eBusiness Weekly
Business Writer
The US$12 billion mining economy target by the end of this year is an ambitious but very unrealistic projection that the Government sets for itself, according to economic commentators.
In 2019, the Government launched the US$12 billion mining strategy by the end of this year underpinned largely by new investments and expansion programmes in the mining industry.
Under the US$12 billion milestone, gold which is Zimbabwe’s major foreign currency earner, is anticipated to contribute US$4 billion, platinum (US$3 billion), diamonds (US$1 billion) while chrome, ferro-chrome and carbon steel will generate US$1 billion and coal (US$1 billion).
Lithium is expected to contribute US$500 million while other minerals will generate US$1,5 billion.
According to the Government, prior to the launch of the strategic roadmap, the mining sector’s contribution stood at US$2,7 billion in 2018 and the figure has since registered phenomenal growth accounting for US$5,3 billion in 2021.
Last year, the mining economy was reported to have cloaked US$8 billion, bring hope that the $12 billion figure may be attainable.
Economist, Professor Gift Mugano, yesterday said citizens in any country would want to see a growing economy sector by sector as it increases chances of job creation, income per capita as well as opening up of opportunities for everyone.
“But now the problem I have is credibility and authenticity of our figures (US$12 billion mining economy). Are we evaluating ourselves on credible figures or we are just throwing in numbers. When you look at our growth rate in this economy, we have a single digit growth and what it means is that we need to relook at where we are coming from with on our figures.
“This year we are now expecting to increase from US$8 billion to US$12 billion which means 50 percent increase and cumulatively more than 100 percent from the last two years, that is not normal,” he said.
“If we are going to hit US$12 billion this year, our GDP at maximum is US$28 billion and if we look at the contribution of the mining sector as a percentage to the GDP alone, the sector has a small percentage (six percent in 2018).”
Prof Mugano said Zimbabwe’s agriculture sector has about 12 percent contribution to the GDP – manufacturing 15 percent- tourism about 10 percent and the services industry 60 percent.
“So, if the mining industry is reaching US$12 billion, which is almost 40 percent of the economy, is it correct, and even if we go back to the current levels of US$8 billion, we are still talking of close to 30 percent . . . but the question is, are we calibrating our economy or is it that our GDP is falsely represented.
“First and foremost, I am saying it’s not possible to jump from US$8 billion to US$12 billion (50 percent growth), the same way I don’t believe that our mining sector has grown by 60 percent last year from the previous year,” he said.
Prof Mugano said he has not heard of investments that are moving mountains in the mining sector, adding that Zimbabwe’s investments in terms of cash and equipment, hovers around US$300 million (1 percent of our GDP).
Some of the investments that have come on board include the US$130 million Sabi Star Lithium Mine in Buhera, Prospect Lithium Zimbabwe’s project in Goromonzi as well as the Zulu lithium project in Insiza District, Matabeleland South province by Premier African Minerals.
In December 2022, Karo Mining Holdings commenced operations on its US$4,2 billion platinum project in Mhondoro, Mashonaland West province, another project the Government has said would give impetus on platinum’s contribution to the US$12 billion milestone.
Asked about where he thinks the value of Zimbabwe’s mining economy is at, Prof Mugano said; “I cannot be precise in terms of where it is, because then I will be prophesying but the point I want you to take home is, what is the share of the mining sector in terms of the GDP share, has it grown to 30 percent? If you answer that question, then we are okay.
“I am challenging the Ministry of Mines and Mining Development in particular, to relook at their projections and figures, and also the Ministry of Finance and Investment Promotion because it oversees Zimstat (Zimbabwe National Statistical Agency) to say these things must be validated.”
Prof Mugano also argued that the firming of commodity prices on the international market would spur growth in the mining sector and propel Zimbabwe to achieving the US$12 billion milestone.
He said at one point, the price of gold in December 2022 was US$2 023 per ounce, but presently it’s around US$1,800.
“The price for gold has actually retreated somehow, but it’s not actually a serious note because at some point gold was US$1,500 per ounce.
“For platinum, it’s around US$927 per ounce and at some point it reached US$1,700 and in 2018 it was US$863 so the price disparities for 2018 and the current price, the margin is below US$100.”
In the past four months to March this year, the international market price for lithium carbonate, which is the feed material in the battery manufacturing industry, nosedived exponentially by a 60 percent margin to nearly US$30 000 per tonne.
And at present, lithium price on the commodities market has further plummeted to US$16 500 per tonne.
In a separate interview economist, Wendy Mpofu, echoed similar sentiments saying, while there is nothing wrong about setting ambitious targets, the projections should be realistic based on facts on the ground.
“It’s an ambitious target, though unrealistic. However, I don’t think the figures that have been given are realistic if we have a closer look at them in terms of contribution to the GDP,” she said.
Another economist, George Nhepera, however said: “The targeted projection is likely to be within before the end of the year, in view of the credible policies such as exchange control surrender requirements, exchange rate stability and rising mineral prices which are boosting the good prospects for increased revenue and profitability for the sector.”
However, he said of grave concern is the lack of trickling down of tangible economic benefits from the sector to the public including the cities in which the mining houses operate from.
“For example, we have Zimplats mining operation in Chegutu-Norton and Mimosa in Zvishavane, yet the same places have lagged behind in terms of economic transformation and development.
“A deliberate and well-crafted policy in my view should be put in place in line with the Government economic philosophy of leaving no one and no place behind,” said Nhepera.
