Gold capacity utilisation to hit 87%
LIVINGSTONE MARUFU
The country’s gold sector capacity utilisation is expected to go up by seven percentage points to 87% by the end of year on the back of increased production in the sector.
The gold sub sector is projected to be the main driver of the mining sector following volatile environment across the world following Covid-19 effects and Eastern Europe war which has triggered a rise in gas and fuel prices.
In crisis situations, the yellow metal is seen as a safe haven asset which trigger gold producers to ramp up output and capitalise on firming prices on the international market.
The price of the bullion is hovering around US$2,000 per ounce.
The Chamber of Mines of Zimbabwe CEO Isaac Kwesu (pictured) told Business Times that gold producers are upbeat about their prospects for 2022 with more than 80% of gold producers planning to increase production both in 2022.
“Average capacity utilisation for the gold industry is projected at 87% in 2022, up from 80% in 2021. Gold production is expected at 35 tonnes with the market conditions firm prices projected to persist in 2022,” Kwesu said.
“Zimbabwe’s gold production increased to 31.4 tonnes in 2021, compared to 20.8 tonnes in 2020 largely benefitting from incentives and favourable gold prices with the yellow metal contributing about US$1.8bn to the total export revenues in 2021.
“In the outlook for 2022, gold revenues are expected to surpass US$2.1bn in 2022.”
The gold price is expected to remain elevated above US$1,900/oz throughout the year.
Experts said the gold price has already responded to the unfolding crisis in Europe, surging above the US$2,000/ounce mark during the period of conflict, from an average of US$1,750/ounce in December 2021.
Gold will also have support from high demand from central banks and jewellery sectors.
“For the greater part of 2022, precious metals will find support as a safe haven on the back of the crisis in Europe. We anticipate gold prices to trend towards the all-time high reached in 2020,” Kwesu said.
“In the second half of 2022, we anticipate the gold market to revert to macro drivers such as real rates, U.S. Federal Reserve policy as well as the growth outlook. We, therefore, expect the gold price to taper off at prices above the 2021 average.”
He said various mines will ramp up production on the back of improved access to deeper areas of the mine and strong capital injection in various mines.
Eureka Gold Mine, Gold Quarry Mine and Shamva Gold Mine have resumed operations and are expected to ramp up production given the serious capital injection that was done with the respective shareholders.
The mines have reopened at a good time when prices are very high on the international market thereby helping companies to improve their export revenues.
The State of the Mining Industry Survey conducted by the Chamber of Mines last year indicated that mining companies are ramping up production in 2022, with mineral exports expected to benefit from favourable prices.
The gold and PGMs sectors are the main growth pillars for the mining sector in 2022.
The mining industry is expected to generate approximately US$5.5bn in 2022, underpinned by strong performance in gold at US$2.1bn, palladium at US$1bn and diamond at US$0.8bn.
