Harare – Zimbabwe’s mining industry business confidence (MIBC) for 2020 remained positive at +2.2 index points, but declined by 5.8 points from 2019’s MIBC of +8 index points, the state of the Zimbabwe mining industry report has confirmed. Launched in Harare today by the Chamber of Mines of Zimbabwe, the report attributes the drop in confidence to weighed down variables such as access to capital, political and country risk, as well as economic prospects. This annual survey is a barometer of progress and prospects for Zimbabwe’s mining sector, which accounts for 70% of the country’s annual foreign currency earnings.
According to the report’s MIBC score interpretation, a score of 100 indicates a much more confident outlook, with a score of minus 100 indicating a much less confident outlook. A score of zero is viewed as “as confident”, or fair in general terms.
The 2019 mining sector report is a shared view by players in Zimbabwe’s mining sector. According to the report, mining executives remained slightly less confident about economic prospects for 2020 with majority of the respondents expecting the economy to marginally contract in 2020. This forecast buttresses the IMF’s latest outlook, which projects the Zimbabwe economy to grow by 2.7% in 2020 after suffering a 7.1% decline in 2019.
The report singled out key regulatory and policy issues impeding the progression of Zimbabwe’s mining sector. These are energy and infrastructure, foreign exchange matters and the overall macro economy. Other issues highlighted included fiscal measures, environment management matters and legislation.
Due to incessant power outages, the mining sector has endured production stoppages and output losses of between 1% and 40% this year. The majority of primary mining houses in Zimbabwe signed agreements with ZESA Holdings to guarantee uninterrupted supplies of electricity. The miners even made advance payments in foreign currency for the supply of this dedicated power. However, according to the survey findings, ZESA Holdings has not played its part as 60% of survey respondents are still facing power outages of upto 3 days per week, with the other 30% enduring outages of between 1 and 2 days per week. Again, 80% of respondents decried the revised tariff framework for the mining sector, which they deemed high and unsustainable. In giving prospects for the power situation in 2020, 70% of respondents were sceptical as they anticipate a further deterioration of the power situation in Zimbabwe.
In light of the above, investors need to critically analyse the 2019 Zimbabwe mining sector report as it largely influences the overall performance of the country in 2020. For the Zimbabwe government, fixing the country’s energy challenges must your key priority to guarantee productivity at the mines, in the process generating the much needed foreign currency for the country –ENN