• Depressed metal prices and geopolitical tensions: Poor global metal prices, particularly for platinum group metals and lithium, coupled with geopolitical conflicts and shifts in demand, are exerting downward pressure on prices
  • Escalating electricity costs and limited output: The mining industry is grappling with escalating electricity costs, which account for a significant portion of overall expenses
  • Proposed increase in royalties and capital restraints: The government's proposal to increase royalties, coupled with the shortage of capital influx, is adding financial strain to mining companies

Harare- In October 2023, Sibanye-Stillwater, a multinational mining company, implemented a restructuring process aimed at reducing costs, which could potentially lead to the loss of over 4,000 jobs and the closure of certain platinum mining shafts. Around the same time, Anglo American Platinum (Amplats) suggested the possibility of job cuts at its head offices in South Africa and globally, as part of cost-saving measures. These three major conglomerates, Implats, Sibanye-Stillwater, and Amplats, all have operations in Zimbabwe. Implats owns Zimplats, Sibanye-Stillwater shares ownership of the Mimosa mine with Amplats, and Amplats has a joint venture with Implats for the Ngezi mine.  In a trading update in November 2023, the CEO of Impala Platinum (Implats) announced plans to reduce spending across all operations, including scaling back a planned investment of US$1.8 billion in Zimbabwe's largest platinum mine, Zimplats. This implies the significant challenges mining companies are facing and Zimbabwe, is not in its own island.  In response to weakening global metal prices, Implats has cut US$1.8 billion in spending at Zimplats Zimplats allocates nearly 47% of its spending to local suppliers, particularly in procurement. In 2022, this figure was over 50%, but it has reduced to 47% this year.


Against this background, major mining companies with huge investments in Zimbabwe incurring such setbacks, this article seeks to unravel Zimbabwe’s 2024 mining sector’s outlook.

Since assuming office in 2018, President Emmerson Mnangagwa has placed significant emphasis on the mining sector as a key driver of his economic agenda. His ambitious objective is to generate substantial revenue of US$12 billion by 2023, as outlined in his economic blueprint, the National Development Strategy 1. The focus is primarily on gold, platinum group metals, and diamonds. Additionally, emerging minerals such as chrome, coal, and lithium, often referred to as "white gold," are expected to contribute to the growth of mining revenues in Zimbabwe.

The government has been actively implementing various policies to revitalize the mining sector in Zimbabwe. However, it has failed to give sufficient attention to crucial issues such as taxes, capital, and electricity, which have a significant impact on the weakening metal prices. Although mining may not be the primary contributor to Zimbabwe's GDP, it remains the leading source of foreign currency earnings for the country. In 2022, mining foreign exchange receipts amounted to a total of 5 billion US dollars, and the government has set an ambitious target to more than double these receipts in 2023. This target is not only ambitious but also challenging, considering the complex dynamics of the mining industry and the broader economic variables in play. In 2022, mineral exports surged to US$5.62 billion, compared to US$2.7 billion in 2017. The mining sector has made a positive contribution to the country's fiscal revenue, with its share increasing from 9% to 12% over a span of five years.

However, there is a prevailing sense of pessimism regarding Zimbabwe’s mining  outlook. The mining index, as measured by the Zimbabwe National Chamber of Commerce (ZNCC), experienced a notable growth of 9.4% in 2022. However, the most recent survey conducted by the ZNCC indicates a decline in this positive trend, with the index falling to -0.3%. This marks the first time during Mnangagwa's administration that the index has dipped below zero, despite his emphasis on placing mining at the forefront of his economic policies.

Zimbabwe's mining outlook, except for gold which is not being affected by geoeconomic fragmentation, but rather used as a safe haven asset is significantly impacted by the downward trend in commodity prices due to geopolitical tensions. This geopolitical event has led to the fragmentation of major commodity markets, prompting countries to impose trade restrictions on commodities and investors shun other commodities less gold and US dollars as a safe haven.  

Poor global metal prices

Global metal prices, especially for platinum group metals and lithium, are expected to remain low. One significant element affecting platinum is the emergence of lithium, which has reduced the demand for the mineral. The rise of battery electric vehicles poses a threat to the demand for platinum now and beyond and other metals used in emissions-curbing catalysts, as these vehicles do not require the same level of platinum usage. However, lithium itself is not immune to challenges. Geopolitical conflicts and economic uncertainties have impacted lithium demand. Russian war on Ukraine resulted in sanctions on Russian natural gas, which previously accounted for 45% of European needs. This situation has made transitioning away from fossil fuels more difficult, leading nations to rely on fossil fuels and reducing demand for lithium including in China, the largest producer of electric vehicles.

This trend is expected to worsen beyond 2023 due to the emergence of new conflicts, such as the Israeli-Hamas War and the failure of a ceasefire in Ukraine. In fact, Ukraine is planning another major offensive. These conflicts further reinforce reliance on fossil fuels and reduce demand for lithium-made products, thereby affecting both lithium and platinum prices. Year to date, lithium prices have experienced a substantial decrease of 72%, while platinum prices have fallen by 45%. In order to mitigate the impact of poor prices, miners may consider increasing production. However, expanding production comes with high production costs, which may not be feasible given the current economic conditions. The combination of reduced profitability, declining revenues, and the high cost of production poses significant challenges for miners in navigating the current market conditions.

Since the beginning of the year, platinum prices have decreased by 15%, while lithium prices have dropped by over 50%, nearly doubling on a year-on-year basis. According to the International Monetary Fund (IMF), geoeconomic fragmentation will heighten platinum and lithium prices headwinds, potentially slowing down the progress of the green revolution by one-third by 2030. ZNNC report indicates that miners anticipate a 15% decrease in profitability and a 20% decline in revenue for the current year, with an additional 10% drop expected in the following year, primarily due to weak commodity prices.

Commodities, given their concentrated production, challenging substitution possibilities, and critical role in various technologies, are particularly susceptible to geoeconomic fragmentation. Geoeconomic fragmentation leads to significant fluctuations and increased volatility in commodity prices. This volatility predominantly affects low-income countries that heavily rely on exporting raw minerals for their economic sustenance. Fragmented mineral markets result in higher costs for the energy transition, reducing investments in renewable energy and electric vehicles, thereby impacting profitability.

Electricity Crisis

One of the major challenges Zimbabwe will face in 2024, which is a carryover from 2023, is the escalating electricity costs. Currently, electricity costs account for 20% of miners' overall expenses, and they have seen a significant increase of 40% year-to-date. In the upcoming year, the Zimbabwe Electricity Supply Authority (ZESA) is planning to raise power tariffs for the third time, which will further drive-up costs. The tariff increase will raise power costs to 24% of overall expenses, up from the current 20%.

Another challenge is the depletion of electricity output, which falls short of the required capacity. The government has stated that peak demand necessitates up to 1.8 gigawatts, but analysis suggests that the mining and manufacturing sectors' development requires up to 2.5 gigawatts to sustain peak demand. Insufficient electricity output, coupled with high tariffs, will result in a production cost increase of up to 10% in the coming year. The industry will continue to rely on generators or solar systems as Hwange Power Station's Unit 1-6 requires substantial investment, estimated at US$2.8 billion, for rehabilitation, repowering, maintenance, and construction. Hwange Power Station serves as Zimbabwe's primary electricity buffer, as Kariba is significantly impacted by climate change, leading to reduced power generation due to recurring drought spells. This means companies will continue to rely more on generators which are expensive amid poor metal prices. this translates to high costs-low profits in 2024.

The combination of high electricity tariffs, limited output, and reliance on alternative power sources poses significant challenges to the mining industry in terms of cost competitiveness and operational sustainability.


Last year, Zimbabwean government has proposed an increase in royalties for platinum miners from 2.5% to 7%, and for lithium from 2% to 5%. It is worth noting that Zimbabwe's tax contribution from mining is currently less than 2%, which is below the average contribution of 2% from countries within the Southern African Development Community (SADC) and above. However, it is challenging to make a direct comparison between Zimbabwe and other countries like South Africa and Zambia due to their differing economic landscapes and circumstances.

However, one significant development to consider is the introduction of a beneficiation tax on platinum, scheduled to take effect in January 2024. This will heavily weigh on Zimplats, Unki and Mimosa which are already struggling from poor commodity prices. This tax is unnecessary given the lower prices of platinum group metals and that Zimplats, is currently constructing a refinery and has agreed to process platinum within Zimbabwe.

For a better 2024 outlook, government should reconsider and potentially revise the proposed increase in royalties, as mining companies already contribute substantial taxes. It is important to strike a balance between ensuring a fair share of revenue for the country and maintaining an attractive investment environment for mining companies, especially considering the current challenges faced by the industry, such as lower PGM prices and the need for infrastructure development.

Capital Restraints

Due to unfavourable commodity prices and high electricity costs, coupled with the necessity to increase production to compensate for these challenges, the sector is currently experiencing a significant shortage of capital influx which will worsen in 2024 due to a slow global and Zimbabwe’s projected economic recovery. The mining industry requires a total of US$2 billion within the next year to bolster production levels and ensure its sustainability in the market.

The situation will be further aggravated by the export retention fee policy. Under this policy, the government pays exporters 75% of their earnings in USD and 25% in local currency. However, due to the depreciation of the Zimbabwe dollar, miners are experiencing a loss in the value of their earnings. For effective production going forward, miners should at least be permitted to retain at least 90% of their earnings in foreign currency. This would enable them to adequately fund their operations and mitigate the adverse effects of currency devaluation and global geoeconomic fragmentation.

Therefore, Zimbabwe's mining sector is facing numerous challenges and uncertainties in the year 2024. The industry will continue to grapple with the impact of poor global metal prices, particularly for platinum group metals and lithium, which have been affected by geopolitical tensions and shifts in demand. Electricity costs will continue to escalate and inadequate electricity output will highly pose significant obstacles to the sector's cost competitiveness and operational sustainability. High tariffs and limited power supply are driving up production costs amid poor metal prices. The proposed increase in royalties, including the introduction of a beneficiation tax on platinum, adds further financial strain to mining companies already struggling with poor commodity prices. While it is essential for the government to ensure a fair share of revenue, striking a balance between generating revenue and maintaining an attractive investment environment is crucial for the sector's growth. The depreciating Zimbabwe dollar and the export retention fee policy will further compound these challenges.  

In light of these circumstances, it is imperative for the government to reassess its policies and consider measures that support the mining industry's growth and resilience. This may include revisiting the proposed increase in royalties, providing incentives for foreign investment, improving infrastructure development, and allowing miners to retain a higher percentage of their earnings in foreign currency. Addressing these challenges will require a collaborative effort between the government and mining companies to create a conducive environment for sustainable growth and attract much-needed investment in the sector.

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