Harare – Equities research firm, Inter-Horizon Securities (IH Securities) says optimism for the mining sector in 2022 remains encouraged by ongoing developments to increase capacity coupled with commodity prices outlook.
This comes after the Ministry of Mines and Mining Development was allocated ZWL$3 billion in the 2022 National budget for mining exploration, the opening of closed mines as well as mineral beneficiation and value addition among other projects aimed at assisting the sector to attain its desired growth by 2023.
The mining sector is targeted to grow to US$12 billion by 2023 and is expected to anchor the country’s transformation into an upper-middle-income economy by 2030.
“Most investment has been centred on an increase in production at the mine and plant level however, there is still much to be done in infrastructure that supports the industry,” IH Securities said.
Concerning commodity prices, according to World Bank, commodity prices are expected to remain well above the most recent five-year average due to the ongoing Russia-Ukraine war and with increased production, Zimbabwe is set to benefit.
Meanwhile, from a stock-market perspective, IH Securities highlighted that it is in favour of the companies with strong financial positions that give room for investment in output growth during seasons of high commodity prices and also provide a cushion to ride out rockier periods for the underlying commodities.
“We are attracted to companies with a culture of management execution, transparency and present environment given that the underlying mineral thrives in periods of global uncertainty. The possibility of a global recession and a weak US$ is expected to support gold prices in 2022,” IH Securities said.
The IH Securities report, however, noted that infrastructural development and upgrade has been slow in Zimbabwe owing to economic challenges and it has been identified by the government as a priority area due to its ‘knock-on effects’ on the overall performance of the economy.
Moving forward, IH Securities anticipates the government to continue revising policies to create a conducive environment for both foreign and local investors.
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