‘Zim should revamp mining sector’

Business
Zimbabwe badly needs to invest and stabilise the mining sector in order to sustain impressive export earnings which have lately shown signs of taking a dive.

Zimbabwe badly needs to invest and stabilise the mining sector in order to sustain impressive export earnings which have lately shown signs of taking a dive, a mining official has said.

BY VICTORIA MTOMBA

Chamber of Mines of Zimbabwe chief executive officer Isaac Kwesu told Standardbusiness last week that the overall performance of the sector was going down.

In 2014 the value of earnings from the mining sector stood at $1,9 billion, down from $2 billion recorded in 2013. In 2012 earnings were $2,2 billion.

The year 2012 was the peak period for the sector in terms of export earnings since the country adopted the multi-currency.

Since 2009 the mining sector export earnings have been on the rise.

The sector’s earnings took off at $500 million in 2009, rising to $1,5 billion in 2010. In 2011, export earnings surged to $2,1 billion.

“For the past three years the mining sector has been going down. Volumes for minerals such as diamonds, platinum and chrome have been going down on the back of challenges of low prices, as well as capital shortages that resulted in low productivity,” Kwesu said. The impact of the decline in earnings of the mining sector has been receding export earnings.

“As a country, we cannot control prices but we can increase production by 5% .This will help us to maintain our earnings. This is only possible if we address capital and capacity utilisation issues,” he said.

Kwesu said the sector also needed to address challenges of high cost of production and increase capacity utilisation which at the moment is close to 50%.

“The outlook can only be positive if we address the production issues,” Kwesu said.

A local economist Tony Hawkins said 2015 was set to be a difficult year for the mining sector globally and a lot depended on the recovery of prices.

In the 2015 national budget, Finance minister Patrick Chinamasa said beneficiation of minerals would help the country reduce the challenges of softening of global mineral prices, as is being experienced in gold, coal, platinum and chrome.

This year, the sector is expected to register a moderate growth of 3,1% driven largely by nickel, gold, chrome and coal.