Gold output seen below target at 22 tonnes

Zimbabwe’s gold output is this year seen at 22 tonnes, lower than the target of 24t after the government failed to pay small-scale miners for deliveries because of the ongoing cash shortages, Mines minister Walter Chidakwa said yesterday.

The Source

“Somewhere in September, we slipped because of the cash shortages . . . the miners told me that if you do not pay us cash, we will sell elsewhere and that is where we lost it, otherwise we could have been at 23 tonnes or 24 tonnes,” he said at the launch of the Chamber of Mine’s report on the state of the mining sector.

He said illegal gold sales by smallscale miners, who produced nearly 40% of the total gold output in the first half of the year, were on the rise.

All gold produced in Zimbabwe is required to be sold to Fidelity Printers and Refiners, a company wholly owned by the central bank.

Gold is Zimbabwe’s main export and, along with tobacco and platinum, accounts for the bulk of the country’s foreign currency earnings.

The country produced 21t of gold in 2015, and remains well below the peak output of 30,2t achieved in 1999.

The report showed that average capacity utilisation for the mining sector had increased from 60% in 2015, to 64% in 2016.

“The platinum sector continues to operate at full capacity, while gold recorded an increase to 79%, from 77% in 2015. Declines in capacity utilisation levels were recorded in respect of coal from 50% to 30% as well as nickel 55% to 41%,” reads the report.

Average profitability in the gold and the nickel subsectors increased in 2016 compared to 2015, while that for platinum producers remained subdued.

But 90% of respondents expect to improve their profitability next year.

In 2016, payments to the government and government-related institutions averaged 13% of revenues and around 17% of total costs.

Shortage of capital and the high cost of power were identified as the main challenges to growth of the sector.

Headcount for the surveyed companies declined by 11%, with 60% of the respondents having reduced their headcount in 2016 by an average of 17%.

The survey also showed that 30% of the mines embarked on new mine developments during 2016 and 60% indicated that they would carry out new mine developments in the next five years.

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