eBusiness Weekly
Tapiwanashe Mangwiro
The ever-increasing commodity prices on the international market are expected to break foreign currency receipt records as the country is a key producer of base minerals.
In times of economic uncertainty, like the one currently being experienced in the world, investors tend to lose their appetite for risk and one of their favourite refuge positions is often investing in precious metals.
Zimbabwe might benefit with investors getting refuge in commodities, especially gold, platinum, and nickel, among other key metals.
Economists and analysts are confident the country will increase its foreign currency receipts on the back of firming commodity prices on the global market.
In 2022, mining export receipts accounted for a staggering 83 percent of export receipts, up from 66 percent almost five years ago.
Chamber of Mines chief economist, Pardon Chitsuro, believes that the country will exceed earnings received last year.
He said; “Mining exports will surpass the US$6 billion mark this year if the trend last year is anything to go by. Also the commodity prices are gaining in 2023 due to many rate hikes which seem to not be ending in the developed world and emerging economies.”
Chitsuro further projected a surge in minerals output during the year, underlining the mining industry as the key driver of Zimbabwe’s economic growth. “The economy is set to register significant growth in the year based on firming production output of key minerals such as lithium which is projected to rise by 100 percent.”
On the world market, nickel price is at a current level of US$26 727.95, down from US$28 194,61 last month and up from $24 015,55 one year ago. This is a change of -5,20 percent from last month and 11,29 percent from one year ago.
Eng. Takudzwa Muzangwa, said the country has to produce these minerals efficiently in order to gain more and currently nickel is doing good on the world market.
“One of the world’s biggest nickel users, Japanese corporate sales continued to rise in February 2023, significantly exceeding expectations. Car sales in the country had the strongest month since March 2021, rising 5,4 percent year-on-year in February. Industrial production was up about 4,5 percent month-on-month,” Eng. Muzangwa said.
As the dollar and rates fell on Tuesday, gold continued to rise and crossed the psychological US$2 000 milestone, after poor US economic data and growing concerns about oil-driven inflation. Spot gold climbed 1,9 percent to US$2 021,74 per ounce.
After a turbulent 2022, the precious metal is making a comeback in 2023. Gold hit a high of US$2 009 per ounce in March, the first time it has breached the US$2 000 in 12 months. As of Tuesday, the safe-haven asset has appreciated by 7 percent year-to-date and 19 percent since October 2022 lows.
The price of platinum is forecast to surge this year thanks to factors including power cuts in South Africa, the war in Ukraine and the increased production of hybrid cars. According to the World Platinum Investment Council there will be a deeper-than-expected global deficit of platinum in 2023 as demand soars and supply struggles to keep up.
The council forecasts a deficit of 556 000 ounces this year, following a global surplus of the precious metal for the previous two years and this is expected to push prices in the second half of the year to around US$1 075 per ounce according to American bank JP Morgan and Chase forecasts.
Development Economist, Dr Prosper Chitambara said; “The financial crisis in the US will bring some positives to Zimbabwe, firstly from a foreign currency generation capacity perspective and secondly the depreciation of the US dollar will make Zimbabwe’s production more competitively within the region because of the dollarisation that is taking place.”
“The firming of commodity prices on the global stage is a welcome development as Zimbabwe relies heavily on foreign currency generated through sales of minerals hence it means there are positive prospects for the country to have more benefits,” highlighted Economic Analyst, Batanai Matsika.
In 2022, minerals contributed 83 percent of the US$11 billion that the country generated as foreign currency receipts, hence the soaring of commodity prices is a welcome development.
