Politics & General News

Mineral production gains support elite

ZIMBABWE’S mineral revenues are set to decline by approximately 20% this year and further 10% next year due to softening commodity prices among other constraints, according to the latest report released by the Chamber of Mines of Zimbabwe (CoMZ).The mining sector plays a very significant role in the development of the country as it has continued to bring the much needed income into the country.
It contributes to foreign exchange generation, gross domestic product, government revenues, capital formation and infrastructure development.The sector accounts for more than 80% of total national exports and employs over 55 000 people, with an estimated 500 000 involved in small-scale and artisanal mining.
Therefore, the projections that the revenues from the sector will decline by 20% this year should send the government into a panic mode because it might fail to raise money to service its foreign currency commitments.
“Analysis of survey responses shows that mineral revenue for 2023 is set to decline by approximately -20% and is expected to further decline by an average of -10% in 2024 due to softening commodity prices,” the chamber’s state of the mining industry survey report released last week, reads in part.
“Despite most mining companies planning to ramp up production to compensate for revenue losses due to low prices, the production increase will be more than offset by the decline in prices.”

Already, in the first half of the year, mineral revenues declined by 29% to US$2,6 billion.
The challenges facing the mining sector include softening commodity prices, foreign currency shortfalls, high-cost structure and capital constraints.Most mining executives expect the commodity market conditions to worsen in 2024. They are anticipating commodity prices to further slowdown in 2024, mostly for PGMs and base metals citing geo-political tensions and weak global economic outlook.Platinum group metals producers are expecting prices to slow down with platinum price expected to fall by (-5%), rhodium (-15%) and palladium (-10%). Gold producers are expecting gold prices to fall by an average of -8%, while lithium producers and nickel producers are expecting price declines averaging -14% and -10%, respectively.
“Survey findings show that profitability for mining companies declined by an average of 15% in 2023 due to softening commodity prices and high-cost structure. Approximately 50% respondents reported that they were now struggling to break even,” it said.
“When interrogated on profitability prospects for their businesses in 2024, most respondents (70%) indicated that they were expecting their profitability to worsen compared to 2023. Those that are expecting profitability to remain the same are mostly in the gold sector.”
However, despite these challenges, survey findings show that prospects for mineral output growth for 2024 are generally higher than those recorded for 2023.Most of the mining executives are planning to ramp up production in 2024 to compensate for anticipated revenue losses due to prevailing and expected softening mineral prices. Only 5% indicated that production for 2024 will be the same as 2023.
In line with the projected mineral output growth for 2024, survey findings show that average capacity utilisation is expected to reach 90% in 2024 compared to 84% in 2023.
“Key sectors anticipated to drive the improvement in capacity utilisation in 2024 are gold, ferrochrome and coal,” it said.
The State of the Mining Industry Survey report has emerged to become a prominent evidence-based study that has been useful in assessing the state and prospects for the mining industry.

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