Mining sector forecasts 20 percent upswing in output

Bulawayo (New Ziana) – Output in the local mining sector is expected to increase by 20 percent in 2024, an industry report has said.

The State of the Mining Industry Survey Report, conducted by independent research consultants commissioned by the Chamber of Mines, looks at the performance and prospects of the sector.

The mining sector plays a dominant role in the country’s economy, accounting for 70 percent of Foreign Direct Investment (FDI), 80 percent of exports, 19 percent of government revenues, three percent direct formal employment and 13,5 percent of Gross Domestic Product.

In an interview, lead researcher and director of the Business School at the University of Zimbabwe, Albert Makochekanwa said although mining output is forecast to go up by 20 percent next year, profit was going to decrease slightly due to subdued international prices for minerals.

“What we found is that next year, the mining sector is expecting output in terms of production to increase by 20 percent in 2024,” he said.

He said production costs were also expected to rise, in part driven by energy price increases.

The Zimbabwe Energy Regulatory Authority recently granted a request by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) for a tariff increase of 2 USD cents a kilowatt hour.

“Also, in the context of Zimbabwe, another issue is the cost of production in the mining sector which is expected to increase due to an increase in electricity tariffs. We have just seen that electricity tariffs have been increased by 2 USD cents per kilowatt and also royalties have been increased,” Makochekanwa said.
“Those costs are going to disturb mining output and profitability,” he said.

To boost production, Makochekanwa said, the mining sector intends to inject US$2 billion for recapitalisation next year.

“One thing the mining sector said it was going to do was to increase their capitalisation. The whole mining sector is expected to spend around US$2 billion in 2024 to ramp up or increase their capital in the mining sector,” he said.

Makochekanwa noted that increased production next year will lead to an increase in formal employment.

“Because of the expected increase in production, formal employment in the mining sector is expected to increase to above 57 000 head counts,” he said.

He implored the government through ZETDC to increase energy production to enable the mining sector to achieve its targets.

“Once electricity supply is assured in terms of constant supply, the mining sector is saying it is geared to go an extra mile and improve output.”

Turning to input supply in the sector, Makochekanwa said the mining sector was ready to procure its raw materials locally.

“In line with the National Development Strategy (NDS1), which encourages all sectors to procure raw material locally, the mining sector is also ready and willing to do so. However, the reason why the mining sector sometimes opts to import raw material is the fact that some of the locally manufactured products are of poor quality,” he said.

“They also said when they procure locally some of the products are overpriced and not competitive. The sector also expressed concern over late delivery of supplies forcing them to import,” he added.

New Ziana