Chidhakwa, Chinamasa contradict on mining projections

via Chidhakwa, Chinamasa contradict on mining projections – DailyNews Live 13 November 2014 by John Kachembere

HARARE – Mines minister Walter Chidhakwa says the mining sector is expected to grow by six percent this year against a negative growth of 1,9 percent predicted by Finance minister Patrick Chinamasa.

“The sector is projected to grow by an average of six percent in 2014. Its contribution to the country’s GDP has seen a phenomenal rise from four percent in the 1990s to 16 percent in 2013 and a projected share of 17 percent in 2014,” Chidhakwa said last week.

This comes as Chinamasa in his mid-term fiscal policy presented in September highlighted that weak international prices for some minerals, frequent power outages, obsolete equipment and inadequate funding for recapitalisation had undermined performance during the first half of the year.

“Consequently, output for gold, platinum and diamond were subdued, necessitating a downward revision of sector’s growth to — 1,9 percent,” he said.

The two conflicting figures come at a time when the mining sector — touted as one of the pillars to lead revival of the Zimbabwean economy – was initially projected to grow by 10,8 percent this year.

However, the projections were later revised downwards after the sector faced various challenges in the first half of the year.

Chamber of Mines president Alex Mhembere last month said established projects in mining were struggling to remain competitive and new mining projects might struggle to become viable.

“The mining industry is now facing challenges and these include depressed mineral prices. All minerals we produce are facing this challenge, particularly gold which has been hovering around $1 200 an ounce and sometimes dipping below $1 200. And with these prices, it is very difficult to sustain large-scale gold mining in Zimbabwe,’” he said.

This comes as local production has been gradually going down as mining companies struggle to sustain operations in the current liquidity challenges.

The mining sector is currently operating at 50 percent of potential capacity utilisation and the gold and nickel sector have been the most affected.