LIVINGSTONE MARUFU
Zimbabwe’s mining companies plan to intensify policy dialogue with the government to create a conducive environment for the sector as it moves to ramp up production in 2021.
The dialogue comes after the sector felt engagements with the central bank on delayed payments had not achieved the desired results leading to a slump in gold production.
In the 2020 state of mining survey presented yesterday, Chamber of Mines of Zimbabwe expected aggressive dialogue to yield positive results which will push authorities to amend unfriendly policies that stymie the growth of the mining industry.
Mining experts suggested that the review of foreign currency retention levels to 70% from 55% was a result of such dialogues.
“Respondents were of the view that the positive policy dialogue with authorities in 2020 would intensify and further improve the operating environment including improvement in the following areas foreign exchange framework, power situation in the mining sector and capital inflows,” the report said.
“About 90% of respondents expected the covid-19 situation to improve in 2021 further boosting prospects for the mining industry in 2021.
Most respondents, 80% indicated that it would take them less than 3 months to go back to precovid-19 levels of operation.”
Miners posited that if the authorities could ensure that payment delays are dealt with, production for most miners would improve as much needed capital will be readily available for mining companies and the production cycle would intensify.
The mining executives were optimistic to improve capacity utilisation, production, sales, profitability and underlying assumptions.
Mining industry capacity utilisation outlook for 2021 is expected to be around 80%.
Survey findings show that average capacity utilisation for the mining industry is at around 61% in 2020, compared to 70% in 2019.
Most key minerals recorded declines in average capacity utilisation in 2020 compared to 2019.
Only the coal sector recorded increase in capacity utilisation while the platinum sector continued to operate at around 100%.
Low capacity utilisation was due to power outages, inadequate foreign exchange allocations, capital shortages, high cost structure and obsolete equipment.
About 80% of the miners indicated that they anticipate operating environment for the mining industry to improve in 2021 compared to 2020.
Industry experts said mining industry’s vision of a US$12bn industry by 2023 will be on track if the authorities address the fundamentals.
