In its first ever state of the mining industry report, the Chamber of Mines said the drop in mineral revenue mirrored the decline in output, which fell by 13.1 percent in 2015 from the previous year.
“Two major reasons were cited for the decline in mineral earnings: low output and subdued prices,” the Chamber, which represents major mining firms in the country, said in the report.
Mining is a key sector in Zimbabwe’s economy but its contribution to the economy has been negatively affected by falling international commodity prices, capital constraints and high production costs, among other factors.
According to the report, the sector’s contribution to gross domestic product is estimated to have fallen to 9.0 percent in 2015, down from 9.2 percent in 2014 and 10 percent in 2013.
The mining sector recorded negative growth of around -3.4 percent and -2.5 percent in 2014 and 2015 respectively while its contribution to national exports is estimated to have fallen to 50 percent in 2015 from 56 percent in 2014, according to the report.
In the report, the Chamber forecast the mining sector to recover in 2016 from two consecutive years of negative growth and post 1.6 percent growth buoyed by anticipated increases in gold and nickel production.
According to the report, the mining industry (excluding diamonds) required about 3.8 billion dollars over the next 5 years to ramp up production and stay afloat.
“Of this, 1.2 billion is required for stay in business while 2.6 billion is for developmental investments,” the report said, adding the bulk of the money (2.8 billion dollars) was required in the platinum sub-sector and 601 million dollars in the gold sector.
The mining sector, according to the report, was planning to implement beneficiation projects worth 362 million dollars in the next five years.
Firms, the report noted, were engaging in cost cutting measures in the wake of shrinking profitability due to declining prices, the report said.
Source: News Ghana/ Xinhua