Up your game, miners told

Source: Up your game, miners told | The Sunday Mail  June 12, 2016

Livingstone Marufu
The Chamber of Mines of Zimbabwe has urged miners to ramp up production to cover losses arising from subdued global mineral prices, especially for platinum and diamonds.

Gold prices have also done badly since mid-2015, plunging to a five-year low of US$1 072,30 per ounce in July last year. Gold has, however, been steadily gaining ground, rising to US$1 262 last Thursday.

In the first quarter of 2016, all minerals – apart from chrome and coal – recorded increases in volumes ranging from eight percent to 64 percent.

Despite the robust production performance in the first quarter compared to the same period in 2015, the Chamber of Mines says more should be done to off-set low prices.

Due to the continued global rout in commodity prices, Zimbabwe’s mineral revenues declined by about US$15 million to almost US$420 million in the first three months of 2016 compared to the same period last year.

Notwithstanding the price-induced decline, mineral production is set to rise 1,6 percent on improved output across all mineral groups by year-end.

Last week, Mr Pardon Chitsuro of the Chamber of Mines told The Sunday Mail Business that while there was an improvement in output, miners needed to up their game.

“Firstly, we would like to commend our mining houses for the job well done in all areas except chrome and coal but we urge them to do more to improve their output in the second quarter.

“Typically during the episodes of subdued prices, mining houses should ramp up production to compensate for the revenue losses arising from lower prices and survive the storm.

“However, the extent to which they succeed obviously depends on whether the percentage increase in output adequately offsets the price decline.

“With the current 22 percent increase in copper output from 2,1 tonnes in the same period last year to 2,57 tonnes, the mineral found itself in a five percent decrease in value from US$8,9 million last year to US$8,5 million this year, hence more should be done to push up the output to compensate for the low prices,” said Mr Chitsuro.

Overall, mineral earnings are forecast to decline to US$1,8 billion this year from US$1,85 billion in 2015.

In the period under review, revenues generated from gold and platinum rose to US$297 million compared to US$263 million realised in the first quarter of 2015.

Consequently, the contribution of other minerals narrowed to US$121 million this year from US$171 million a year ago.

Gold output increased buoyed by deliveries from small-scale producers under the Gold Mobilisation Programme.

Government has set a target of 24 tonnes of the yellow metal this year, which will be about six percent more than the 18,3 percent delivered last year.

Small-scale gold producers contributed about seven tonnes last year and have been given a target of 10 tonnes this year.

Gold benefited from both a firming price and increased output to record a 17 percent increase in value from US$161, 67 million in the first quarter of 2015 to US$189,65 million in the same period this year.

Platinum was up six percent to US$108,97 million in 2016 compared to US$102,65 million last year.

Mr Chitsuro called upon Government to review the electricity tariff downwards in order to improve the fortunes of the mining sector.

“Mining companies nitpick multiple tax heads and levies as one of the hindrances in the mining sector. Therefore we should revisit our multiple tax regimes to encourage production and create an enabling environment for investment,” said Mr Chitsuro.

Experts say the mining sector will remain depressed in 2016 and 2017 mainly due to international prices.

An estimated US$3,8 billion is required to optimise operations over the next five years, while about US$1,2 billion is needed for “stay-in-business” costs.

The sector needs US$2,6 billion for expansion projects.