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Business Reporter—-

ZIMBABWE’s mineral revenue remained flat in the nine months to September 2016 at $1,38 billion compared to $1,34 billion during the same period last year on low metal prices.This comes as miners struggle to make foreign payments due to the cash crunch pervading the entire industry, as it emerged that mines require about $1 billion annually to purchase key inputs for their operations.

Chamber of Mines of Zimbabwe chief executive Isaac Kwesu said that the prices for most minerals exported by Zimbabwe remained largely subdued, except for gold, depriving the country of the much need foreign exchange.

The mining sector generates over 60 percent of Zimbabwe’s annual foreign exchange earnings at nearly $2 billion with exports totalling $3,5 billion last year.

The price of the yellow metal registered 6,8 percent increase over the nine months to September 2016, but platinum retreated 9,6 percent while nickel plunged 27 percent.

“The average prices for most minerals have remained predominantly depressed, with average prices for platinum and nickel 9,6 percent and 27 percent lower for the comparable periods, respectively,” Mr Kwesu said.

Other minerals that recorded significant decline in revenue performance included diamond, chrome, palladium, copper, cobalt, iridium, rhodium and ruthenium.

The CoMZ chief executive said this while giving an update on the performance of the sector between January and September 2016 ahead of the release of an independent report on the state of the industry next week.

Zimbabwe’s mining industry recorded mixed mineral output performance for the nine months to September 2016 with key minerals however, registering output growth.

According to the update by the Chamber of Mines of Zimbabwe yesterday gold, platinum and nickel recorded significant growth in production while diamond, nickel and coal saw notable production decline.

The decline in the performance of diamond and coal was attributed to reorganisation during consolidation of diamond mining by Government and capital and equipment challenges faced by Hwange Colliery Company.

Mr Kwesu cited tight fiscal constraints such as high royalty charges and corporate tax for the mining industry compared to other mining jurisdictions and statutory payments to Environmental Management Authority among some key factors weighing down on mines.

Mines in Zimbabwe are also subjected to high charges by Rural District Councils in which they conduct their mining activities, which raises the effective tax rate they pay.

As such, there was need to rationalise and streamline charges to mining industry, as well as lower tariffs for electricity in line with mineral prices obtaining on global markets, Mr Kwesu said, to improve viability of mines.

Further, the Chamber of Mines boss pointed out that difficulty in making foreign payments, due to the choking cash crunch across the domestic economy, among the challenges hindering operations in the industry.

With limited foreign currency earnings and low balances in nostro accounts, foreign bank accounts to facilitate foreign payments, settling obligations offshore has turned out to be a nightmare for Zimbabwe.

“About $1 billion is required annually to purchase inputs and consumables in the mining industry,” Mr Kwesu said. He said the combination of factors he mentioned summed up to result in high cost of doing business.

Referring to mining as a fragile industry, Mr Kwesu said there had been few investments in the sector, which were mostly confined to gold mining, but nothing had been committed to Greenfield areas of the industry this year.

He said that the mining industry required about $5 billion for recapitalisation over the five year period to 2020.