EXECUTIVES in Zimbabwe’s mining sector are bullish about prospects for 2021, but say a cluster of areas still require urgent attention to give them the confidence to invest and expand their operations.
BY SHAME MAKOSHORI
A list of concerns released by the Chamber of Mines of Zimbabwe (CoMZ) was dominated by perennial factors that President Emmerson Mnangagwa’s administration has failed to tackle in the past two years.
Mnangagwa has spent the past two years promising wide-ranging reforms to attract investment and improve profitability in mines.
The CoMZ said it was worried that access and cost of capital would remain a challenge in 2021 while an uncompetitive investment environment would compound the hurdles that confront players.
The report warned against a persistently high country risk, which has discouraged investment inflows into several world-class assets requiring fresh injections to return to full production.
Their concerns came as the CoMZ’s Mining Business Confidence Index (MBCI), which measures confidence levels among miners, rose slightly to 3,2 this year, from 2,2 in 2019.
However, the MBCI still fell far short of the heights of 21,9 that it reached at the end of 2017, when hopes rose sharply in the immediate aftermath of the ouster of the late former president Robert Mugabe in a military coup.
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Before the 2017 surge, miners had measured it at -6,6%.
“This means that overall, mining executives are slightly confident about the prospects for their businesses in 2021 compared to 2020,” the CoMZ said.
“Notwithstanding the positive Business Confidence Index, access and cost of capital, which is anticipated to remain a challenge, an uncompetitive investment environment, an uncertain policy environment and a high country risk remained negative,” added the report.
It said 90% of mines were planning to ramp up production next year while 10% would maintain production at current levels.
“Mining executives are slightly more confident about the mining industry growth prospects for 2021.
“Reflecting these sentiments, about 90% of respondents are expecting the mining sector to grow in 2021, while 10% are projecting the mining industry to be at the same output levels,” it noted.
Capacity utilisation, a measure of productive efficiency, is projected to increase to 80% next year from 61% in 2020.
“We are saying despite Covid-19, the future is brighter than where we are.
“That is the confidence we got from mining executives.
“The growth projections are based on the basis that issues that are bedevilling the sector will be sorted (and) Covid-19 will be managed well in the next 12 months,” said Albert Makochekanwa, lead consultant for the survey.
The report said 40% of respondents to the survey indicated that they were expecting to increase production by more than 30%.
It projected gold output to rise by 32% to 33 tonnes next year, from a 25-tonne projection in 2020.
Growth is also expected in several key minerals including platinum, diamonds and chrome, which is expected to reach 2 300 tonnes next year, from 1 200 tonnes this year.
“In the PGMs (platinum group metals) there are a lot of projects (such as) the Great Dyke and Karo Resources with platinum output expected to grow by 2025,” the survey revealed.
The report said mining sector executives were looking forward to improved power supply in 2021.
