Forex allocation delays bog down Zimbabwe’s mining industry, reduce mineral output
HARARE – Zimbabwe’s mineral production slipped in the first quarter as most key minerals recorded negative growth, with gold output being the largest casualty owing to the delays in foreign currency allocation, said the Chamber of Mines of Zimbabwe (COMZ) recently.
The southern African nation is poised to produce 100 tons of the yellow metal by 2023. It also aims to achieve 50 tons by the year 20130, while at the same time maximizing the platinum contribution to the economy.
Briefing the media ahead of the Zimbabwe Annual Mining Conference next week, chief executive officer Isaac Kwesu said the association was still consolidating data.
“By the time we get to our conference, that information will be available but preliminary figures just indicate that the first quarter was not a good performing period in the mining industry as most key minerals recorded negative growth,” she said.
“I am confident given we receive additional debtor may not change much in terms of the outlook of the industry in the first quarter, but we are still hopeful with the many initiatives the industry is going through that we will be able to cover the negative growth and post remarkable output performance for the mining industry by year end.”
However, COMZ was still very much confident notwithstanding the purporting negative overall performance based on what mine houses were doing that it would be a good year. The systematic challenges across most minerals, Kwesu said, had a lot to do with delays in allocation of forex, which had improved to a large extent.
“In weighted basis, gold constitutes the biggest chunk of the mining industry. So any downside factors that undermine gold have an overall impact on the overall performance. We may have already seen the performance of gold in the first quarter where the gold output fell by 10% and I think that’s the biggest slump across most minerals. So it weighed down the overall performance because of its significant weight its constitutes more than 34% of the mining industry performance so gold has a lot to do with the overall performance,” he said.
Of all the materials, chrome marginally improved, with the lobby group insisting the numbers were indicative as they were still being validated. COMZ said power cuts were just a recent problem, as the mining industry was still get priority in terms of allocation of power.
“There has been some load shedding in the gold mining houses but not that significant to affect performance yet since it is a recent problem. In terms of fuel the mining houses are ok, we still access fuel easily and most of the mining houses export so we access fuel easily,” COMZ President Batirai Manhando.
COMZ is still engaging the apex bank on issues relating to thresholds to make sure that they are adequate to meet the import requirements industry thresholds. Gold initially retained an average of below 10% and the association lobbied and for it to go up to 55%.
“It differs from mining house to mining house and mineral to mineral, but suffice it to say, that the current threshold if we are to expand the operations, of which we should be doing, I have enunciated the vision of 2030 and own growth prospects,” said Manhando. “We definitely need to be capitalising and most of this will require forex. In the ideal world if you go to the market we should be getting the US dollars we want, we are still in the transition stage, in terms of thresholds we are still engaging we think they are still on the low side and we need them up but it differs from minerals to mineral.”
COMZ is also working with the central bank so that the mining companies will get their payments in time which will enable them to buy their inputs in time for their production processes.
“Lead time has come down to at least 2 weeks at most, it used to be as much as 12 weeks. it’s an improvement but we should operate at 7 days. This is the number we agreed with the bank,” Kwesu said.
The association said the liberalisation of the foreign exchange was a step in the right direction – when you come up with the right price, you reduce pressure from mere miners or expectation of liquidation of nostro to support the interbank market will come from one side but may also have individuals, other institutions that may have free funds also bring monies onto the interbank market and volumes will improve including miners who may not have adequate funds can also go to the interbank market to top up our import requirements.
“While it’s still early but indicative signs are that as long as the price of the forex is fair we have also more volumes come to the market and even miners who do not have adequate may also access it on the market,” he said.