Zimbabwe’s target to hit US$12bn a year from mining revenues, starting 2023, appears a mere pipe dream if the sectors’ performance this year is anything to go by. In the absence of a miracle which turns around the extractive industry’s fortunes, not much hope can be invested in the US$12bn goal.
While official statistics of revenue earnings have been kept under wraps in the past month, indications are that the extractive industry has raked in over US$2bn in the first 10 months of the year, led by gold which last year accounted for 65% of the sector’s earnings.
The US$2bn, which could amount to US$3bn at the end of the year, is a paltry 25% of the US$12bn. This gives Zimbabwe two years to quadruple annual mining revenues. The US$12bn target is anchored on gold and chrome, with an ambitious plan to grow gold production from the 33 tonnes last year to 100 tonnes.
This comes as the sector suffers immensely from leakages as producers sell the yellow metal in neighbouring South Africa for cash given that the government’s sole gold buyer, Fidelity Printers and Refiners, is paying 55% hard cash and the balance in local dollars.
This is prompting smuggling, with some foreign buyers said to be setting up their base locally to mop up the gold. As of October, gold production stood at 24.5kg, which is 10 000kg below the 35 tonnes target for this year. Last year deliveries closed at 33.28 tonnes, a figure which failed to meet the revised 2018 target of 34 tonnes.
Last year, gold contributed over 65% of the country’s mineral export earnings leaving the mineral as the highest forex earner ahead of tobacco. Chrome also stood at 1.35kmt against an annual target of 1.9kmt this year.
Meanwhile, chrome ore production is certain to miss the annual 1.9kmt target in 2019 as production stood at 1.35mt at the end of October, as low commodity prices on the global market, foreign currency shortages and massive power cuts threaten contribution of the extractive sector to the economy.
Zimbabwe’s chrome miners could be losing up to US$70 per tonne in potential chrome due to huge disparities between domestic and export pricing of the mineral as cartels cash in on the distortions, the Zimbabwe Miners Federation (ZMF) has said.
Predatory buying is rampant across the mineral-rich Great Dyke, leaving producers at the mercy of buying cartels who are taking advantage of infrastructure and marketing challenges besetting the economy, ZMF has said.
Zimbabwe accounts for 12% of the world’s chrome ore deposits; only second to South Africa, but the value is far greater than 12%. The chrome reserves have only been exploited to the extent of 5%. The country plans to more than double chrome ore and high carbon ferrochrome production between now and 2022 to 3.1kmt and 950mt respectively.
Diamond production was 1,755,538 carats for the 10 months, below 2.2m carats that had been produced by August 2018. A mega deal that will bring Alrosa and other partners on board in the country’s diamond mining is yet to bear fruit. Other major deals in platinum and gold are also at formative stages.