Mines see US$10bn funding shortfall
Zimbabwe expects to generate US$12 billion from mineral exports by 2023. 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.
While Zimbabwe has the world’s third-biggest reserves of platinum-group metals, plus gold, diamond and chrome mines, development has been stymied by economic instability, which affected foreign direct investment.
While mining is projected to generate earnings of US$5,5 billion this year, it faces a number of headwinds, the country’s Chamber of Mines of Zimbabwe said in its latest commodity outlook report.
The Government of Zimbabwe is targeting to grow the country’s mining sector to a US$12 billion industry by 2023, a significant milestone towards the country’s Vision of upper middle income status by 2030.
Mining, currently riding high amid a surge in global prices, is expected to anchor short to medium term growth for the mineral rich Southern African country, which has more than 40 mineral occurrences.
Last year, Zimbabwe announced rules forcing exporters to transfer 40 percent of their foreign currency earnings to the central bank, instead of 30 percent. That’s exchanged into local currency at little more than half the parallel market rate.
Those foreign-exchange losses pose a risk to the mining industry, said the chamber, a lobby group that represents companies including Impala Platinum Holdings Ltd. and Anglo American Platinum Ltd.
“Key risks to the Zimbabwe mining sector outlook include inadequate foreign exchange allocations to fund operational requirements and expansion projects,” the chamber said.
While the outlook for steel makers remains cloudy, the weakening of the US dollar is propping up global commodity prices including metals as well as crude oil.
When the dollar weakens, the same amount of any commodity costs more in terms of dollars. Therefore, prices increase. And, the stocks of metal companies are mirroring that optimism. — Bloomberg.
