Huge capital gap saddles mining sector
ZIMBABWE’S mining sector is battling a huge capital gap, resulting in some companies failing to meet targets, Chamber of Mines of Zimbabwe (CoMZ) chief executive Isaac Kwesu has said.
“We are in the growth mode, recovering, and when you are in the growth drive, you really need to make sure that the capital expenditure and operational capital is always available,” Kwesu told NewsDay Business in an interview on Tuesday.
“So, there is a huge funding gap which the industry has to close in terms of meeting their growth plans. So, we need to attract the critical capital, both local and foreign capital, to make sure that we meet our targets,” he said.
According to the chamber’s latest commodity outlook report released in April, Zimbabwe’s mining industry sees a funding shortfall of US$10 billion over the next five years, a challenge compounded by erratic power supplies and exchange rate volatility.
The gold sector, which is projected to generate earnings of US$5,5 billion this year, is facing a number of headwinds, CoMZ said.
“We also need sufficient inputs, specifically those that are imported. So we also want to make sure that those who have foreign exchange shortfalls meet sufficient inputs that have to be imported. Those to me are the two most critical issues that you need to attend to when you are in the growth mode,” he said.
Kwesu said the mining industry needed “adequate” capital to buy equipment so that it could meet its growth plans in the next 10 years.
“So, these numbers are not small numbers. We are talking about the whole industry requiring a huge capital outlay,” he said.
The mines chief said more than 70% of the capital requirement “we are talking about is required in the platinum sector. We have heard about Zimplats talking about nearly US$1 billion with their planning”.
“So that’s the capital we are talking about, but we want to know how much has been mobilised by now because this money does not come from the government, but shareholders.”
He said the industry was committed to green energy to align with international standards and best practices.
“Our industry is trying its best to also participate and have initiatives of green energy,” Kwesu said, adding that the outlook for the country’s mining industry was positive, buoyed by the encouraging commodity price upturn that has seen mineral prices surpassing long-term projections.
The mining sector rebounded by 3,4% in 2021, from a COVID-19-induced contraction of 9% in 2020.
Most key minerals last year recorded growth, with gold rising by 86%, diamond increasing by 51%, coal adding 21%, while platinum output advanced by 13%.
Nickel output increased by 13% in 2021.
Zimbabwe launched the strategic road to the achievement of a US$12 billion mining sector by 2023 in October 2019 as part of the broader macroeconomic roadmap towards achieving an upper middle-income economy by 2030.
The multi-billion-dollar industry will be driven by gold, platinum, diamond, chrome, iron ore, coal, lithium and other minerals.-ewsday
