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Mining industry expected to recover




THE Chamber of Mines of Zimbabwe (CoMZ) says the country’s mining industry is expected to recover this year following the government and private sector interventions to address structural distortions and cost of doing business.

Speaking at the Mining, Engineering and Transport (Mine Entra) 2016 conference in Bulawayo yesterday, CoMZ president Toindepi Muganyi said despite challenges the industry was facing, the future looked bright.

“Albeit lower than desired 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 five months of 2016 compared to 2015,” he said.

Muganyi said gold, for example, recorded growth output of 21%, platinum grew by 35% whereas nickel increased by 8% in 2015.
However, coal, chrome and diamond output remained below the previous year’s levels, he said.


He said if the industry sustained these growths, they forecast output for the key minerals to increase by the end of 2016.
Gold is expected to record
24 000kg, platinum 16 000kg, palladium 13 848kg, nickel 17 000 tonnes, coal 3, 726 million tons and chrome
220 000 tonnes.

“The medium to long-term prospects of the industry remain bright, with output for most minerals expected to record phenomenal growth, as both government and the private sector aim to address the structural distortions and cost of doing business in Zimbabwe,” Muganyi said.


He, however, said currently the sector was faced with a plethora of challenges such as depressed mineral prices and liquidity crunch.

“On the backdrop of depressed mineral prices, and compounded by other challenges such as persistent liquidity, power and capital shortages, our mining industry has remained fragile and distressed, with most mining houses still struggling to break even,” he said.


For the second year in a row, he said the sector recorded negative growth of -2,5% in 2015, from -3,4% in 2014, while total mineral revenue declined from $1,9 billion in 2014, to $1, 86 billion in 2015.

Notwithstanding the challenges, Muganyi said the mining industry remained a key driver to economic revival, and its contribution compared favourably with both international and regional experiences.


The sector is currently contributing in excess of 10% to gross domestic product, more than 50% to national exports, between 8-12% of fiscal revenue, more than 50% to foreign direct investment and creates more than 45 000 formal jobs.

Muganyi said the suppliers sector remained a critical component of the mining industry value chain. He said the 2015 mining industry survey revealed that around 36% ($720 million) of the $1,8 billion generated by the mining industry in 2015 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% from the manufacturing sector, 4% from electric power producers, 3,2% from iron, and steel products, 35% from distribution, 2,3% from non-electrical machinery and equipment, 1,3% from plastics and rubber, 1% from fibres, matches, ink and other chemicals, and 20% from mining itself,” he said.

He said there was need to encourage local procurement.


Against this background, Muganyi said, suppliers should strive to improve on quality of the product, cost and delivery lead times, to tap into this huge opportunity.

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