A research consultancy says the liberalisation measures introduced by the inclusive government last year have gone a longway in restoring confidence in the mining sector, allowing previously closed mines to reopen and resume operations.
In its latest report, Zimbabwe Mining Sector Review, asset management company Imara Capital predicts the total value of minerals produced in the country will increase in the near future.
The asset management company notes that growth would be driven by increased investment, improved liquidity and a reduction in local input costs.
“The sector’s contribution to gross domestic product has remained at an average of 7%,” Imara said.
“The liberalisation measures introduced in 2009 have restored confidence in the mining sector, allowing previously closed mines to reopen and resume operations, particularly in gold mining.”
The country’s biggest gold producer, Metallon Gold, has already reopened two of its five gold mines; Canada’s New Dawn Mining Corp has also opened Turk Mine while London-listed Mwana Africa has reopened Freda Rebecca gold mine.
Gold producers are restarting shut mines in Zimbabwe after new rules allowed them to sell gold directly to refiners of choice, but uncertainty is likely to block big new mine investments for years.
Imara projects gold output to increase from 4 966 tonnes in 2009 to 7 724 tonnes in 2010 as a result of the reopening of a number of mines.
Imara said the mining sector had evolved significantly from the period of hyperinflation and foreign currency shortages.
In the last 20 months, mining has become a critical pillar in the Zimbabwe economy, creating jobs, earning foreign currency and helping the diversification of the country’s economic base through beneficiation projects.
Production of coal is expected to increase from 1,7 million tonnes in 2009 to about 2,4 million tonnes in 2010, owing to an improved macroeconomic environment.
But potential of this sub-sector is being hampered by ageing equipment and frequent breakdowns, according to the report.
Platinum output is seen at 8 712 kilogrammes this year, following expansion programmes by Zimplats and Mimosa, and the expected firming of international prices.
Imara said platinum production had increased steadily from 519 kilogrammes in 2001 to about 6 849 kilogrammes in 2009.
Zimbabwe, according to Imara, has the potential to supply 25% of the global diamond demand in terms of value within a few years.
The country sold its first batch of Chiadzwa diamonds in August after meeting the Kimberley Process Certification Scheme’s minimum requirements.
Buyers came from India, Lebanon, the US, Israel and Russia.
Imara, however, said Zimbabwe’s asbestos production had declined to an estimated 3 316 tonnes in 2009 from 11 489 tonnes in 2008 due to the underperformance of major producer Associated African Mines, weighed down by old machinery.