Zimbabwe: Mining Export Earnings Plunge
Zimbabwe’s export earnings from minerals are seen plunging in the current financial year, missing government’s US$4 billion target, owing to various production constraints, as well as increased side-marketing activities and smuggling as the economic crisis deepens.
The mining sector registered a 15% decline in mineral production in the first quarter of 2019 due to the depressed operating environment.
Zimbabwe was this year targeting a 28% increase in mineral export earnings to US$4,2 billion from US$3,2 billion as the sector gears towards its Vision 2030 target of an annual haul of US$12 billion per annum by 2023.
However, Zimbabwe’s chrome ore sales softened 38,76%, while values declined 44,1% in the seven months to July 2019, driven by tumbling production as well as weakening commodity prices.
Figures from the Minerals Marketing Corporation of Zimbabwe (MMCZ) show that the country exported 307,3 metric tonnes (mt) of chrome ore valued at US$41,4 million tonnes during the period down from 521mt in the same period last year earning the country US$68,8 million.
However, the high carbon ferrochrome sales increased 21,5%, lifting the country’s earnings by 15,4% to US$193,974.72 buoyed by increased capacity by Jin An and Afrochine.
MMCZ general manager Tongai Muzenda told businessdigest in written responses that the sales increased to 220,4 metric tonnes from 181,4 metric tonnes, but said beneficiation was determined by smelting installed capacity.
“The sales volume for chrome ore declined by 38,76%, while value declined by 44,14%. This was mainly due to production capacity constraints and softening commodity prices. High carbon ferrochrome sales increased by 21,51% in volume and 15,40% in value, on the back of increased capacity by largely Jin An and Afrochine. Beneficiation is mainly determined by installed capacity by the smelters and on the contrary, raw chrome exports reduced drastically due to production constraints,” he said.
In the six months to June, gold production plunged to 1 658kgs from 2 323kgs in May 2019 owing to a lack of confidence and lack of discipline, particularly among small-scale miners.
Zimbabwe Miners Federation chief executive Wellington Takavarasha last week told businessdigest government came up with incentives for small-scale miners, as he attributed the decline in gold deliveries to loss of confidence.
“I will not beat about the bush, the decline is because of a lack of confidence in the system,” Takavarasha said. “It is also about lack of discipline in the sector. There are too many middlemen. Government needs to come up with incentives for small-scale miners.”
The just-released World Platinum Investment Council (WPIC) second-quarter report also shows that platinum production in Zimbabwe remained largely flat year-on-year at 115 koz (thousand ounces), while a new platinum group of metals smelter was recently opened in the country in May 2019.
While WPIC noted a marginal increase in output year-on-year to 470koz in 2019 (+5koz year-on-year), and also estimates total mining supply at 1,615koz for Q219, a decrease of 35koz (-2%) year-on-year.
Globally, the revised 2019 surplus forecast has slightly declined to 345koz from a prior estimate of 375koz against a strong increase in investment demand which will excessively offset lower automotive and jewellery demand compared to 2018.
Total demand in 2019 is forecast to rise 9% compared to 2018. Mines minister Winston Chitando recently said gold, diamonds, coal, hydro-carbons, stainless steel, ferrochrome and nickel and platinum prices are expected to play a key role in achieving its US$12 billion target.