Deal with issues afflicting the mining sector

Last week, at the Chamber of Mines of Zimbabwe conference held in the resort town of Victoria Falls, the president of the chamber, Thomas Gono, painted a gloomy picture of what is happening in the mining sector.

The resources sector being choked by growing economic headwinds the industry is battling with.

Given that the mining sector generates over 70% of foreign currency earnings and 13% of the country’s GDP, it is imperative that the government solve some of the issues plaguing it.

Some of the challenges besetting sector include a steep drop  in global commodity prices, foreign exchange shortages, severe power outages, expensive electricity, unstable exchange rates, and a heavily regulated environment.

The mining companies are also grappling with escalating operational costs, which could force them to turn to job cuts to survive.

“The mining industry is facing significant headwinds,” Gono said.

He added: “As you might be aware, the mining industry  growth rate declined from 10.5% in 2022, to 4.8% in 2023, with most key mineral subsectors recording subdued output performance. The sector is likely to further decline this year.

“The value of mineral exports also declined to US$5.2bn  in 2023 from US$5.6bn  in 2022. This performance comes at a time when the country is reeling from a drought that is threatening to disrupt the strong and positive economic performance of prior years. Our preference is for the mining industry to be resilient in supporting the economy in such difficult times.

“The power supply constraints continue to adversely impact the mining sector. In particular, those that are not connected to dedicated power lines, endure frequent and severe power outages that result in lost production time.

“The quality of power is reported to be poor resulting in damage to electrical plants and equipment and in addition, responses to reports on faults are slow resulting in extended periods of down times.”

According to Gono, a number of mining businesses have resorted to pricey alternative electricity supply options in order to prevent grid power outages from interfering with their operations. The majority of these options consist of solar power and pricey diesel generators.

The miners need government support to survive.