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Zimbabwe's mining firms are set to cash in on the rally in global commodity prices, which have been spurred by jittery market conditions resulting from the Ukraine- Russia conflict.
Mining companies in the country are expected to ramp up production this year, with mineral exports expected to benefit from favourable international prices.
The gold and platinum group metal (PGM), Zimbabwe's largest export revenue earners, prices are expected to anchor the mining sector and overall economic growth.
Overall mining generates more than 75 percent of the mineral rich Southern African country's annual export revenue. The country's other major export earner is tobacco.
According to a State of the Mining Industry Survey conducted by the Chamber of Mines of Zimbabwe (CoMZ), the mining sector could benefit immensely from the current geopolitical tensions between Ukraine and Russia, which will drive up commodity prices.
Gold is considered a safe haven in times of crises or market uncertainties, such as the current situation due to the Ukraine-Russia conflict.
The war has also sent jitters in the market given Russia supplies 40 percent of global PGMs, a key input in the manufacturing of electric vehicles.
The miners' association sees Zimbabwe's mineral revenue this year topping US$5.5 billion due to the anticipated favourable international prices in gold and pgMs.
“The mining industry is expected to generate approximately Us$5,5 billion in 2022, underpinned by strong performance in gold, Us$2,1 billion, palladium, Us$1 billion, diamond, US$o,8 billion and US$o,6 billion," said the CoMZ.
The improvement in prices comes as the executives in the mining industry believe capacity utilisation will be 83 percent in 2022 after it closed 2021 at around 80 percent.
The executives believe the kev sectors of gold and ferrochrome expected to drive mining industry capacity utilisation this year.
Gold sector anticipates to increase its capacity utilisation to 87 percent from the current 80 percent, as ferrochrome industry capacity utilisation is anticipated to move from 40 percent to 6o percent.
The platinum group of mineral (PGMs) is expected to remain at100 percent utilisation as the coal industry remains stuck at 80 percent.
Chamber of Mines anticipates record growth throughout the mining sector this year led by a 43 percent increase in diamond from 3,8 million carats to 5 million carats.
Gold is expected to breach the 30 00o kilogramme mark this year as it is anticipated to end the year at 35 000 kilogrammes representing a 21 percent production increase.
Nickel and chrome are also expected to see significant increase in production with targeted output of 17 655 metric tonnes and 1,6 million metric tons, respectively.
PGMs production is projected to register growth of 11 percent, with platinum expected to reach 15 200 kilogrammes while palladium prices could reach 13 650 kilogrammes from the current 13 000 kilogrammes.
However, the industry said the downside risks to these projections include erratic power supply which is resulting in disruptions to production, capital shortages as the country's mining sector is expected to have a funding gap exceeding US$1o billion for the next five years.
Other major impediments the industry is facing include loss of value on the portion of exports sold to the Reserve Bank of Zimbabwe (RBZ),which is converted into local currency.
The CoMZ has been engaging the Government on some policies thev feel still need to be addressed in order to increase production even further according to Thomas Gono their vice president.
We have written to the Government that the retention ratio should be increased to 80-85 percent in order to see the mines expand and be sustainable," Mr Gono added
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- [Editor:Alakay]
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