By Wellington Zimbowa
REGULATORY inconsistencies by Government seem to persist bearing an ugly face on the mining sector, dwindling hopes of its full potential as Zimbabwe’s socio-economic recovery sector, a recent mining survey report has revealed.
The State of the Mining Industry Report Prospects for 2021 has revealed that mining executives are unsettled that if the 2020 inconsistencies in regulatory extend to 2021 will negatively affect business planning, thus extending the harsh operating business environment in the country.
However, miners are optimistic of a slight change in the ease of doing business in the coming year.
“They cited misalignment in foreign exchange and fiscal framework, liquidation of unutilized Nostro balances, and multiple taxes to weigh down mining operations in 2021.’
The Chamber of Mines Zimbabwe report notes that 90 (percent) % of mines in the country are set to ramp up production in 2021, while only 10% will remain operational, but stagnant.
“Of the respondents that are expecting to increase production, approximately 40% are expecting to ramp up production by more than 30%. About 10% expect to increase output by between 10% and 30%,” the report stated.
Survey findings show that most respondents are planning to improve capacity utilisation in 2021. The average capacity utilisation for the industry is expected to increase from 61% in 2020 to a 5-year record at 80% in 2021.
As was the case for 2020, survey findings show that “Most mining executives are pessimistic about the prospects for raising adequate capital in 2021, indicating that uncompetitive investment environment, high cost of doing business and perceived country risk are major hindrances to raising capital.”
Most mining executives are optimistic about the profitability of their businesses in 2021, with 70% of respondents indicating that they are projecting their businesses to be more profitable compared to 2020, while 20% are expecting the same level of profit as in 2020.
“Only 10%, mostly in the base metals industry are projecting losses citing the possibility of COVID- 19 related challenges including depressed markets and logistical disruptions to persist in 2021,” it said.
The findings show that most respondents, about 80%, are expecting the COVID- 19 pandemic to be contained in 2021.
“About 50% of respondents indicated that it would take them less than 3 months to recover to 2019 operating levels, while 10% would take them 3 – 6 months; another 10% would require 6 – 12 months to recover,” reads part of the report.
The survey results also revealed that mining houses are most likely to retain the number of employees at the same level as 2020.
“Confirming the above, about 70% of the respondents indicated that they would maintain the same number of employees in 2021 as was the case for 2020, while 20% are planning to recruit more labour in 2021. Only 10% of respondents are planning to shed off some employees.”
However the PGMs sector is registering commended progress as new platinum projects such as Great Dyke Investment, Karo Resources and Todal are at varying developmental and resource quantification stages, with platinum output set to surpass 24 tons by 2025.
In Hwange, there are some coal and coke battery initiatives being implemented, however, at varying stages.
By Wellington Zimbowa