Capacity utilisation for Zimbabwe mines seen at 80% in 2021

AT least 90% of mines in Zimbabwe are planning to ramp up production next year while 10% expect to remain the same, a new report shows.

According to the latest State of the Mining Industry Report Prospects for 2021 findings shows that mining executives are slightly confident about the prospects for their businesses in 2021 compared to 2020. The report was done by the Chamber of Mines of Zimbabwe.

The Mining Business Confidence Index for 2021, which measures the mining business sentiments (optimism or pessimism) about the prospects of the mining industry in the next 12 months is at +3.1, somewhat higher than +2.2 recorded for 2020.

“Of the respondents that are expecting to increase production, approximately 40% are expecting to ramp up production by more than 30%. About 10% expect to increase output by between 10% and 30%,” the report stated.

Survey findings show that most respondents are planning to improve capacity utilisation in 2021. The average capacity utilisation for the industry expected to increase from 61% in 2020 to a 5-year record at 80% in 2021.

As was the case for 2020, survey findings show that, “Most mining executives are pessimistic about the prospects for raising adequate capital in 2021, indicating that uncompetitive investment environment, high cost of doing business and perceived country risk are major hindrances to raising capital.”

Most mining executives are optimistic about profitability of their businesses in 2021, with 70% of respondents indicating that they are projecting their businesses to be more profitable compared to 2020 while 20% are expecting the same level of profit as in 2020.

“Only 10%, mostly in the base metals industry are projecting losses citing the possibility of covid-19 related challenges including depressed markets and logistical disruptions to persist in 2021,” it said.

The findings show that most respondents, about 80%, are expecting the covid-19 pandemic to be contained in 2021.

“About 50% of respondents indicated that it would take them less than 3 months to recover to 2019 operating levels while 10% would take them 3 – 6 months; another 10% would require 6 – 12 months to recover,” reads part of the report.

Also survey findings show that mining houses are most likely to maintain the number of employees at the same level as 2020.

“Confirming the above, about 70% of the respondents indicated that they would maintain the same number of employees in 2021 as was the case for 2020, while 20% are planning to recruit more labor in 2021. Only 10% of respondents are planning to shed off some employees.”

However, mining executives are worried about policy inconsistencies which characterized the operating environment for 2020 to persist in 2021, impacting negatively on business planning.

“They cited misalignment in foreign exchange and fiscal framework, liquidation of unutilized nostro balances, and multiple taxes to weigh down mining operations in 2021.’

In the PGMs industry, there is a lot of progress at new platinum projects including Great Dyke Investment, Karo Resources and Todal which are at various stages of development and resource quantification with platinum output expected to exceed 24 tons by 2025.

There are also a number of coal and coke battery projects in the Hwange area at various levels of implementation

Falton Zveushe – Business Mail