Zimbabwe needs to urgently mordenise its mines and that will require close to $11 billion from the previously anticipated $7 billion, according to the Chamber of Mines.
Chamber of Mines president Batirai Manhando said the ammount of financial has increased due to a hype in interest recorded since takeover of the new political adminstration.
The local mining industry is currently operating below capacity on the back of capital shortages,” Manhando told an annual meeting of the mining chamber.
“At the beginning of the year the capital intensive industry required $7 billion for both ramp-up and sustainance capital. The figure has lately been revised upwards to $11 billion with renewed interest in our sector,” Manhando said.
He said with the exception of platinum producers, all other mines, including those of gold, nickel, cobalt and coal were operating below their installed capacity.
Mining generates more than half of Zimbabwe’s export receipts — last year it earned $2.8 billion — but industry executives say it has the potential to earn more with increased investment.
Zimbabwe holds the second largest deposits of platinum and chrome after South Africa and has lately seen increased interest from lithium investors, who however say funding still remains a hurdle.
Manhando said local mining companies are faced problems that included high costs of electricity, labor and royalty fees when compared to other jurisdictions. There had also been little exploration in the country since 2000, he added.
“Equipment at most mines was more than 50 years old, severely undermining efficiency and cost effectiveness of the sector, he said.
Mines and Mining Development Minister Winston Chitando said the government would announce a new “mining vision” at the end of June and projected that the output of gold could rise to 85 tonnes in five years.
Minister Chitando said Government is however negotiating for a $5 billion fund which is set to extensively adress funding challenges currently bedevilling the local mining sector.
The local mining sector requires close to $11 billion which will go towards adressing working capital challenges and boosting productivity.
Chitando said the fund is still under negotiation with no set timelines.
”We are currently negotiating for $5 billion with a fund manager, the funding which is expected to be chanelled towards the mining sector which has gomne for years without meaningful funding injection.
“We don’t have set timelines on the negotiations yet but its something we are giving enough attention to make sure we reach a conclusive position,” said Minister Chitando.
He said Government is alive to the challenges being faced by the country’s mining sector chief among them being difficulties in accesing financing.
However, as a result of the recent improvement in the general investment climate, there has been increased appertite by investors to inject capital into the Zimbabwean mining space.