Zimbabwe earns US$4,4 billion from mining alone in 2021

Mangudya also promised to let miners retain 80% of their export earnings if they further increased production.

THE mining sector has raked in US$4,4 billion since January this year, which is over 70 percent of the country’s foreign currency earnings, an event overseen by Reserve Bank of Zimbabwe (RBZ) John Mangudya has heard.

This came out at the 2021 state of the mining industry report, released at an event attended by mining executives, central bank officials, government ministers and representatives of the private sector this Thursday.

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The report indicates that the mining sector has contributed US$4,4 billion to the country’s foreign currency needs.

Central bank governor John Mangudya, who addressed miners at the launch of the report, projected record high mineral exports this year.

“At $4.4 billion, that’s what we are expecting from mineral exports for this year, that’s the highest we have ever recorded in this country,” Mangudya said.

Zimbabwe earned $3.65 billion from mineral exports last year, with platinum group metals and gold accounting for 82% of the earnings.

Mangudya also promised to let miners retain 80% of their export earnings if they further increased production. He did not specify what increase he would like to see.

“The central bank is looking into all the concerns raised by the mining sector so that we can reach an agreement on what needs to be done to take this sector further, however I can assure the sector of commitment to provide more incentives depending on how the sector ramps up production,” he noted.

Presenting the findings of the report, lead researcher Professor Albert Makochekanwa provided figures on how the mining sector has continued to register increased production.

“Generally mining executives are confident about the prospects for their businesses in 2022, notably among the positive sentiments include optimism about commodity price outlook, improvement ion capacity utilisation and anticipated mineral output growth,” he said.

Another Researcher, Dr Carren Pindiriri provided details on how there is increased optimism in the sector.

“Despite some operational viability challenges, the sector is however confident about growth next year. The outlook will however depend on stakeholder commitment to solve fiscal policy challenges, exchange rate disparities and energy infrastructure among others,” said Dr Pindiririri.

The executives also heard that Zimbabwe’s miners are losing 20% of their export proceeds due to a widening gap between the official and black market currency exchange rate.

The Zimbabwe dollar is trading at 93 to the United States dollar on the official market, but is quoted as low as 180 against the greenback on a thriving black market.

A survey commissioned by Zimbabwe’s mining chamber found that mining companies were losing money due to the exchange rate mismatch.

Exporters from Zimbabwe are required to surrender 40% of their foreign currency earnings to the central bank, in exchange for local currency at the official rate.

“Almost all respondents indicated that the value of the surrender portion that is liquidated into local currency at the official auction rate has been significantly eroded on the back of the parallel market rate which is used for pricing goods and services by local suppliers,” the report said.

“Respondents highlighted that the exchange rate disparities have resulted in mining companies losing 20% of gross export proceeds.”

The mining companies said they were also battling electricity shortages, low levels of investment and the high cost of capital, but despite the challenges, the survey found that miners were more confident about their prospects for 2022 compared to this year.

The report showed an improvement in the confidence index to 17 for 2022 from 9.8 in 2021. The scale ranges from minus 100 for the least confidence, to 100 for the highest.

“Notable among the positive sentiments include optimism about the commodity price outlook, improvement in capacity utilisation and anticipated mineral output growth,” the report said. – via Mining.com/ZBC/HourlyHits

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