BY SHAME MAKOSHORI Zimbabwe’s mining authorities are upbeat that their plan to target US$12 billion in turnover from mining annually from next year is achievable.
There are, however, still sceptics across the industry, with many saying Mines and Mining Development minister Winston Chitando has underestimated the depth of the challenges facing the industry.
In a key note address to the Mine Entra conference last week, Chitando glossed over the troubles and emphasised that his plan was viable.
By next year, he said, the industry would turn over US$12 billion as planned.
“The mining industry continues to witness significant growth due to major investments in areas of exploration, value addition and beneficiation, the opening of new mines, the resuscitation of closed mines, and the expansion of existing mines across the various mineral subsectors,” Chitando said.
“Key mining projects commissioned by the President include, but not limited to Eureka Gold Mine, Shamva Gold Mine, RioZim Cam and Motor Biox Gold Plant, ZIMCN Radnor Gold Mine reopening and Bikita Minerals Spodumene Project. We want to take this opportunity to applaud the private sector for working closely with the government for the journey walked so far in the mining sector. A US$12 billion mining industry by 2023 will be achieved.”
After building up revenues from US$2,9 billion in 2017, the industry generated US$5 billion last year, even as the economy was hit by COVID-19 pandemic shutdowns.
President Emmerson Mnangagwa said last week, the industry would see revenues rising to US$6 billion this year, with output expected to double from 2023.
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The $12 billion figure has been a contested target, given the fact that big miners say there still are several hurdles to the sector’s growth.
Gold and diamond mines are facing potential shutdowns, according to the Chamber of Mines of Zimbabwe (CoMZ).
It said unless government intervenes, the situation in many operators will affect the drive to achieve the revenue targets.
The CoMZ mounted a fresh appeal for authorities to cut diamond royalties by three percentage points and proposed several other interventions.
These would be key in scaling up production under the US$12 billion strategy.
Diamond miners are currently required to pay 10% of their gross earnings to the State in royalties.
“The royalty for diamonds at 10% is among the highest in the region,” the CoMZ said, as it spelt out its expectations for the upcoming review.
“The royalty is undermining viability in the diamond sector, which continues to be weighed down by a high cost structure (on the back of high input costs, high fiscal charges and unsustainable cost of capital).
“The situation is worse for kimberlitic diamond producers such as Murowa Diamonds which requires huge costs to extract.
“To restore viability in the diamond industry, diamond producers are appealing for a downward review in the royalty to around 7% in line with regional averages, as well as, the overall cost structure in the diamond sector,” it added.
But authorities say part of the strategy to reboot the mining industry would include opening up fresh opportunities to the industry’s supplies to tap into US$2,4 billion annual budgeted by big mines for materials.
About 80% of this money is finding its way to foreign markets because of various reasons, the industry finds it cheaper to deal with foreign suppliers.
At the Mine Entra exhibition last week, several new and traditional investors moved to clinch deals in the industry.
First time exhibitors at Mine Entra 2022 were confident the exhibition would broaden their market base and grow their businesses.
Enginet chief executive officer, Jacob Ziwahwa, said the exhibition was building the framework for expansion.
“We want to add value to the mining and mineral processing sector,” he said.
His views were shared by the South African-headquartered Platoon Lubricants director, Enock Kabaira who said more networking opportunities were giving the industry the capacity to expand.
“We are planning to open a branch in Zimbabwe, which will service countries as far as Zambia and the Democratic Republic of Congo,” he said.
Platoon Lubricants is a subsidiary of Shield Chemicals — a South African-based company that manufacturers products such as dashboard sprays and car tyre polish.
“We will not let down our potential clients,” said Kabaira.
But the big miners say suppliers, who are mostly small-scale enterprises, could do more to quicken the achievement of the US$12 billion target if they do things right.
For now, they have made so many mistakes around their pricing models, and they are losing out.
Mnangagwa said he was concerned about the state of affairs.
“I was so sad to hear that 20% of your supplies are local and 80% is foreign, which means we are exporting jobs,” Mnangagwa said in a key note address.
Mnangagwa was impressed by high quality consumables on display, but noted that domestic suppliers demanded a premium.
“There is no excuse for the continued importation of consumables like mill balls,” the President added.
But Colin Chibafa, president of the CoMZ, said billions of United States dollars were ending up offshore because of the pricing crisis.
He indicated that unless domestic suppliers returned to normal pricing, they should forget about access to lucrative opportunities in one of the region’s fastest expanding mining sectors.
“There are US$2,4 billion opportunities for local suppliers,” Chibafa told the conference.
“We are exporting jobs and our wealth and this is an unattainable situation. We cannot afford the more than 100% price increases in US dollar terms that we have seen. You must change your business models. You must not be wholesalers, you must seek to manufacture locally,” the CoMZ president added.
Musa Magama, the commercial director of CPS Africa said events such as Mine Entra helped the industry iron out such problems.
“We want to reach out to a lot of potential clients and offer them solutions,” he said.
- This article was taken from the Weekly Digest, an AMH digital publication
