Harare – A large number of mining executives in Zimbabwe are less confident about the country’s economic prospects for 2020, with 60% expecting the economy to contract in the respective year.
According to the findings of the latest State of the Zimbabwe Mining Industry Report, this is due to a number of variables such as access to capital, political and country risk.
The mining executives are however slightly more confident about profitability for the mining industry in 2020 because of firmer global prices.
The report highlighted that 30% anticipate the economy to be more or less the same as in the previous year while approximately 10% of the respondents indicated that the economy will improve in 2020.
The negative 2020 prospects expressed by the mining sector, which is the country’s largest foreign currency earner underpinned by gold and platinum, is in direct contrast of government’s own growth prospects.
Finance Minister, Professor Mthuli Ncube told legislators at the recently held 2020 National Budget Seminar that economic recovery is projected for 2020 underpinned by macro-economic stabilisation measures and enhanced production.
Government through the Ministry of Finance had initially projected a 4.8% growth for 2019, but has since admitted that the economy is set to contract by 6.5% in 2019.
The International Monetary Fund has projected that the economy will instead contract by 7.2% this year.
With little hope for a currency rebound where the local currency has lost over 80% value against the US dollar since its re-introduction in February 2019, high inflation, persisting foreign currency shortages, low productivity coupled with acute power shortages and lack of confidence in government’s policies, the basis of 2020 growth prospects announced by Professor Ncube have again become a subject of contention.
According to the survey, minerals are expected to record declines in output growth in 2019.
Gold is expected to decline between 5% to 35% from 33.2 tonnes record deliveries in 2018 which was worth over $1 billion in export receipts, platinum (0% to -7%), diamond (-30% to -40%), chrome (-10% to -20%), nickel (-2% to -10%), and coal output expected between -10% to -40%.
“According to respondents, in 2020, the following key minerals are expected to experience production growth: gold (5%, to 40%), ferrochrome (5%, to 20%), diamond (10%, to 20%) and coal (5% to 15%),” the report said in part.
In a bid to boost mining sector performance, government recently launched a US12 billion mining sector roadmap by 2023.
The success of the project will largely depend on availability of adequate capital for expansion of current production, water, adequate infrastructure, electricity, ICT as well as a conducive political environment.
Equity Axis News
Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, email@example.com and firstname.lastname@example.org.