Post Chamber: Mining sector expected to anchor economic growth

The sector is projected to grow by 15,9% this year over an estimated growth of 25,8% last year.

 

According to the Chamber of Mines annual report,  mining output accounted for 13% of gross domestic product directly, although the indirect multiplier effect takes the contribution to about 18,4% of total GDP.

These indirect multipliers include backward linkages (eg transport, supplies, professional services) and forward linkages (eg electricity generation) and the induced effect via mining generated incomes.

In terms of foreign exchange earnings per unit of GDP, mining contributed US$2,1billion to national exports, representing 50% of the country’s total merchandise exports and the country’s total foreign exchange earnings. “If beneficiated minerals are added to primary minerals (eg ferro-alloys, steel, chemicals, catalytic convertors), the sector accounts for well above 60% of merchandise exports.

However, during the first quarter, mineral production was on a decline despite the firming of international prices of most minerals except  chrome, which rose by 17% from 37 092 tonnes in January to 43 632 tonnes in February before declining 37 092 tonnes in March 2012.

Gold output increased 9,7% in the same period. Gold prices were rising in January and in February before falling in March 2012. The prices had started at US$1 598 in January and closed the quarter at $1 663 in March. Permanent secretary for economic planning Desire Sibanda, in the ministry’s first quarter update, said that generally gold prices were high in the first quarter compared to the corresponding period in 2011. The rise in gold prices was mainly attributed to increased demand for the metal in India and China.

Despite the growth, the sector continues to be affected by power outages, high cost of finance lack of medium to long term finance for retooling, lack of equipment and an increase in the mining fees by 5 000%.

The sector however continues to act as a magnet for investment in Zimbabwe, as it directly accounted for more than 50% of total fixed investment and more than 75% of the total private sector investment in 2011. “If the multiplier effect is taken into account, mining helped generate about 80% of total investment in the economy,” says the update.

The reason for the rise is the contribution of mining output with more than US$5 billion required by the sector in the next five years.” — Staff Writer.