HARARE – Chrome output from Zimbabwe’s mines slid by 12 percent to 394 253 tonnes during the third quarter of 2019, after clocking 447 625 tonnes during the same period in 2018, official reports showed on Thursday, blaming the closure of a key mine for the slowdown.
African Chrome Fields (ACF), which produced 10 percent of output in the southern African country, halted operations in September last year, citing a rapidly deteriorating economic climate, highlighted by high inflation and power shortages.
Thursday’s report became one of the biggest lessons for authorities in Harare that they must quickly move to stem a multifaceted economic crisis that has been repelling investors.
Chrome had emerged among the most sought-after mineral from Zimbabwe, with ready markets in China’s booking industries.
“Chrome output in the third quarter of 2019 declined to 394 253 tonnes compared to the 447 625 tonnes produced during a comparable period of 2018,” Zimbabwe’s Ministry of Finance said in its third quarter economic bulletin.
“Chrome production was heavily affected by power outages (which was) compounded by the exiting of one of the major produces in the industry ACF. The company used to contribute more than 10 percent of total output. In addition, challenges in accessing foreign currency for importation of spares and explosives, along with shortages of fuel across the chrome industry were among other challenges,” said the ministry.
The data showed output in all minerals excerpt iridium slowed down during the period, with diamonds suffering the sharpest knocks after production in the region that produced gems was affected by Cyclone Idai at the beginning of the year.
Output in key minerals like gold and platinum also declined, the report said.
AFC, which is operated by the South African business mogul, Zunaid Moti said on September the crisis in Zimbabwe had been compounded by a sharp drop in international chrome prices, which wreaked havoc on operators across the continent.
It said 500 workers would lose jobs at the operation, where the Zimbabwe National Army is believed to be a dormant partner.
Global prices of ferrochrome, used to make stainless steel, tumbled in 2019 due to weaker demand from stainless steel mills in top producer China, according to traders in Asia and Europe.
Moti said he had been under intense pressure to close the business due to Zimbabwe’s negative image, but he was set to lose significant wealth after sinking close to US$250 million in the past five years.
“Some people would not want to do business with us because we are in Zimbabwe,” Moti told reporters.
“But the economic meltdown in the southern African country has also caused a negative impact as well,” he said.
Local media reported that Moti had invested over $200 million in the construction of an aluminothermic plant and six other plants that were set to generate 10 000 tonnes of ultra-low carbon ferrochrome monthly within 11 months.
AFC’s move into Kwekwe five years ago was a huge reprieve to a mining community that had seen a string of big operators including the giant ZISCO Steel, once Africa’s largest integrated steelworks, shut down.
In March 2018, ACF Zimbabwe director, Ashruf Kaka, told delegates at an investment conference that the firm’s investments had created 1 200 jobs in the country.
A further 5 500 people had indirectly benefited from the project, he said, reiterating President Emmerson Mnangagwa’s assurance that investments were safe in Zimbabwe, which is battling to reform unfriendly policies.
Kaka said the ambitious mining firm was also scouring for opportunities in the country’s agricultural sector, which he said presented great opportunities for growth.
He said AFC had entered the country during the most difficult time for investors, when the rule of law was “undermined” by policies of the previous government.
“African Chrome Fields invested in excess of $220 million in Zimbabwe in the last two years. We have already engaged government for diversifying to gold and diamonds. We are committed to Zimbabwe in every respect,” said Kaka.
“We have been looking at agriculture with our local partners, Sakunda. We will be injecting foreign investment into these areas,” he said, assuring investors that this was the time to invest in the country’s mining industry.