The mining sector requires nearly $400 million in 2018 to sustain operations on the back of an uptick in capacity utilisation, an industry report has said.
BY NDAMU SANDU
The capital intensive sector injected $211 million this year for both sustenance and ramp-up, according to the 2017 Mining Industry Survey Report released last week.
The report said respondents in the survey indicated that they faced difficulties in raising capital for both sustenance and ramp-up.
“The industry requires around $392 million in 2018 to sustain operations,” the report said.
It further stated that the platinum sector requires $200 million next year, gold ($110m), coal ($70m), chrome ($20,77m) and nickel at $3,57 million.
Average capacity utilisation for the mining industry was up at 71% in 2017, compared to 64% in 2016.
The PGMs [platinum group metals] sector continues to operate at around 100% capacity utilisation, while chrome (37% to 80%), diamond (58% to 70%), coal (26% to 50%) recorded significant upward utilisation levels in 2017, compared to 2016.
Declines in capacity utilisation levels were recorded in respect of gold (79% : 73%) and nickel
(41% : 39%),” the report said.
It said all key minerals recorded output increases in 2017, compared to 2016, with the survey showing that 60% of respondents increased output by more than 5%.
The report further said 15% of respondents, which were all gold producers, indicated that they recorded declines in output in
“In 2018, the mining sector is expected to record an output boom, with survey findings showing that 90% of respondents are planning to increase output by more than 10%,” the report said.
The respondents said costs were high, with gold producers recommending a 45% reduction to less than USc7/KWh.
“All gold producers indicated that the current USc12,8/KWh is too high and should be reduced to levels less than USc7/KWh,” the report said.
The survey showed that average profitability in the mining industry declined in 2017, with 30% of respondents having made losses in 2017, compared to 15% in 2016.
“Of the 30% who made loses in 2017, 70% had made profits in 2016. In the outlook, average profitability is expected to improve in 2018, with 90% of respondents indicating that they are projecting profits in 2018,” the report