‘Gold output to increase to 50 tonnes by 2020’

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Gold output is envisaged to increase to 50 tonnes by 2020, generating $1,8 billion annually, a mining executive has said.

BY FIDELITY MHLANGA

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A total of $600 million is required to optimise production, Gold Producers Association chairman, Noah Matimba said.

He said the presence of extensive gold deposits, coupled with idle capacity, presented an opportunity for the sector to increase output to over 50 tonnes by 2020.

“Existing producers have a potential to increase output to 50 tonnes through improved efficiencies and expansion of current operations.In line with output growth, gold revenues will reach $1,8 billion by 2020,” Matimba said at the Chamber of Mines annual general meeting in Victoria Falls on Friday.

“The gold industry requires $600 million in the next five years to optimise production, of which $410 million relates to ramp up capital, while $190 million is for sustenance of operations.”

He said at present, capacity utilisation levels, the mining industry required an estimated 120 MW of power, with an estimated 30 MW meant for gold mining.

Matimba said the existing electricity tariff for the gold industry, at 12,8 cents/KWh, was significantly higher than the regional average of 8 cents/KWh.

Gold is currently contributing around 4% to the fiscus through government taxes and other fiscal charges, and an additional 4% is generated in the value chain.

After attaining a peak of 27,1 tonnes in 1999, gold output levels progressively declined to reach a historic low of 3,6 tonnes in 2008, before recovering back to 20 tonnes by 2015.

It is envisaged that gold’s contribution to gross domestic product could rise from 7% to 15 % by 2020, whereas total exports would surge from 40 to 55%.

In terms of contribution to fiscus it is envisioned that the sector will channel 12% from the current 8%, with contribution of foreign direct investment growing to 31% from the current 28%.

To achieve the growth, Matimba said there was need to resuscitate closed mines, improve efficiencies, reduce costs, use new technology and optimise the use of inputs and a conducive business environment.

Critical success factors for sustained growth and development, according to Matimba, include managing costs through aligning labour costs to productivity, optimal power usage and negotiating with suppliers for reduced prices.

The gold industry continued to operating below installed capacity at around 77% in 2015 despite in excess of 4 000 recorded gold deposits.

In terms of gold productivity per square kilometre, the country is ranked above traditional big producers such as United States of America, Canada, Australia and Brazil.

However, Zimbabwe remained largely underexplored, impacting negatively on grades due to limited new discoveries.

Gold receipts increased from $155 million in 2009, to reach a peak of 868 million in 2013 and were at $737 million in 2015. For the period 2012 to 2015, the industry generated $2,7 billion

“The formal gold industry has created in excess of 11 000 direct jobs (25%) of total formal mining employment of around 40 000 and an additional 33 000 in indirect jobs,” Matimba said.

He said the government should address the power supply deficit and cost, road network, rail network and water infrastructure, continue reducing the cost of doing business, improve the investment climate, optimal benchmarked fiscal framework and finalise amendments to the Mines and Minerals Act.

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