BY FREEMAN MAKOPA/FIDELITY MHLANGA
ZIMBABWE’S mining industry suffered huge setbacks during the first quarter of this year, with mineral output falling across sub-sectors after being hamstrung by escalating power blackouts, the Covid-19 scourge, capital shortages and flooding in gold mines, official data indicated this week.
In a review of economic trends for the three months to March, the Ministry of Finance and Economic Development said platinum output slowed by 5%, tracking a trend also reported in chrome, gold and nickel, which plummeted by 17%.
Last week’s report confirmed fears by President Emmerson Mnangagwa during last week’s Chamber of Mines of Zimbabwe (CoMZ) annual general meeting (AGM) that an ambitious target to ramp up output and increase revenues to US$12 billion a year was off track, and the industry had to regroup and re-strategise.
The ministry’s report illustrated how write-downs in the key gold sector were compounded by disruptions to the operations of Zimbabwe’s 1,5 million artisanal and small-scale miners, who were kept out of work after shafts were swamped by flooding.
A rebound in output from big gold producers failed to offset the slowdown.
In an interview with businessdigest this week, incoming CoMZ president Colin Chibafa confirmed that mines were grappling with several headwinds, but reaffirmed his resolve to scale up engagements with authorities to iron out problems, including prolonged payment delays to gold miners.
“Over the past two years and in the greater part of the first half of 2021, gold producers had been facing prolonged payment delays for gold delivered to Fidelity Printers and Refiners (FPR),” Chibafa told businessdigest.
“The recent changes in the marketing of gold where FPR and the producer jointly export the gold has seen some improvements in payments turnaround. As FPR continues to fine tune the new system, we hope that the delays will be a thing of the past. As the CoMZ, we will continue to engage FPR and authorities for timeous payments for gold deliveries,” Chibafa added.
“Mining is capital intensive and growth for the sector requires significant long-term funding from lenders and shareholders. We applaud government efforts to create a stable and predictable operating environment that will allow miners to focus on mining. This will de-risk the industry, allowing lenders and shareholders to commit the significant amount of capital required for growth.”
The Ministry of Finance was worried that some of the minerals whose output slowed had lost out as prices increased aggressively on the international markets, as world markets returned following a difficult 2020.
“Performance of the mining sector was mixed,” the ministry said.
“While on one hand, firm international prices and resuscitation of closed mines improved the performance of the mining sector, there were major drawbacks from a number of factors such as unstable power supply, heavy rains which culminated in the flooding of shafts, working capital challenges and subdued demand for some minerals,” said the report.
It said gold output retreated to 4 311kg during the review period, compared to
6 152kg produced during the same period in 2020.
“The decline was mainly on account of a fall in production from the artisanal and small-scale gold sector. Large scale producers delivered about 2 291kg during the first quarter of 2021, 11,2% higher than what was produced during the same period in 2020, while the artisanal and small-scale gold sector delivered 1 586kg, about 55,6% below the production of the same period in 2020, reflecting leakages through smuggling,” said the report.
It said platinum output declined by 5% to 3 369kg from 3 544kg during the same period in 2020.
With low throughput from primary and secondary producers, possibly due to hard lockdown, nickel output slipped to 3 284 tonnes during the period — output from primary producers was 25% lower than what was extracted during the first quarter of 2020.
“The decrease in nickel output was against a surge in prices by about 39% in the first quarter compared to the same period in 2020 and 10,4% above the last quarter of 2020,” noted the report.
“Following onset of the second wave Covid-19 pandemic during the first quarter of 2021, chrome production receded to 300 926 tonnes from 353 669 tonnes for the same period in 2020 and 311 495 tonnes in the fourth quarter of 2020. Of the chrome ore produced, about 74% was beneficiated and value added and disposed as high carbon ferrochrome (HCF), while only 26% was sold as raw chrome. This is due to the favourable prices of HCF that prevailed during the quarter, as compared to those of raw chrome,” the report added.
Diamond production increased by 15% to 702 639 carats in the first quarter from
611 331 during the same period in 2020, while coal output climbed to 596 753 tonnes during the period under review, compared to 462 140 tonnes previously.
In his address to the CoMZ AGM, Mnangagwa said: “Considering that 2023 is 18 months away the mining sector must take stock with regards to the realisation of a US$12 billion mining economy. With unity of purpose, collaboration and increased investments the sector is bound to reach greater heights. The institution of various measures targeted at attracting investment, enhancing exploration activities, as well as opening of new and idle mines is set to further augment ongoing efforts”.