 billion 2015, he said.
“Albeit lower than desired (growth) and somewhat mixed, the mining industry is expected to recover this year, with a number of minerals having already recorded significant growth in the first six months of 2016 compared to 2015,” said Muganyi.
The period under review had seen gold surging 21 percent, platinum 35 percent and nickel by eight percent, he said.
However, coal, chrome and diamond output were below the previous year’s levels.
Muganyi said by year end, they were forecasting gold, platinum, palladium, nickel, coal and chrome to recover significantly.
He said the suppliers sector remained a critical component of the mining industry’s value chain and that the 2015 state of the mining industry survey had revealed that around 36 percent (US$720 million) of the US$1,8 billion generated by the sector last year was spent on suppliers.
“Thus our industry remains an important market for output from other sectors. The sector currently receives inputs amounting to 11,2 percent from the manufacturing sector, four percent from electric power, 3,2 percent from iron and steel products, three percent from distribution, 2,3 percent from non-electrical machinery and equipment, 1,3 percent plastics, rubber, one percent from fibres, matches, ink and other chemicals, and 20 percent from the mining itself,” said Muganyi.
He said they would continue to encourage local procurement.
“Medium to long term prospects of the industry remain bright with output for most minerals expected to record phenomenal growth, as both government and private sector aim to address the structural distortions and cost of doing business in Zimbabwe,” said Muganyi.
Mines and Mining Development Minister, Walter Chidhakwa said government was no longer expecting growth in the chrome mining sector since its removal of a ban on the export of raw chrome last year due to a decline in the commodity’s price.
Meanwhile, Chidhakwa said government was exploring ways of supporting the growth of the small scale gold sector, which contributes 40 percent of total production in the country.
The sector is hard-hit by challenges which include the lack of technical expertise.
Chidhakwa said hundreds of thousands of people had resorted to small scale gold mining to earn a living.
He said should the economy improve, the number of the artisanal miners would go down, while committed miners would remain in operation.
“From our perspective, it is our intention to provide them with technical expertise and therefore I have given instructions to the Zimbabwe School of Mines to begin to work out a programme for training them. In fact, they have already started training the small scale gold miners out there,” said Chidhakwa.
“They may be makorokoza today, they may be small scale gold miners today, but they are probably the future large scale miners and we need to look after and nurture them so that they are able to move into the future.”
He said the Ministry of Finance had recently given them the green light to recruit more geologists, mining engineers and metallurgists.
This had enabled the Mines Ministry to build capacity aimed at improving operations of artisanal gold miners.
“We need to grow the small scale gold sector because I believe that is where our greatest potential is. If you look at gold production as of today, at least 40 percent of our gold production today is coming from the small scale gold sector and it is growing. I have no doubt that in the next year they would exceed 50 percent of gold production in this country and therefore we want the facilitation that will promote that the growth be met,” said Chidhakwa.
He said it was also important that squabbles and conflicts over claims and concessions were resolved amicably and peacefully.
“There is no single day that passes without us hearing that somebody had a mine collapse on them, somebody was killed in a fight for gold concessions and some of it in disputes…every day I am first respondent, second respondent or third respondent, whichever you want me to be,” said Chidhakwa.
He said some of those conflicts were fuelled by corrupt officials from his ministry who allocated claims to more than one person, but he was working tirelessly to bring that to an end.
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