Zimbabwe’s mining sector is expected to grow in 2022 alongside its regional peers in the Democratic Republic of Congo, South Africa and Zambia, according to Standard Bank.
Standard Bank is the parent company of Zimbabwe’s commercial bank, Stanbic Bank.
The bank believes that the growth is going to be driven by current high prices and the ever growing supply chains.
“With mining companies currently enjoying high prices, exceptional production performance and robust supply chains, the mining team Standard Bank, anticipates that the sector will continue showing resilience and growth, remaining financially sound in 2022,” the bank read.
The vote of confidence comes as the mining industry executives believe capacity utilisation will be 83 percent in 2022 after it closed 2021 at around 80 percent.
The platinum group of mineral (PGMs) is expected to remain at 100 percent utilisation as coal industry remains stuck at 80 percent, as drive for energy transition continues to grip the globe.
Going forward, mines are expected to continue adding future-ready energy transition minerals to their portfolios.
Standard Bank believes that, “The rise of electric vehicles, driven by consumer preferences for more environmentally friendly products, is boosting demand for minerals used in batteries and electric motors, such as lithium, nickel, copper, cobalt, manganese and vanadium.”
According to world statistics, 70 percent to 80 percent of the world’s available PGM resources sit in South Africa’s ‘Bushveld Complex’ and in Zimbabwe, which shows the two countries will have a massive role to play in the decarbonisation of mining and the global economy.
It is believed that Zimbabwe has the second-largest platinum deposit and high-grade chromium ores in the world, with approximately 2.8 billion tonnes of platinum group metals and 10 billion tonnes of chromium ore.
Chinese owned mines have been dominating the Zimbabwean chrome and lithium mines and they have been investing heavily in the sector with new investments.
Standard Bank says total Chinese acquisition of lithium from Zimbabwe, DRC and Mali has now risen to U$1bn since 2021, and gold from South Africa and Ghana focused on the medium-sized targets shows encouraging upsize potentials.
China Statistics Agency said China’s total outbound foreign direct investment (FDI) increased to US$145.2 billion, representing 9.2 percent year-on-year growth last year.
China’s FDI into Africa is directed towards the mining and metals sector with an increasing investment appetite focused on specific commodities in different jurisdictions and it represented a quarter of the country’s FDI.
“Given more favourable legislation in a number of African jurisdictions, sustained Chinese interest in the continent, booming commodity prices, the improved balance sheets of many African miners, an increased global appetite for bulks and the broader range of ecosystem-financing options available to miners, Standard Bank remains optimistic that Africa’s mining sector offers real opportunity for expansion in 2022,” the statement read.
Zimbabwe has a diversified mining sector with close to 40 different minerals. The predominant minerals include platinum, chrome, gold, coal and diamonds.
Mining accounts for about 12 percent of Zimbabwe’s gross domestic product (GDP). It is widely believed that the sector has the potential to generate US$12 billion annually by 2023 if challenges such as persistent power shortages, foreign currency shortages and policy uncertainties are addressed.