eBusiness Weekly
Golden Sibanda
Growth of Zimbabwe’s mining industry will rebound by end of the year if teething issues, chief among them ‘low’ foreign currency retention thresholds and delayed payments to gold miners are resolved, captains of the mining industry have said.
Chamber of Mines of Zimbabwe (CoMZ) chief executive officer (CEO) Isaac Kwesu, told journalists in Harare on Wednesday ahead of the miners’ annual general meeting in Victoria Falls next week that the mining industry did not perform well in the first quarter.
Next week’s mining conference will be held under the theme “Realising Vision 2030 Through Mineral Resource Led Growth”. President Mnangagwa will be the guest of honour while several high profile dignitaries, including key ministers, will grace the annual event.
Minerals production declines
Kwesu said while production of most minerals had declined in the first three months of this year, the miners remained confident that the slump in the first quarter will be reversed and remarkable growth realised provided challenges were addressed.
“We are still hopeful, with a number of initiatives the industry is going through, that we will be able to recover from the negative growth and post remarkable output performance for the mining industry by year end,” Kwesu said.
Mining, which generated US$3,2 billion in 2018 and is projected to earn US$12 billion by 2023, accounts for over 60 percent of Zimbabwe’s annual export earnings.
Government’s two-year economic blueprint, Transitional Stabilisation Programme (TSP) targets reopening closed mines, boosting mines operating below capacity, opening new mines, promoting beneficiation, value addition and increasing earnings from minerals.
“We are still very hopeful that notwithstanding the negative performance for the first quarter, overall performance for the year, based on what mining houses are doing, is going to be a good year, Kwesu added.
He said challenges across the sector mostly entailed delays in forex payments to exchange to gold miners, which had, however, improved lately.
While it used to take 12 weeks for payments for gold deliveries to come through, the time lag has been cut to two weeks, but miners want this further reduced to seven days.
The miners said the forex is required for procurement of key production inputs.
“You would notice that on a weighted basis, gold constitutes the largest chunk of the mining industry, so any downside factors that undermine gold mining have an overall negative impact (on the mining industry).
“You may already have seen the overall performance of gold in the first quarter…gold output fell by 10 percent and that was the biggest slump across minerals, so it weighed down on the overall performance,” he said.
Gold deliveries not impressive
Deliveries to the country’s sole authorised gold buyer Fidelity Printers and Refiners, declined to 6,5 tonnes in the first quarter from 7,3t over the same period last year.
Kwesu said gold mining constituted over 30 percent of the overall mining industry, meaning anything that happens to gold had the effect of weighing down overall performance of the mining industry.
The CoMZ CEO said the mining entities continued to engage the Reserve Bank of Zimbabwe over the foreign currency retention for gold mining companies, which now stand at 55 percent from below 10 percent initially.
“We are engaging the monetary authorities on issues pertaining to thresholds to make sure that we meet the imports requirement thresholds of the mining industry,” he said.
Weighing in on the issue CoMZ president Batirai Manhando, said while the foreign currency retention thresholds for minerals had grown on the back of intense lobbying; the current levels remained on the lower end. Gold miners retain 55 percent of their export proceeds as foreign currency while the balance is paid in RTGS dollars. The retention threshold is lower for other minerals.
“(The adequate threshold) differs from mining house to mining house and mineral to mineral, but suffice to say that the current thresholds (are low), if we are to expand the operations, of which we should be doing, (in line with Government’s vision 2030 of upper middle class economy) and own growth prospects), we definitely need to be capitalised and most of this requires foreign exchange.
“We think they (foreign currency retention thresholds) are still on the low side and we need them up, but this is different from mineral to mineral,” he said.
If these main teething issues are not addressed, Manhando said, the desired performance for the mining industry will not be met come the end of this year. Mr Manhando hailed monetary authorities for taking the bold step to liberalise the foreign exchange marker saying while it was early days to comment, the mining industry felt the market would allocate the elusive foreign currency more efficiently.
