All going ‘Zimmingly’ as miners express optimism in post-Mugabe era
These are the key findings of a survey of Zimbabwean mining investors and executives, commissioned by the country’s chamber of mines, which says investors and executives “are optimistic that the new government will implement consistent and predictable mining policies” in 2018.
“Around 50 percent of respondents are optimistic about prospects of a consistent and predictable mining policy environment, while 10 percent were of the view that the policy environment will remain uncertain and unpredictable,” says the report.
Apart from Anglo Platinum, other foreign resource firms with operations in Zimbabwe include Metallon Corporation, Toronto-listed Caledonia Mining Corporation, Impala Platinum and Sibanye Stillwater, as well as Asa Resources. Locally owned miners such as RioZim are also significant players in an industry also dominated by artisanal miners in gold and chrome mining.
Finance Minister Patrick Chinamasa said last week in his 2018 budget statement that Unki mine, which is run by Anglo Platinum, was “to commission a smelter in August 2018”. Mimosa, which exports a concentrate, is also way behind as its board still has to approve a feasibility study for a smelter. Zimplats is working on refurbishing its Selous Metallurgical Complex.
“The government, however, notes with concern the slow pace in implementing agreed targets, particularly stage three (base metal refinery to recover base metals), due for completion by January 1, 2017,” Chinamasa said in his 2018 budget and fiscal policy statement.
Zimbabwean mining sector investors surveyed under the chamber of mines report recommended the “adoption of an optimal fiscal regime for the mining sector with a view to guaranteeing investment inflows” into the country.
Miners also want royalties to be reduced to reflect the industry’s peculiar circumstances, such as low grades, cost structure, ability to pay and the overall fiscal landscape. Other industry players prefer that royalties be “indexed to commodity prices to promote viability” of the sector.
Zimbabwe’s foreign currency and liquidity shortages is occasioning challenges in terms of foreign payments, with all gold producers concerned by the current exchange control policy, where all their proceeds are retained by the Reserve Bank of Zimbabwe.
“All gold producers indicated that they were experiencing foreign payment delays during 2017, with outstanding payments exceeding eight weeks.”
The government projects that the mining sector will grow by 7.5 percent this year and Chinamasa is expecting mineral export earnings for Zimbabwe to grow to $2.5 billion in 2018 compared to $2.3 billion for this year. Major contributory minerals are expected to be platinum, gold and diamond from resurgent gem mining under a consolidated approach.
Mining industry executives are equally buoyant about the prospects for the industry in 2018. Those surveyed said they were optimistic that the new government would resolve all legislative and policy bottlenecks affecting the industry.
“The profitability prospects confidence indicator for 2018 stood at +18 percent, compared to +11 recorded for 2017, indicating strong optimism of profitability of mining businesses in 2018, with 70 percent, of respondents anticipating profits in 2018 and 20 percent, expecting just to break even,” says the survey report.
About 20 percent of producers are “expecting to record losses in 2018”.
- BUSINESS REPORT