Zimbabwe is targeting $12bn worth of minerals export earnings by 2021 if long-term capital and machinery investments are put in place, says Finance Minister Prof Mthuli Ncube.
The development comes at a time when the government is moving towards increasing production in the mining sector to reach optimum capacity in the next two years.
The country has over 60 different minerals underground – the major ones being gold, diamond, platinum, chrome, nickel and lately lithium. The minerals can be fully exploited for quick economic turnaround.
However, foreign currency shortages, difficulties in raising requisite capital to increase production, and the lack of beneficiation are preventing the country from realising the full potential of the sector.
But Prof Mthuli Ncube says the country is “expecting the mining sector to contribute over $12bn worth of exports annually if fresh capital to the tune of $8bn is injected towards machinery investment and beneficiation. Hundreds of thousands of jobs will be created in the process.”
The country’s biggest mining body, the Chamber of Mines of Zimbabwe, believes that the sector, which has been devoid of meaningful investment over the past two decades, needs fresh capital investment to ensure that positive growth and viability are maintained.
The mining sector is expected to increase its contribution to the country’s total export earnings to above 69%, from 60% in 2016. The expected growth, it is hoped, will anchor the turnaround of the national economy.
It is why the government is moving to increase the mining sector’s contribution to GDP, which currently sits at 13% or nearly $3bn.
Minister Ncube revealed that the sector requires an $8bn capital injection spread across the major minerals, with gold needing $900m, platinum $3,5 bn, diamonds $700m, nickel $220m, chrome $410m, coal $300m, lithium $250m, asbestos $150m, iron and steel $800m, and others $570m.
This investment, according to the minister, will increase the output for gold to 45 tonnes per annum, platinum 28 tonnes, diamonds 7 million carats, nickel 30,000 tonnes, chrome 8 million tonnes, and coal 10 million tonnes.
Based on the latest global commodity prices, the minerals can generate well over $20bn annually.
In the first two months of the year, gold production is already higher than last year’s.
According to the 2018 Mining Industry Survey Report, the mining sector is beset by constraints in electricity supply, high cost of electricity, low feedstock, and low commodity prices, as well as foreign payment delays.
Other serious impediments, according to most investors, are excessive regulation, foreign currency constraints, and a poor transport system.
One of the newer mining companies in the country, Liberation Mining, which began operations in 2017 and invested $10 million in coal mining, says if the challenges are addressed, it will be able to produce 50 million tonnes of coal per annum from the current 1.5 to 2 million per annum.
Another company, the Australian-owned Prospect Resources Ltd, which is working on a lithium project in Arcadia, 35km east of Harare, says another constraint is the high cost of doing business in Zimbabwe.
Though the company has been greatly assisted by the government, its executive director, Duncan Greaves, says the high cost of doing business in the country far outweighs the potential gains to be made, as charging high prices to recoup costs will ultimately make them uncompetitive globally.
Mining executives say resolving the concerns raised by local and foreign mining companies will go a long way in improving the country’s exploitation of minerals.
Zimbabwe holds the second largest deposits of platinum and chrome after South Africa, and has lately seen increased interest from lithium investors who, however, say funding still remains a hurdle.
The equipment at most mines, which are on the average 50 years old, is severely undermining efficiency, and until this problem is resolved, the sector will struggle.
The good news, however, is that due to a rebound in commodity prices, coal, gold, chrome, iron ore, nickel, and diamonds are expected to do wonders this year.