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Zim miners sound wage alarm for 2017 - survey

Harare – Zimbabwean mining companies – among them units of SA and other world resource firms such as Sibanye Gold [JSE:SGL], Caledonia Mining Corporation and Anglo Platinum [JSE:AMS] – will not be able to afford salary raises in 2017, survey findings showed on Monday.

The mining houses in Zimbabwe continue to be weighed down by electricity, statutory and labour constraints. A biting liquidity crunch has also seen miners and other companies in the southern African country bulk.

Findings of the State of The Mining Industry Survey released on Monday showed that about "100% interviewed said that they will not afford any salary increments in 2017".

This suggests that the mining industry will battle employees’ unions that have been pushing for a higher minimum salary increase. The chamber of mines and mining employees agreed to a 1.5% salary raise that took the minimum wage for the industry to $246 in 2016.

The industry has struggled along, although some operators such as gold miner Metallon Corporation are investing significantly to boost output. Zimplats has also just announced that it is investing in a new mine.

However, only about 40% of mining industry executives are bullish that "the sector will grow by at least 5%”.

Around "50% plan to grow output by between 1% and 4%, 10% of the respondents are planning to maintain their output," says the survey findings.

The cost structure for mining companies is mainly constituted of labour (30%), supplies (36%), power (16%) and statutory payments, accounting for an average 95% of total costs in 2016.

"Headcount for surveyed companies declined by an average of 11%, with 60% of respondents having reduced their headcount in 2016 by an average of 17%, compared to 2015."

Although Zimbabwe’s economy has continued to weigh down the miners, about 50% of the industry is looking beyond the country’s current troubles, with half of operators saying they "spent on expansion projects in 2016 while 70% have lined-up expansion projects" for 2017.

However, a significant number raised concerns over funding constraints such as a lack of access to capital. This was "undermining implementation of planned expansion projects" with operators such as Bindura Nickel Corporation now banking on a rebound in nickel prices to speed up its smelter and refinery restart projects.

"Capital constraints, constraints in electricity supply, high cost of electricity, low feed-stock and low commodity prices, were cited as the major challenges in initiating beneficiation facilities," says the report.

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