Zim miners target increased output

HARARE - Zimbabwean miners are targeting increased output next year on the back of improved capacity utilisation, the country’s Chamber of Mines has said.

A survey conducted by the mining industry body, launched in the capital yesterday, revealed that most miners expect fortunes to turn around in 2017 after enduring a turbulent 2016 where depressed metal prices dominated the year.

“The mining industry is confident of a positive 2017 market outlook with an index of +17. About 40 percent of respondents indicated that they expect the outlook to be better than 2016, while 30 percent were of the view that it will be largely the same as 2016. Twenty-five percent of respondents expect a weak market outlook,” the report said.

The survey’s growth prospects index at +50 indicated overall optimism on the potential of the sector to grow next year, comparing favourably with +9,1 recorded for 2016.

Findings from the report pointed out that about 90 percent of respondents are positive that the industry will grow in 2017, while only five percent expect the industry to contract marginally.

The overall mining business confidence for 2017, though negative, is set to improve from that of 2016, following findings indicating the mining business confidence index for 2017 improved to -14 from -37,9 recorded for 2016.

However, the report showed that the economic prospects confidence indicator for 2017 at -50, showed pessimism held by most miners with regard to Zimbabwe’s deteriorating economic environment going into next year.

“About 66 percent of the mining business executives expect contraction of the economy in 2017. 

“Another 22 percent expect economic growth prospects in 2017 to remain the same as 2016 while 12 percent expect a marginal growth in 2017,” the report said.

The profitability prospects confidence indicator for 2017 stood at 11 percent, indicating optimism of profitability of mining businesses in 2017, with about 60 percent of respondents confident of making profits in 2017.

But, the report also showed that miners still remain concerned by political risks present in the country.

“…industry is worried about political risks as shown by an index of -41. All respondents indicated that political risk is high in the country.

“All respondents also indicated that the current fiscal regime is characterised by multiple tax heads and revenue collecting agencies, with the cumulative effective tax perceived to be high.

“The survey identified the following tax heads dominating respondents’ effective tax,” the report said.

Other challenges outlined in the study range from exorbitant mining fees and charges, high power costs, power cuts, inflexible labour laws and others.

“All respondents were of the view that the current fiscal regime for the mining sector is sub-optimal and should be reviewed and considered the current non-deductibility of royalties as undermining the competitiveness of the industry.

“The respondents are also of the view that the tax heads are many and should be streamlined,” the report said.

The sector is still lobbying for a slash of the electricity tariff, from the present $0,12/kilowatt-hour (kwh) to at least $0,08/kwh amid indications that miners lost between $200 000 to $5 million in output due to power cuts.

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