The government should step in to support financially strapped miners and help cut costs by reviewing tax laws and electricity tariffs in order to prevent business closures that might lead to shortages of foreign exchange, a decline in government revenue, the loss of jobs, and a decline in GDP overall.
The call is made at a time when the resources sector has seen a significant downturn, mostly due to a sharp decline in metal prices on the global market and rising operating expenses, which has forced numerous large mining corporations to reduce staff in order to stay afloat.
Miners have already had to make large employment layoffs as a result of having to implement cost-cutting measures in response to the weaker price environment.
The crisis according to analysts, the current crisis is the latest sign that Zimbabwe is bearing the brunt of the worst severe commodities price decline in over a decade, which has resulted in widespread layoffs.
The Chamber of Mines of Zimbabwe president, Thomas Gono, said that the situation was grave.
There is increasing concern that the mining industry may experience a large-scale workforce reduction.
“The unfolding slowdown in commodity prices has seen most key minerals including PGMs experiencing significant decline in prices averaging 60% over the past 12 months and has resulted in reduction in mineral earnings by more than 30% from US$2.2bn to US$1.5bn in 2023,” Gono said.
He added: “This situation has been happening at a time the cost structure has been increasing, propped up by a 44% and 180% increase in electricity tariff and royalty, respectively.
“This has impacted negatively on the viability of PGMs producers.
“While the producers have introduced interventions to minimise the full impact of the softening prices including ramping up production, improving on efficiency and cutting back on some capital expenditures, the initiatives have been inadequate to offset the decline in prices.
Some of the producers are now retrenching to supplement their cost cutting initiatives.”
It also coincides with ZIMPLATS, Zimbabwe’s largest platinum miner, being the most recent to declare that, in an attempt to stay in business, it is putting policies in place to control expenses and save money, including personnel layoffs.
Mimosa, another platinum miner, has also declared its intention to fire employees.
