HARARE - Zimbabwe's mining sector is set to grow by 1,6 percent this year on the back of improved production, the country's Chamber of Mines has projected.
According to findings of the Chamber's study, titled "The State of the Mining Industry Survey, Report on Findings 2015", 40 percent of local mining companies surveyed said they expected the sector to post a negative growth.
The survey also indicated that about 10 percent of local miners said the output projection will remain flat, 30 percent were optimistic indicating that they expected growth to be between one and four percent while 20 percent said they expected the sector to grow above five percent.
The mining sector prediction comes after Finance minister Patrick Chinamasa in his 2016 National Budget forecasted that the sector was going to grow by 2,4 percent in 2016 buoyed on increased output in gold, chrome, coal, nickel, platinum and diamonds.
The mining sector output has been recording negative growth at -3.4 percent in 2014 and -2.5 percent in 2015, but the study also showed that the value of mineral output also mirrored the decline in output, falling by 13,1 percent in 2015 due to low output and subdued prices.
Chinamasa had also forecasted an overall GDP growth of 2,7 percent driven by agricultural recovery and growth in the mining sector, but the latest mining forecast puts a dent on the country’s growth projections.
According to the survey’s chief consultant, Albert Makochekanwa, capacity utilisation in the mining sector also went down to 60 percent in 2015 from 74 percent recorded in 2014.
The average grade for the mining industry fell across most minerals from in 2014 to in 2015 due to possibly lack of investment in development (and exploration) over the years.
“Profitability for the mining industry has declined across most minerals, with most respondents recording losses during the period under review,” Makochekanwa said.
Shortage and high cost capital was ranked the number one factor undermining sector viability followed by low commodity prices and high cost of power.
“About 90 percent of the respondents reported that they encountered difficulties in raising the requisite capital for staying in business or ramp up production in 2015.
“62 percent of these respondents said that they were using antiquated and inefficient equipment,” the consultant said.
The study also showed that a total of $3,8 billion is needed to revive the sector.
According to the survey, platinum output increased from 12 483 in 2014, to 12 564 in 2015 projected to increase in 2016 as one of the players expects to ramp up production in 2016.
Gold posted a 13 percent output increase to 20 000 tonnes from
15 386 in 2014.
According to a World Economic Forum (Wef) report released earlier this month, all Zimbabwean mining companies must brace for a further plummet in commodity prices on the international market this year.
It indicated that — despite having had a tough year in 2015 — commodity prices for everything, from crude oil to industrial metals such as iron ore and copper plummeted even further by the close of last week.
Due to this situation, the world’s mining giants have been forced to restructure their businesses in order to stay afloat as they battle declining profits.
The market capitalisation of the top 40 global mining companies fell by nearly $300 billion in 2015.