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Zimbabwe mining needs at least $5bn to recapitalise

By mining weekly

Zimbabwe’s mining sector would require between $5-billion and $7-billion over the next five years to recapitalise and increase its mineral output, Chamber of Mines of Zimbabwe president Winston Chitando said Wednesday.

Speaking at this year’s Zimbabwe Mining Indaba, he said the cash injection would enable the country to increase its gold production to 50 t/y; platinum to 21 t/y, from 12 t expected this year; and coal to seven-million tons a year, from two-million tons forecast for 2012.

The gold sector was only running at 50% capacity and production for the year was anticipated to reach 14.5 t, still well below the 1990-levels of 28 t/y.

Ferrochrome and chrome production was also running at below capacity, owing to low prices and finance constraints, while the nickel sector was placed under care and maintenance.

However, Chitando stated that mining remained at the heart of Zimbabwe’s economic activities and that it provided great impetus for exports and employment. The sector employs about 45 000 people and accounts for about 50% of the country’s foreign currency inflows.

Mining is contributing about 13% to Zimbabwe’s gross domestic product, matching the manufacturing sector’s 14% contribution, and is expected to reach 25% by 2020.

He told Mining Weekly Online that the country experienced increased interest from investors in past months, despite concerns over political and regulatory uncertainty.

Chitando said the chamber was engaging with government to address challenges of high operational costs, supply constraints, illiquidity, lack of long-term capital, as well as challenges in the mining fiscal environment relating to regulation, taxes and mining fees.

“I look forward to a positive outcome to these discussions,” he noted.

Chitando added that Zimbabwe held countless investment opportunities in, among others, infrastructure, operating mines requiring capital to expand, discontinued operations that could be revived, as well as exploration.

He also put forward that the country offered an enabling environment, as it had an abundance of mineral deposits, a qualified labour force and good structural systems in place.

On beneficiation, Chitando commented that he supported it, but that a mineral policy wherein beneficiation was clearly defined was required.

“There is not good clarity on what beneficiation is, because I think we have a lot of [existing] beneficiation in the country,” he said. Chitando stressed, however, that it was important to pursue opportunities to further enhance value addition.

Meanwhile, Mines and Mining Development Minister Moses Mpofu said liberalisation of Zimbabwe’s gold sector and the new multicurrency system made the country’s mining sector viable.

He stated that production of all commodities had exceeded expectations in the first half of the year and that he anticipated the trend to continue in the short to medium term.

Mpofu assured investors that the Zimbabwean government was reviewing its mining administration fees and levies to enable investment and facilitate the discovery of new minerals.

He said it was encouraging that mining companies continued to align themselves with the requirements of the country’s indigenisation laws. “This is a positive step towards the economic development of indigenous people,” Mpofu noted.