Harare - Zimbabwean mining companies have invested up to US$362m in mineral beneficiation projects expected to be completed in the next five years as the government intensifies a value addition drive to create more employment and keep money in the country.
Zimplats, owned by Impala Platinum [JSE:IMP], as well as Unki mine, controlled by Anglo American Platinum [JSE:AMS], are some of the companies that have already made provision for smelter projects in the country.
A state of mining report by the Chamber of Mines Zimbabwe has now said that about 60% of the country's mining companies have invested in value addition projects across mineral categories such as diamonds, gold, platinum and nickel.
However, the survey found "there are challenges to mineral beneficiation" in Zimbabwe. "Capital constraints, electricity constraints, high cost of power, low feedstock and low commodity prices are affecting mineral beneficiation," according to the report.
It said that only about 25% of Zimbabwean gold miners have plans to undertake exploration. The grade of underground gold being mined in the country has also declined, it said, pointing to ore bodies that are getting lower.
Zimbabwe currently produces about 20 tonnes of gold per year. About 54% of miners in the country are large-scale, while the remainder are artisanal and small-scale gold miners.
"75% of the gold miners in Zimbabwe are doing underground mining while 25% are undertaking surface mining. Mining companies are undertaking labour rationalisation and mine to mill optimisation to manage rising costs," said the report.
A confidence index of the mining business in the country found mining investors in the country are also concerned about political and regulatory issues.
Unfruitful wage talks
The Chamber of Mines Zimbabwe is engaging with worker unions in the country over wage negotiations. Tinago Ruzive, president of the Associated Mine Workers' Union of Zimbabwe - the country's main mining union - told Fin24 that the chamber and the union have since held two meetings, which have yielded no progress.
He said workers need to be more motivated and incentivised to be truly productive. But with most mines rationalising costs, it is unlikely that Zimbabwean mineworkers will be awarded significant wage increases.