The Chamber of Mines of Zimbabwe (CoMZ) has expressed concerns over the decreasing international mineral prices, emphasizing that this trend jeopardizes the health of the mining sector and potentially derails the ambitious US$12 billion mining revenue target set for the year.
In 2019, under President Emmerson Mnangagwa’s directive, the nation aimed for a US$12 billion revenue benchmark for the mining sector by the year’s end, banking on augmented government backing and investor initiatives.
However, CoMZ’s 2022 annual report reveals that the mining industry is projected to fall short of its goal by roughly 42%, citing escalating operational costs, persistent power outages, and foreign currency complications as major hurdles.
This challenge arises in tandem with expectations from global consultancy entities that forecast a decline in mineral prices. Factors such as China’s economic deceleration, fueled by mortgage challenges, a transition away from carbon-intensive operations, and international political uncertainties, are cited as driving forces behind the anticipated drop.
CoMZ highlighted that diminishing mineral prices are progressively undermining the feasibility of mining endeavors. They detailed significant price drops in key minerals over the last year, including rhodium, lithium, palladium, diamond, and nickel.
Additionally, CoMZ pinpointed the heightened cost environment that the mining sector now grapples with, exacerbated by soaring electricity rates and augmented royalty charges for select minerals. Specifically, they highlighted the recent royalty hikes for platinum and lithium.
Despite efforts by mining entities to curtail expenses through strategies such as capital expenditure reductions and operational optimizations, the viability gap remains significant. CoMZ asserts that only with targeted government interventions, such as adjustments to electricity tariffs and royalty fees, can the sector’s sustainability be safeguarded.
This proclamation from CoMZ contrasts sharply with President Mnangagwa’s recent State of the Nation Address, in which he claimed the mining sector’s value had surged to US$12 billion, up from US$2.8 billion in 2017.
It’s noteworthy that mining is a cornerstone of Zimbabwe’s economy, standing as its premier foreign currency generator. The capital-driven sector remains in dire need of investments to amplify production capacities.
