Harare - Zimbabwe's gold miners are ramping up production, benefiting from the low cost nature of the country's mines, where deposits are generally closer to the surface compared to mines in South Africa and other source markets.
Finance Minister Patrick Chinamasa said last month that the mining sector will grow by 2.4% this year, driven by increased output of gold and platinum. Gold production this year is expected to top 20 000 kilograms from the 2015 output of 18 700kg.
Canadian gold producer Caledonia Mining Corporation is gearing up to account for about 50 000 ounces of this from its Blanket gold mine in Zimbabwe, while other bullion miners such as Mwana Africa’s Freda Rebecca mine and Metallon Gold are also looking to raise output this year.
Caledonia company executives said on Wednesday that bullion output for 2015 had surged to 42 000 ounces.
“Due to the high fixed cost component at Blanket and the generally stable environment for input costs, the projected increase in production to approximately 50 000 ounces of gold is expected to result in a lower average production cost per ounce,” said Caledonia CEO Steve Curtis.
In the first quarter of the current year, production from the Blanket mine is projected to be 10 700 oz before rising to 14 000 oz by the fourth quarter of 2016.
“The completion of the Tramming Loop on 22-Level (750 metres below surface) slightly ahead of schedule in mid-2015 was an important factor which contributed to the increased production by alleviating the underground logistical problems which constrained production in 2014,” said Curtis.
However, softer commodity prices could pose problems for Zimbabwean miners' revenue prospects. The gold price averaged $1 079 per ounce in early Wednesday trade across major markets as the yellow metal eyes a stronger resistance level of $1 084/oz, according to economists.
Zimbabwe, which is rich in mineral deposits, has been urged to diversify its economy and revive manufacturing and other production sectors. Zambia, another resource-heavy economy, has also been facing headwinds ballooned by its over-reliance on copper, of which prices have also been weaker in the past few months.
Chinamasa said in his 2016 budget statement for Zimbabwe that the mining industry's stronger growth position would be attained against mounting constraints such as “depressed international mineral prices, falling demand in export markets, financing, as well as power shortages”.