Zimbabwe’s gold and platinum output is expected to rise in 2016, as the mining sector tries to make up for losses experienced in 2015.
A review of 2015 by the country’s Chamber of Mines shows that Zimbabwe registered a 7% decline in revenues, with 70 % of the major miners recording losses.
It blamed low output and subdued mineral prices. After most companies ended the year in the red, plans to increase gold production by 5 % and platinum output by 1 % to 13 tonnes in 2016.
It’s an attempt by miners to reverse two years of decline and return to profitability. The umbrella body says investment will be appropriate to the turn around.
CEO for Chamber of Mines Isaac Kwesu says: “Our industry requires approximately 3.8 billion dollars of capital over the next five years for projects, of this 1.2 billion is to stay in business.”
In addition to shortages in capital, profitability has been weighed down by depressed commodity prices, power shortages and increased labour costs.
The umbrella body says most are producing minerals at a loss. Gold costs 1200 an ounce to produce while on the market it sells for just under 1100 dollars.
Platinum is produced at 1100 an ounce while it selling for 900 dollars. While Nickel producers lose 500 dollars for every ounce produced.
“Our regional peers costs relatively lower, most of our costs are as a result of the hyperinflation effects, and costs did not come down as expected.”
The chamber says Zimbabwe fared better than its neighbours.
The Chamber of Mines says due to viability challenges close to 85 % of miners struggled to pay wages in 2015, with an additional 12% applying for exemptions.
All miners say they will not be able to afford increases in 2016, while a further 22 % say they have negotiated salary cuts with employees.