Mining stocks in positive performance
The Zimbabwe Stock Exchange resources indicator, the Mining Index, has defied the selling pressure that characterised recent market activity on the bourse after rising for the third consecutive week sustained by gains in its three active counters. While the other key indicators, the ZSE All Share Index, ZSE Top 10 Index and Industrial Index succumbed to losses week on week, the resources index remained in the positive.
Experts say while the economic environment remains turbulent, mining stocks will remain in good standing on their ability to export and generate foreign currency.
This also extends to other mining firms not listed on the ZSE, for instance, the country’s largest platinum producer — Zimplats as well as Unki.
In the week to Wednesday, the Mining Index rose 2,03 percent to close pegged at 314,86 points subsequently extending year to date gains to 38,27 percent.
At 3 cents, gold miner Falgold was 20 percent above prior week’s level of 2,5 cents. This comes as the yellow metal is predicted to reach a price of US$1 700 an ounce and higher in early 2020.
This month gold rallied to its highest level in six years, ranging between US$1 480/oz and US$1 510/oz.
Standard Chartered Bank expects gold to remain at these prices for the rest of this year and then move to around US$1 570/oz by this time next year.
Bindura rose 2,77 percent to 13,36 cents. Diversified group, RioZim inched up a marginal 1,16 percent to close the week pegged at $2,60 compared to previous week’s $2,57.
Mining is seen as one of the key sectors to drive economic growth and the country’s aspirations of becoming an upper middle income economy by 2030.
There is also a lot of potential in the mining sector following the government’s decision to scrap some of the indigenisation requirements save for diamond and platinum.
The investor friendly policies now include the amendment of the Indigenisation and Economic Empowerment Act to allow foreigners to have more than 49 percent of company ownership, with the exception of diamond and platinum extraction sectors which market watchers say will be instrumental in boosting investment across the board.
Already the sector is seen growing to a US$12 billion sector by 2023 which will further enhance its contribution towards meeting Vision 2030.
While the country may be endowed with vast mineral resources and with potential to grow the mining sector, London based strategic analyst Hopewell Mauwa acknowledges achieving a US$12 billion mining sector by 2023 will not be a walk in the park.
“It is glaringly obvious, however, that the plan will meet severe headwinds from inadequate infrastructure capacity (electricity, rail, water, roads), human capital shortages, cash/monetary policy challenges, lagging mining regulatory reforms, the negative impact of US/EU restrictive measures on attracting capital, among other issues
“On the balance of probability, therefore, the delivery of projects, the bulk of which are either at concept level or in early stages, could take longer to execute than the optimistic 2023 target,” he said_The Herald