Mining capacity utilisation to hit 90pc

02 Jun, 2024 - 00:06 0 Views
Mining capacity utilisation to hit 90pc Minister Chitando

The Sunday Mail

Oliver Kazunga

Senior Business Reporter

CAPACITY utilisation in the mining sector is expected to reach an average of 90 percent this year, buoyed by gold, ferrochrome and coal, the Chamber of Mines of Zimbabwe (CoMZ) has said.

The yellow metal is the country’s largest single export earner expected to generate US$4 billion annually, while platinum, the second largest export earner, last year generated US$2,1 billion against a US$3 billion target.

Between them, platinum and gold account for more than 50 percent of Zimbabwe’s export revenue, while mining in general constitutes more than 75 percent of the country’s exports.

Recently, the Government challenged the mining sector to ramp up production as the yellow metal has a direct bearing on the new currency, Zimbabwe Gold (ZiG), launched in April this year. ZiG is backed by gold, other precious minerals and foreign currency reserves.

Speaking at the just-ended CoMZ annual conference in Victoria Falls last week, the organisation’s president, Mr Thomas Gono, indicated that capacity utilisation in the mining industry last year averaged 84 percent, up from 81 percent in 2022.

He said though capacity utilisation in the mining industry rose marginally in 2023, the surge was driven by gold, ferrochrome and platinum group metals (PGMs), which recorded levels above 80 percent.

“Capacity utilisation, on average, increased marginally from 81 percent in 2022 to 84 percent in 2023.

“Driving the average capacity utilisation for 2023 were gold, ferrochrome and PGMs that recorded capacity utilisation levels of above 80 percent.

“In the outlook for 2024, capacity utilisation is expected to increase further to 90 percent, driven by gold, ferrochrome and coal,” said Mr Gono.

The mining industry continues to be a significant contributor to employment, creating more than 53 000 formal jobs and over 500 000 artisanal and small-scale miners.

“In the outlook for 2024, mineral output is expected to grow by a weighted average of around 7,6 percent as mining companies ramp up production to compensate for revenue losses arising from low commodity prices.”

The international market has been marked by price volatility, with the PGMs and lithium sectors hardest hit.

Mr Gono said although Zimbabwe’s mineral output is expected to surge, mineral revenues are seen declining to around US$5 billion this year as prices on the global market are likely to remain depressed. Last year, the country’s mineral revenues stood at US$5,2 billion.

Gold deliveries last year decreased by 14 percent to 31,9 tonnes from 37,2 tonnes in 2022. In 2023, Zimbabwe’s PGMs output recorded a record high of 507 000 ounces, reflecting a 6 percent rise from 2022.

So far, the country has three active PGMs producers, namely Zimplats and Unki Mine, majority-owned by South African firms Implats and Anglo-American, respectively; as well as Mimosa, which is co-owned by Implats and Sibanye Stillwaters.

Mr Gono said other factors that constrained full capacity utilisation included electricity outages, inadequate foreign exchange allocations, loss of value on the surrendered portion of export revenues, capital shortages and the high operating cost structure.

“Data available indicates that gold production for the period January to April 2024 (stood) at 8 937 kilogrammes compared to 9 185kg last year.

“Platinum, palladium and iridium production in 2023 was at the same level as in 2022, with declines in production recorded for rhodium (4 percent) and ruthenium (13 percent) over the same period.

“Primary nickel production is facing challenges, and the only primary nickel producer (Bindura Nickel Corporation) is now under judicial management in an effort to rescue the operation.

“Primary nickel production only contributed 16 percent to total nickel production as the mine operated from January to September 2023.

“Nickel production, however, grew by 1,4 percent last year to 14 465 tonnes,” he said.

“Despite this decline in performance, the sector accounted for approximately 78 percent of national exports in 2023, maintaining its position as the largest foreign currency earner in the country. In addition, contribution to Government revenue was estimated at around 20 percent of the total.”

Despite the prevailing circumstances, Mr Gono lauded continued investments by companies in the sector to sustain production.

“We are happy to report that many mining operations have invested in alternative electricity supply solutions to ensure that operations are not disrupted by outages of grid power,” he said.

Speaking at the same occasion, Mines and Mining Development Minister Winston Chitando rallied stakeholders in the mining industry to approach the challenges and opportunities in the sector with courage, determination and vision.

“Together, we can navigate these turbulent times and restore the viability of mining operations in Zimbabwe.

“By working collaboratively, we can build a brighter, more prosperous future for Zimbabwe and all its people.

“I am pleased to announce that the mining industry is currently experiencing numerous projects in exploration, extraction and expansion, alongside significant efforts in engagement and re-engagement,” he said.

The notable projects include the US$1,5 billion Dinson Iron and Steel Company’s steel plant in Manhize near Mvuma, which is expected to start production soon.

“The investment is a clear indication of the fact that the Second Republic is putting in place measures and policies that attract investment.

“The President also commissioned the Pickstone Peerless underground shaft project in Chegutu, Mashonaland West, on the 10th of April 2024.

“In addition, the Kamativi Mining Company lithium processing plant in Kamativi, Matabeleland North, was commissioned on the 12th of April 2024.”

He added that Zimbabwe is making significant strides in ensuring it has a notable presence in the oil and gas industry.

“Invictus Energy recently confirmed a large and rich gas-condensate discovery at Mukuyu, following initial analysis results of downhole fluid samples.

“The potential benefits for the economy and the people of Zimbabwe from oil and gas extraction, along with its associated value chain, are immense and far-reaching,” said Minister Chitando.

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