Mining earnings projected to fall 4 percent
LIVINGSTONE MARUFU
Zimbabwe’s mining industry’s export revenue is projected to fall 4% to US$5bn this year from US$5.2bn achieved in 2023 as a result of steep decline in global commodity prices on the international market and other economic challenges plaguing the economy.
These include devastating power cuts, capital constraints, foreign currency shortfalls and expensive electricity tariffs.
Thomas Gono, the president of The Chamber of Mines of Zimbabwe, told Business Times that the outlook was gloomy.
“These mineral revenues are, however, expected to decline to around US$5bn on account of further softening of commodity prices. We believe the increase in production will not compensate for the declines in prices,” Gono said.
He added: “Risks to the mining sector outlook include fragile power supply, capital constraints, foreign currency shortfalls, loss of value on the surrender portion of export proceeds and high cost of production.”
The mining industry growth declined from 10.5% in 2022, to 4.8% in 2023, with most key mineral sub-sectors recording subdued output performance.
Mineral exports also declined to US$5.2bn in 2023 from US$5.6bn in 2022.
Survey findings show that profitability for mining companies declined by an average of 15% in 2023 due to softening commodity prices and high-cost structure, resulting in many firms struggling to break even.
Mining executives indicated that they are expecting their profitability to worsen in 2024 compared to 2023.
Those that are expecting profitability to remain the same are mostly in the gold sector.
Notwithstanding these obstacles, capacity utilization climbed slightly on average from 81% in 2022 to 84% in 2023. In 2024, capacity utilization is predicted to rise even higher to 90%, mostly due to the production of coal, ferrochrome, and gold.
The industry continued to be the nation’s top earner of foreign exchange despite this downturn in performance, accounting for around 78% of all exports in 2023.
It was projected that the mining sector contributed 20% or more to government revenue overall.
