Zimbabwe’s mining sector optimistic of 2021 prospects

Zimbabwe’s mining sector has expressed optimism over prospects in the coming year on anticipation of better management of the Covid-19 pandemic, improved commodity prices and a favorable fiscal regime locally, the 6th State of the Mining Industry Report, Prospects for 2021 launched today highlights.

The extractive sector underwent a challenging year due to the impact of the Covid-19 which weighed heavily on commodity prices due to weaker demand as economies went under lockdown.

According to the report findings, the mining business confidence index for 2021 which measures the business sentiments (optimism or pessimism) from mining executives stands at +3.1 from 2.2 in 2020.

As such, 90 percent of miners plan to ramp up production in 2021 with just 10 percent of the respondents expecting production levels to remain at same levels with current year.

The miners said regardless of capital constraints currently experienced, gold output is expected to grow 32 percent to 33 000 kg in 2021 from 25 000 kg this year.

Platinum will slightly increase by 3 percent to 15 000 kgs.

Coal output is tipped to grow 25 percent from this year’s levels of 2.4 million Metric tonnes to 3 million MT.

The diamond sector is projecting output increase of 19 percent from 2.1 carats to 2.5 million carats.

The Mining sector capacity utilization is expected to grow to 80 percent next year from 61 percent this year.

This growth is anchored on the expectation that the country will manage the Covid-19 better and there will be favorable government interventions.

70 percent of respondents are confident of profitability in the mining sector with 20 percent expecting profits to remain constant with those of current year.

“The respondents expect government will put in place optimal royalty, an efficient foreign currency auction trading system and timeous payment for gold and coal deliveries,” said the survey’s lead researcher, Professor Albert Makochekanwa.

However, the sector remains short of adequate capital to meet its operations and expansions.

60 percent of respondents said the capital constraints are likely to persist into the year 2021 with 20 percent projecting the challenges in accessing capital likely to get worse and the other 20 percent being optimistic.

Zimbabwe has been struggling to access capital and investment from external creditors due to negative country perception and market watchers say the situation is likely to persist.

The Reserve Bank of Zimbabwe (RBZ) on the other hand has been struggling to make timely payments to producers of gold, a development that has affected most gold producers’ cash flow.

Recently leading gold producer, RioZim Limited announced that due to delays in gold receipts payments by the Central Bank, the company had been struggling to operate efficiently.