Q2 Mining Confidence Index Down to 12.9: ZIMSTAT
The Zimbabwe Statistical Agency (Zimstat) Business Tendency Survey for the second quarter of 2024 reveals that the mining confidence index has declined to 12.9 from 15.9 in the first quarter. Miners cited cash flow difficulties among other significant challenges affecting the sector.
By Ryan Chigoche
The survey aims to produce indicators that monitor the current business situation and short-term developments in the manufacturing and mining sectors. The index values range from 0 to 100, with readings above 50 indicating sector expansion and those below 50 signifying contraction.
Insights on business performance during the second quarter were gathered from 80 mining companies, achieving a response rate of 62.5%. According to Zimstat,
“The Mining Confidence Index decreased to 12.9 in the second quarter of 2024, from 15.9 recorded in the first quarter of 2024. The mining sector faced the following three major challenges: cash flow difficulties, a shortage of electricity, and uncertainty regarding the economic environment.”
Zimbabwe’s mining sector faces several obstacles hindering its growth and development. A significant issue is the unstable policy environment. Frequent changes in mining regulations create uncertainty, discouraging investment and complicating long-term planning. Ongoing amendments to key laws, such as the Mines and Minerals Act and the Economic Empowerment Bill, further exacerbate this instability.
Another major challenge is the exchange rate disparity. Mining companies are suffering substantial losses due to the gap between the official exchange rate for export proceeds and the parallel market rate for input costs, effectively acting as a tax on their gross proceeds.
Power supply issues also plague the sector. Frequent and prolonged outages disrupt mining operations, resulting in increased costs and reduced productivity, particularly for energy-intensive processes.
These interconnected challenges contribute to a difficult operating environment for mining companies in Zimbabwe, limiting their potential to drive economic growth and development. Addressing these issues requires a comprehensive and coordinated approach involving both government and industry stakeholders.
In terms of capacity utilization, the agency reports that the mining sector stood at 57.5% in the second quarter, up from 50.3% in the first quarter of 2024. Notably, 20% of respondents expressed more optimism about the general business climate, with 45% expecting an increase in production levels during the third quarter.
Regarding total order books for the second quarter, approximately 64% of respondents felt that conditions were normal for the season, although the sector recorded negative net balances in this area during the same period. Additionally, 17.9% of mining sector respondents noted that supplier delivery times in the second quarter of 2024 were faster than in the first quarter.