Chamber seeks funds for gold mining

gold mining sector.
Its president, Victor Gapare, said that a detailed report on the sector had been compiled for potential investors.
“We recently financed a study on the gold mining industry in Zimbabwe by the London-based world-renowned consultancy GFMS World Gold Analyst,” said Mr Gapare.
“This report has highlighted the opportunities available in the industry in Zimbabwe and has been distributed to most investment banks in Europe and North America.”
He added that the report had also been distributed to the Far East. Miners will have to negotiate their capital requirements with the banks involved, Mr Gapare told Herald Business in an interview. The gold sector requires about US$1 billion over the next five years.
“We plan to do similar studies on platinum, chrome and nickel this year, followed by coal early next year,” he said.
Inadequate working capital has hampered the industry’s growth, which rose by 47 percent last year. This year it is is expected to record a 44 percent growth.
The sector experienced challenges over the past 10 years, along with other key economic sectors – manufacturing, agriculture, tourism and financial services.
But confidence is returning to the sector, after the establishment of the inclusive Government in 2009. The liberalisation of the gold sector in the same year was a further positive element.
Renaissance Capital has predicted that the mining sector would achieve double-digit growth over the medium term which would boost output to between 12 and 13 percent of the GDP by 2015. This would be despite growing concern over the indigenisation and empowerment programme.
RenCap said Zimbabwe’s mining would be the fastest growing sector in Zimbabwe this year, owing to strong commodity prices, increasing investment in expansion programmes, and the recapitalisation of mining operations.
Currently, the mining sector accounts for 6 to 7 percent of GDP. RenCap said renewed activity at existing gold mines, contributions from recent diamond discoveries and increasing platinum group metals output have fuelled the sector’s growth.
Coal mining also received a boost from an investment in Hwange Colliery and the notable developments in the mining space include the opening up of the country’s coalfields by President Mugabe and the approval of over 60 applications for the development of the country’s coal assets.
The report said gold output was projected to increase on the back of new mines opening and the recapitalisation of old mines
RenCap noted strengthening commodity prices explained the mining industry’s appeal to foreign investors. It added this should boost the sector’s export earnings in 2011.
While the outlook for the mining industry was positive, the report noted, industry remained beset by significant challenges, which implied that although the growth rate was exceptional it remained below potential.
These challenges include erratic power supply and capital constraints. The interest rates on dollar loans at between 12 percent to 18 percent were still prohibitive, said RenCap. – Business Reporter-New Ziana.