Depressed mineral prices hit miners

HARARE - Declining international mineral prices significantly affected the operations of mining companies in 2014, experts say.

On the international market, gold and platinum prices declined by 1,5 percent and 10,8 percent to average $1 184,10 and $1 261,33 respectively in 2014 compared to 2013.

The plummeting of gold and platinum prices continues to be influenced by the appreciation of the United States dollar against major currencies, owing to the tightening of the United States monetary policy.

“The weakening of these precious metals prices is a cause for concern for Zimbabwe as it affects the viability of mining companies as well as growth of the overall economy hence the need for value addition and beneficiation,” said the African Development Bank (AfDB).

Mining is strategic to the southern African country’s $10 billion economy and is anticipated to drive growth in the medium-term.

The sector accounts for just over 16 percent of gross domestic product, marginally ahead of agriculture and accounts for more than 50 percent of exports.

AfDB, however, noted that Zimbabwe has been experiencing growth in gold production mainly driven by small-scale miners despite the fall in gold prices on the international market.

Gold mining firms in the country have been able to increase output because of incentives offered by government through reduction in royalty fees and presumptive taxes for small-scale operators.

Cumulative gold deliveries to October 2014 reached 11,11 tonnes which surpassed the 10 tonnes required for the country to be reaccredited into the London Bullion Market Association compared to 10,55 tonnes in October 2013.

The readmission into the London Bullion Market Association will enable the government to increase earnings from gold and also attract more investments.

Hwange Colliery Coal Company (HCCL), group chairman Farai Mutamangira said falling international metal prices were mitigating the firm’s revival plans.

“The commodity prices, for coal and coke significantly declined and was affected by demand in ferro-alloys and steel products,” he said, adding the liquidity crunch prevailing on the local and global economies militated against short-term plans that the HCCL had to recapitalise its operations.

This comes as mining companies in Zimbabwe have described the current year as a period of negative and positive halves.

On the one hand, the Zimbabwean government saved its miners from total collapse under the heavy saddle of fiscal demands and on the other, it softened demands that platinum miners speedily build a base metals refinery inside the country.

The country is also currently amending its mining legislation to modernise its legislative framework and will consolidate mining revenue collection as separate collections by local authorities, State institutions such as the Environment Management Agency as well as the State revenue agency, Zimra.

A new mining bill would be finalised in 2015 and will also lay the foundation for the consolidation of diamond mining companies in the Marange and Chiadzwa areas.

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