HARARE-Output from Zimbabwe’s key mining industry slackened during the third quarter of 2019, with production in several mineral slumping by between 12 and 32 percent, according to data from the Ministry of Finance and Economic Development.
The data, which is contained in the quarterly economic bulletin, demonstrates that the country’s decade-long economic crisis could still be on, dealing a blow to hopes of an immediately recovery by a country that has just released a roadmap to achieve a US$12 billion mining economy by 2023.
The report showed that out of 10 minerals listed by the ministry including gold, diamonds, chrome and platinum, nine reported frightening drops in output.
Gold suffered a 23 percent fall in output during the period to 8 744 kg, from 11 412 kg in 2018.
Platinum output retreated by 17 percent to 3 159kg, from 3 814kg during the third quarter of 2018 while diamonds suffered a 26 percent drop to 479 933 carats during the review period, after reaching 646 473 carats in 2018.
Chrome dropped by 12 percent to 394 253 metric tonnes in 2018, from 447 625 tonnes the previous year, with ruthenium suffering the sharpest decline of 32 percent.
Nickel output dropped by 17 percent, as problems continued at the country’s sole producer, the Zimbabwe Stock Exchange-listed Bindura Nickel Corporation Limited, which has had to delay a key project due to funding problems.
Coal production slid by 25 percent.
Only iridium, which is an insignificant mineral, reported a rise of eight percent.
“Power shortages was the major challenge for the mining sector,” the ministry said.
“It is estimated that about 80 percent of the miners suffered regular and prolonged power outages resulting in output losses of around 20. Platinum output stood at 3 159 kg, about 17 percent, lower than 3 814 kg produced in the same period of 2018. Although production efficiencies improved across the three main producers, there were extended maintenance works spilling into third quarter at milling plant at Zimplats causing lower production. As a result, cumulative output to September 2019 was 10 271 kg, lower than the 10 996 kg realised during the same period in 2018. 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. Chrome production was heavily affected by power outages was compounded by the exiting of one of the major produces in the industry Africa Chrome Fields. The company used to contribute more than 10 percent of total output,” said the report.
In addition, challenges were reported in accessing foreign currency for importation of spares and explosives, along with shortages of fuel across the chrome industry.
Analysts immediately warned Zimbabwe’s government to deal with the problems affecting production.
“We were not very surprised because we had seen this coming,” said Tapiwa Sibanda, senior analyst at Trade Winds.
“The Chamber of Mines of Zimbabwe had revised revenue targets to US$2,9 billion for 2019, after predicting that earnings would end the year at US$3,4 billion. But we didn’t expect a brutal crisis like this after the hyped roadmap to a US$12 billion mining economy, which was laid out by the Ministry of mines. Mines minister, Winston Chitando was so confident his overly optimistic targets would be met that we thought Zimbabwe was seeing off its decade-old problems,” he said.
Zimbabwe’s economy has been in turmoil since the country switched back to its domestic currency in 2019, after a decade of a multicurrency system that was underpinned by the United States dollar.
Along with the foreign currency shortages and exchange rate volatilities that hit the markets in the aftermath of a return to the Zimbabwe dollar has been a gruelling power crisis, a ruthless drought, labour unrests and intensified hyperinflation now estimated at over 400 percent.
“Authorities have slept on the job again,” said Sibanda. “And black-market foreign currency dealers have assumed full control, dictating who buys greenbacks, and at what price, and that is unacceptable. During the first episode of hyperinflation in 2007/8 we saw what happens when authorities surrender the levers that run economies to a few crooks in the shadowy markets, and we surely wouldn’t want to see a repeat of that laxity now. It is surely a bad way to start a year for a country that lost 150 firm closures last year, potentially throwing 20 000 workers off the job market,” he said