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Livingstone Marufu
The gold mining sector is expected to spend over $100 million on expansion projects this year, with output projected to increase significantly.
This represents a 500 percent increase from the $20 million spent the previous year.
Planned investments comes at a time when mineral prices are firming on global markets.
Commenting in a recent survey report, Chamber of Mines of Zimbabwe chief executive Isaac Kwesu, said all mining houses were expected to spend a cumulative $100 million on expansion projects, which should have incremental output of between 20 percent and 100 percent.
“Gold output is expected to increase in 2018 as all respondents indicated that they will ramp-up production in 2018, with one of the largest producers anticipating a 100 percent increase in output,” he said.
Survey findings revealed that weighted average capacity utilisation in the gold industry was estimated at 74 percent in 2017, falling from 79 percent in 2016.
Survey findings show that average production costs in the gold industry decreased to $1 001 per ounce in 2017, from $1 032oz in 2016.
This lays a strong foundation for pushing up production to the 27,1 tonnes target for 2018 after the country achieved 24,7 tonnes last year.
Gold accounted for 40 percent of mineral exports in 2017, down from 47 percent in 2016. The sector accounts for over 25 percent of formal employment, of which 300 000 are involved in artisanal mining.
Once again, artisanal miners outperformed large-scale producers after they delivered 1,4 tonnes of 2,6 tonnes of gold total output last month.
This was despite a difficult environment due to the prevailing wet weather.
According to the findings of the recent survey, about 90 percent of the respondents in the gold industry did some exploration work in 2017.
Of these, 30 percent undertook Greenfield exploration, while 40 percent and 30 percent did on-mine and brownfield exploration, respectively.
All mining houses in the gold industry have plans to undertake exploration around their mines in the next five years, while 90 percent have plans to carry out greenfield exploration in the next five years.
The findings also revealed that all of the respondents did not make investments into new mine development projects in 2017 due to lack of funding.
The highest cost producer extracted the precious metal at a cost of $1 133 per oz, while the least cost producer incurred $723 per ounce.
About 90 percent of the gold miners said their all-in costs declined in 2017 on the back of various cost-cutting measures that include labour rationalisation, multi-skilling and avoiding unnecessary overtime.
Miners were also able to cut costs after negotiating price reductions with suppliers and terminating arrangements with commercial contractors.
Profitability improved in 2017 to around $254 per oz from $235 per oz in 2016.
About 70 percent of gold producers made profits in 2017, with projections unchanged for 2018. All mining houses said that the profits were being ploughed back into recapitalizing the businesses.
Last year, gold miners surpassed the 24,5 tonnes target after delivering 24,8 tonnes.
Reserve Bank Governor Dr John Mangudya, hopes the $150 million gold support facility for small miners and periodic onsite monitoring by the Gold Mobilisation Technical Committee, will spur deliveries this year.
Gold is a strategic mineral in Zimbabwe as it is its single biggest foreign currency earner.
A shortage of foreign currency has impacted on the country’s ability to process international payments, including for critical spares required by manufacturing and mining sector equipment as well as raw materials.
Online Reporter