The Sunday Mail
THE nascent recovery in global commodity prices, especially for gold and platinum, has raised expectations that Zimbabwe will generate more revenues from mining than initially forecast.
At the beginning of the year, the Chamber of Mines of Zimbabwe projected mineral revenues for 2016 to drop by US$50 million to US$1,8 billion from US$1,85 billion in 2015.
The increase in commodity prices coincides with rising production at mines.
Gold output grew 17 percent to 10,4 tonnes in the first six months of the year from 8,9 tonnes during the same period a year ago, while platinum output jumped to eight tonnes from 5,6 tonnes in the review period.
However, with the exception of gold, average prices for all key minerals during the first half of 2016 were lower than the comparable period in 2015.
But in the last three weeks, platinum prices have risen to US$1 106 per ounce from US$1 082 owing to increased demand from car manufacturers.
Platinum is mainly used in the manufacture of catalytic converters, which convert toxic gases such as carbon dioxide to less toxic pollutants.
By 2021, all cars registered in the European Union were not expected to emit more than 130g of carbon dioxide per kilometre.
Gold prices have risen to US$ 1 327 per ounce from US$1 325 as central banks in Asia and Europe slash interest rates and pump millions into financial markets to stimulate growth.
Chamber of Mines economist Mr Pardon Chitsuro told The Sunday Mail Business that rising global car sales and uncertainty surrounding US politics were a boon for platinum and gold.
“Based on the performance of minerals during the first half of 2016, the sector is projected to recover considerably underpinned by gold, nickel and PGMs. Platinum prices firmed by 2,2 percent from a weekly average of US$1 081,90 per ounce to an average of US$1 106,20 per ounce in the past three weeks. The increase in platinum prices was attributed to rising demand outlook for the metal in the global automotive industry.
“Global car sales increased in the second quarter of 2016 hence the increase in platinum prices and demand in general,” said Mr Chitsuro.
He pointed out that investors often hedged investments in gold when the US economy underperformed.
“If there is a lot of pessimism in American politics — people not knowing who is going to be their next president — the economy going in the negative direction, gold prices will be firmer than ever. That is the major reason for its strength this year.”
In the first six months of 2016, nickel output rose to 9 101 tonnes from 7 917 tonnes over the same period in 2015.
BNC, the primary producer, accounted for 37 percent (3 361 tonnes) of the total, while the rest came from secondary producers Zimplats (32,6 percent), Mimosa (18,8 percent) and Unki (11,6 percent).
Platinum and nickel production are projected to jump 27 percent and 12 percent to 16 tonnes and 18 tonnes respectively.
Slowing demand for minerals from China — the world’s biggest consumer — and the corresponding decline in prices has hit resource-dependent economies in Sub-Saharan Africa.
Last year, the mining sector’s contribution to Zimbabwe’s GDP fell to nine percent from 9,2 percent a year earlier and 10 percent in 2013. Mineral exports account for half of total national receipts.
This year’s gold output is forecast to rise by four tonnes from 2015 to 24 tonnes. Second quarter production at Metallon, the country’s biggest producer of the metal, gained nine percent to 638,5kg from 585kg a quarter earlier.
