Local manufacturing companies are under capacitated to supply mining consumables, due to capital constraints, obsolete equipment and high cost structures, mining executives have said.
By Fidelity Mhlanga
Alex Mhembere, Zimplats chief executive officer and chairman of the joint suppliers and producers (JSP) committee, said while mining can provide business opportunities, the manufacturing sector was facing a plethora of challenges, making it impossible to supply mining companies.
“The subsector is not sufficiently capacitated (capacity utilisation 30%), and is largely uncompetitive due to ageing equipment, low uptake of products, capital constraints, high cost structure and unreliable power supply among other challenges,” he told delegates at a Chamber of Mines meeting recently.
Subsectors that were identified include engineering, iron and steel, belting, chemicals and protective clothing.
The JSP committee, which comprises the Chamber of Mines and a Confederation of Zimbabwe Industries committee, was established to improve the availability of local products in mining, with an exclusive mandate to develop linkages between the mining industry and the upstream sector.
“While the mining industry can provide opportunities to local producers, the sector has little capacity to meet the local producers’ financial requirements for working capital and retooling,” Mhembere said.
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The committee, Mhembere said, has already identified key manufacturing subsectors with strong linkages in the mining sector with a view to assessing their current capacities and requirements to adequately service the mining industry.
“Where products are available, they remain highly uncompetitive in prices, quality, reliability of supply and poor back up services,” he said.
“The study, however, reveals that the mining sector offers an immediate market for local producers of mining sector input requirements.”
Mhembere said findings of the assessment programme point to the need for adequate support programmes for the local manufacturing sector through various initiatives.
He said the mining industry, despite its current challenges, is committed to supporting government policies by pursuing the beneficiation agenda through building more beneficiation plants.
“Thus, there is need for all stakeholders (government, mining sector, local producers and bankers) to agree on strategies to implement the current local content development initiatives,” Mhembere said.
“In the long term, there is need for medium to long term financing frameworks to support retooling and replacement of ageing and obsolete equipment with a view to improving efficiencies and competitiveness, through engaging the financial sector to participate in the development of linkages.”
