Mineral prices plummet

Senior Business Reporter
ZIMBABWE’S economic turnaround which was now anchored on the anticipated improved performance of the mining sector is likely to sneeze due to the drastic fall of mineral prices on the international market. Speaking at the Zimbabwe Alternative Mining Indaba in Bulawayo on Thursday, Mines and Mining Development Deputy Minister Fred Moyo said there was a need to protect the mining sector as it was a major contributor to the country’s revenue and Gross Domestic Product.

“That’s quite serious for Zimbabwe if more than 50 percent of your revenues are coming from a commodity which has lost 50 percent of its value. It means there is 100 percent impact, it’s as simple as that.

“The same sector has lost 50 percent of its capacity and it’s a big challenge. So we need to engage Government, businesses and workers (the labour) and try and see how we can protect our sector. It’s not the interest of one, it’s a tripartite issue,” Dep Minister Moyo said.

He said the slumping metal and mineral prices was a global phenomenon which is caused mostly by an oversupply into the market.
The drop has since seen the price of platinum falling from $1 800 to $900 an ounce and that of gold from $1 700 to just about $1 000.

“We can be in serious trouble if we don’t move quickly because it’s every nation that has to act to protect its own position because it’s a global phenomenon,” Dep Minister Moyo said.

Zimbabwe Miners Federation chief executive officer, Mr Wellington Takavarasha said it was unfortunate that Zimbabwe and other African countries had to feel the brunt as prices of commodities were being determined by developed nations.

“We can’t control prices as they are controlled by international institutions such as the London Metal Exchange. We can’t stockpile our reserve at Fidelity Printers and Refiners because we have less capital thus we are so desperate and this is a problem, going into the future we should seek alternative markets,” he said.

Renowned Bulawayo-based economist Dr Bongani Ngwenya concurred with Mr Takavarasha saying that Africa was feeling the pinch in the drop of minerals largely due to the fact that “the whole pricing mechanism is not within our control.”

He said the fact that Africa trades in primary or raw products leaves it at the mess of developed nations.
“We are trading in primary products and raw material where there is no value addition so it creates problems especially when the prices drop. We tend to suffer from commodity pricing policy, we can’t really come up with realistic projection to say we expect to make this much in terms of revenue,” Dr Ngwenya said.