Mining Growth Projections Reduced to 5.2% Due to Expected Lower Gold Production
The government of Zimbabwe has revised its mining growth projections for 2024, reducing the expected growth from the initial 7.6 percent projected at the beginning of the year to 5.2 percent as of June. This adjustment is attributed to lower-than-expected gold production output.
By Rudairo Mapuranga
Speaking to the Parliament of Zimbabwe during the 2024 Midterm Budget and Economic Review, held under the theme “Consolidating Economic Transformation,” Minister of Finance and Investment Promotion Prof. Mthuli Ncube highlighted the revised expectations for gold output.
“In 2024, mining sector growth is now projected at 5.2%, down from the 7.6% projected during the 2024 Budget. The downward revision is on account of expected lower gold output than initially projected,” Prof. Ncube stated.
Despite the reduction in gold output projections, Prof. Ncube noted that the mining sector has shown resilience due to improved production of lithium, platinum group metals (PGMs), nickel, and chrome. These increases in production have helped offset the impact of softening commodity prices.
“The resilience of the sector is underpinned by new minerals, particularly lithium, along with anticipated higher output for PGMs, nickel, and chrome, which are expected to compensate for international price decreases,” he said.
The state of mining in Zimbabwe faces significant challenges, including frequent electricity outages and high electricity costs. The current electricity tariff of US$0.14 per kWh is double the US$0.07 per kWh rate desired by the industry, resulting in high operational costs. Additionally, a 15 percent VAT, considered high by industry standards, has contributed to reduced production.
However, there is a silver lining with the recent removal of VAT on all gold sales, which could potentially boost production as miners benefit from more favorable pricing.
The mining sector’s growth and resilience amid these challenges underscore the importance of strategic adjustments and policy support to ensure sustainable development and investment in Zimbabwe’s mineral wealth.