- February 28, 2019
- Posted in LOCAL
The Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya, has called on miners to ramp up production to compensate for potential declines in mineral prices.
Precious metal prices were generally subdued last year, occasioned by weak safe haven demand and a generally stronger dollar owing to interest rate hikes by the Federal Reserve during the year.
Mangudya said the developments “significantly” raised opportunity costs of holding precious metals such as gold and platinum.
Further, a general waning in global tensions diminished safe haven demand for precious metals.
Intensified trade tensions involving the two countries have raised market concerns about global trade and investment prospects, clouding the outlook for demand for most commodities.
Said Mangudya in the 2019 Monetary Policy Statement on Wednesday: “The moderation in commodity prices calls for increased production in commodity dependent economies such as Zimbabwe, so as to compensate for the potential revenue losses.”
Mineral revenue jumps to $3,4bn last year
Minerals Marketing Corporation of Zimbabwe (MMCZ)’s corporate communications executive Pretty Musonza said the actual figures were not yet ready, but provisional figures point to “an increase from the 2017 figures”.
“The figures for last year have not been finalised. They should be ready in the near future,” said Musonza in a recent interview.
“However, I can confirm that indicative figures point to an increase from what the sector achieved in 2017.”
MMCZ, which was established through an Act of Parliament (MMCZ Act Chapter 21:04), is an exclusive agent for marketing and selling of all minerals produced in Zimbabwe except silver and gold.
The approximately $3,4 billion revenue generated last year represented a significant jump from the $2,3 billion raked in 2017.
Chrome concentrates output increased by 26 percent to 658 306mt and generated US$102,6 million with nickel output also rising by 9 percent to 61 073mt and raked $59 million.
With diamond output surpassing the 2,4 million carats target to end the year on 2,8 million carats, more money is expected from that sector and experts see mineral export receipts topping US$3,4 billion.
The Zimbabwe Revenue Authority (Zimra) recently reported that the mining sector contributed $95,67 million in royalties, against a target of $90 million.
The impressive performance of the revenue head represented 30,86 percent jump from the US$73,11 million achieved in 2017.
Chamber of Mines of Zimbabwe chief executive officer Isaac Kwesu said the jump in mining royalties was indicative of the growth of the mining sector.
This year, Kwesu predicts a jump in mineral output, but only if Government addresses the cost of doing business in the country.
“The challenge remains the high cost structure in the industry but as long as we manage to produce cheaply, as long as we secure inputs cheaply, as long as we get capital cheaply, I think the sector is poised to expand output.
He said the mining sector must take advantage of the rising global prices, “otherwise we miss the opportunity”, if the country does not increase output.
Government wants the mining sector to generate $12 billion revenue by 2025.
Gold blings with 33,2t
Gold deliveries to Fidelity Printers and Refineries, a gold buying arm of the RBZ, reached 33,2 tonnes, a record high for the country.
The annual target was 30 tonnes.
The output was the greatest since 1980. Small-scale producers, who confront a plethora of challenges, continued to dominate the country’s gold deliveries, accounting for 65,3 percent of the total deliveries.
Primary producers, who have all the sophisticated equipment, contributed 34,7 percent to last year’s gold deliveries.
Mangudya said the “marked increase” in gold deliveries was realised against the background of “strong Government and RBZ support and incentives to further boost production and exports”_Business Weekly