eBusiness Weekly
Africa Moyo
Mining executives are planning to spend large in recapitalising their operations, while at the same time confident they will make profit in the coming year, driven by growth in the sector.Further, the mining sector is bullish about employment prospects next year amid plans to hire more employees in response to the anticipated business boom.
This is captured by in the State of the Mining Industry Report 2018 and Prospects for 2019.
The report was publicised recently by the industry’s representative body, the Chamber of Mines of Zimbabwe (CoMZ).
Reads the report in part: “The profitability prospects confidence indicator for 2019 is +6 percent, indicating mining executives’ optimism about profitability of mining businesses in 2019. Demonstrating the above, 51 percent of respondents are anticipating profits in 2019 while 39 percent expect marginal growth, with the remaining 13 percent indicating that profitability will remain the same as 2018.”
Miners also expect the industry to grow next year.
The growth prospects index for the mining sector next year is at +25, implying that mining executives are optimistic about the growth of the industry. More than 52 percent of respondents expect the sector to grow while a measly 13 percent foresee contraction in mining sector activities.
The investment plan index for 2019 is +10 a reflection of miners’ desire to inject capital in 2019.
Notwithstanding the desire to invest, the investment plans index for 2019 is somewhat lower than that of 2018 which was +50.
The diminished prospects for investment next year are on account of restricted access to capital and uncompetitive investment environment despite Government efforts to improve the ease of doing business reforms.
Despite hopes for a surge in mining operations, the access to capital index for 2019, which measures the extent to which access to capital affects mining operations, is -20.
This indicates that mining executives expect difficulties in raising capital in 2019. Government, through the Transitional Stabilisation Programme (TSP) and the 2019 Budget, is working towards improving the investment climate in the mining sector and a number of measures have been put in place to achieve growth in the sector.
In the 2019 National Budget Statement, Finance and Economic Development Minister Professor Mthuli Ncube said for improved performance in the mining sector, the TSP and the Budget have proposed deliberate policies across the sector that include reviewing surrender requirements to ensure continued production across all key minerals.
Other measures include dealing with mining claims held for speculative purposes; facilitating and incentivising exploration; automated cadastre information system; resuscitating closed gold mines such as Jena Gold Mine, Elvington Mine and Shabani Mashava Mines (SMM). The resuscitation programme involves use of “own resources for some of the entities, while for others joint venture partnership arrangements will be pursued”.
Government also plans to create an “efficient and competitive mining tax regime”; developing artisanal and small-scale miners through financing them; expediting the transparent marketing of the diamond stockpile under the Zimbabwe Consolidated Diamond Company (ZCDC); and plugging leakages in the marketing of gold, including implementation of a robust monitoring framework.
Prof Ncube said value addition and beneficiation is also expected to play a key role achieving growth in the sector.
“The thrust is to value add and beneficiate more through processing and refining of minerals and link processed and refined minerals to the manufacturing sector in order to industrialise.
“In this regard, Government is finalising the Mineral Value Addition and Beneficiation Policy to improve domestic smelting and refining, to take advantage of the immediate scope for income and exports generation offered by minerals such as platinum, chrome, lithium, nickel, diamond, copper, gold and coal.”
As part of efforts to boost operations of the mining sector, Government has reviewed foreign currency retention by gold miners from 35 percent to 55 percent. The Ministry of Mines and Mining Development was allocated $15,4 million to finance its operations.
