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Mines sector set to recover in 2021

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Executives in the mining sector have expressed confidence that the industry will return to normal operations next year.

BY FIDELITY MHLANGA/TAURAI MANGUDHLA

They said the majority of mines would ride out of the COVID-19-induced shocks that crippled operations worldwide this year.

The annual State of the Mining Industry survey released by the Chamber of Mines of Zimbabwe said a poll of the industry’s captains had revealed that the sector was poised for growth in output and improved capacity utilisation.

Capacity utilisation, a measure of productive efficiency, is projected to increase to 80% next year from 61% in 2020, the report said.

“We are saying despite COVID-19, the future is brighter than where we are.

“That is the confidence we got from mining executives. The growth projections are on the basis that issues that are bedevilling the sector will be sorted (and) COVID-19 will be managed well in the next 12 months,” said Albert Makochekanwa, lead consultant for the survey.

He said the majority of mines were planning to ramp up production next year, with only 10% saying they would maintain output at current levels.

The report said 40% of respondents to the survey indicated that they were expecting to increase production by more than 30%.
It projected gold output to rise by 32% to 33 tonnes next year, from a 25-tonne projection in 2020.

Growth is also expected in several key minerals including platinum, diamonds and chrome, which is expected to reach 2 300 tonnes next year, from 1 200 tonnes this year.
“In the PGMs (platinum group metals) there are a lot of projects (such as) the Great Dyke and Karo Resources with platinum output expected to grow by 2025,” the survey revealed.

The report said mining sector executives were looking forward to improved power supply in 2021.

However, it said the industry was expecting that the cost and access to capital would remain a drawback in the coming year.

The survey said mining industry executives were expecting improved mineral prices next year as the globe improved operations due to projected reduced health concerns over the COVID-19 pandemic.

“Most mining executives are pessimistic about the prospects for raising capital in 2021. An uncompetitive investment environment, high cost of doing business and perceived country risk are major hindrances to raising capital. Most respondents are expecting that COVID-19 will be contained in 2021. About 50% of respondents indicated that it would take them less than three months to recover to 2019 operating levels while 10% said it would take them three to six months,” the survey said.

Most mines will maintain current staffing levels next year, the survey said, with only a minority set to recruit more workers.

It said the industry was worried that policy inconsistencies, which affected businesses this year, might persist into 2021.
Miners underscored the need to address key infrastructure deficits, including power, as well as impediments to doing business in light of the need to raise adequate capital to invest in beneficiation.

Mines minister Winston Chitando said government was looking into policy concerns raised by miners.

“We have minerals that have been affected by the current COVID-19 pandemic,” Chitando said.

He added: “There is government determination to ensure that there is a correct framework for the entire industry. I can assure you that in the next two weeks there are specific interventions that will be announced for two minerals.”

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