daniel chigunwe
Nqobile Bhebhe
RESEARCH and stockbroking firm, IH Securities, says favourable gold prices have bolstered foreign currency receipts in the current year resulting in growth of 9,5 percent from US$5,6bn in the first half of 2023 to US$6,2bn in 1H24.
Mining is a strategically key economic sector for Zimbabwe.
Apart from employing thousands, mining in Zimbabwe accounts for over 12 percent of gross domestic product and generates well over three-quarters of the country’s export earnings.
Zimbabwe has more than 60 extractable minerals but limited investment means less than 10 are currently being commercially exploited.
Among these are gold, platinum, diamond, chrome, nickel, coal and lithium.
In its Equity Strategy Year to Date Review, the stockbroking firm noted that overall, mineral exports accounted for 65 percent of export receipts in 1H24, signifying the importance of the sector for the economy.
“Gold deliveries to Fidelity for the first nine months of 2024 were 7,2 percent ahead of the prior year at 24 tonnes.
“For the remainder of the year, Fidelity estimates it will receive 11 tonnes, bringing the annual total to 35 tonnes,” it said.
IH Securities said elsewhere in the sector, depressed commodity prices have taken their toll as platinum producers have had to implement cost management strategies.
For instance, it said Kuvimba Mining House recently revealed it was considering budget cuts for its Darwendale platinum project.
National platinum production is expected to fall by a marginal one percent in 2024 to 504 000 ounces amid operational challenges and depressed prices.
Lithium operations have also been affected by weak prices, with miners such as Bikita Minerals halting production on one of its plants as a result.
It noted that, according to the Chamber of Mines, miners have spent approximately US$182million on capital projects in 2024, with an additional US$495million in the pipeline for 2025.
“Notable investments include a US$30mn expansion projects at Blanket Mine, Mimosa’s US$79million development of a Tailings Storage Facility and US$14 million expansion at Pickstone Peerless.
“Whilst capacity utilisation in the sector remains unchanged from 2023 levels at 84 percent, the Chamber of Mines estimates that it will reach 90 percent in 2025 on the back of improvements in gold, ferrochrome and PGMs.”
The report shows that gold capital projects have a financial outlay of US$65 million, coal sector players intend to inject US$20 million, ferrochrome sector (US$25 million), platinum firms (US$2,8 million ) and lithium sector is expecting to inject US$380 000 000.
However, it said power outages are one of the key constraints crippling the sector, with a recent survey by the Chamber of Mines indicating that miners have lost $500 million of potential revenue due to power outages this year.
“In addition, the high electricity tariff, pegged at USc14.21/KWh with a peak tariff of about USc19/KWh continues to exert cost pressures on industry players. The cost is even higher during power outages, where diesel powered generators are used as a backup, with an implied tariff exceeding USc30/kwh,” reads part of the report.
It noted that the Mining Business Confidence Index for 2025, which measures the mining business sentiments about the prospects of the industry in the next 12 months, is positive (+5.4 percent), signifying miners’ confidence in their prospects in the outlook owing to anticipated commodity price recovery in 2025.
The latest Mining Industry Prospects for 2025 report findings shows that in 2025, the mining industry’s electricity demand is expected to increase by about 18 percent to 700 megawatts while diesel consumption is expected to increase by 12 percent.
The State of the Mining Industry Survey commissioned by the Chamber of Mines of Zimbabwe (CoMZ), was conceived in 2015 to provide a detailed account of the state of affairs in the mining industry vis-à-vis key performance opportunities, prospects and challenges in the mining sector.
Since its inception, the report has become the main reliable source of the state of affairs on the performance and prospects of the mining industry.
The survey reports have assisted in bridging the information gap and providing leverage for Government policy as well as strategic planning for other key stakeholders that include mining houses, investors, financiers, suppliers, labour and communities.
Bongani Ndlovu