Hard-pressed Zim miners invest $211m in 2017 | Fin24
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Hard-pressed Zim miners invest $211m in 2017

Dec 08 2017 21:27
Memory Mataranyika

Harare - The larger mining companies in Zimbabwe, including SA platinum groups Impala Platinum [JSE:IMP], Anglo Platinum [JSE:AMS] and Sibanye [JSE:SGL] Stillwater, invested $211m in operations this year and want an improvement in the fiscal, operating and regulatory frameworks to be up to date with capital requirements for 2018.

The state of mining report released by the chamber of mines of Zimbabwe on Friday shows that mining companies in Zimbabwe are still hobbling from a plethora of constraints although the government on Thursday addressed some of the concerns by miners.

This includes deferment of a raw platinum export tax to 2019, scrapping of indigenisation requirements for other minerals except for platinum and diamonds and reduction in mining ground rental fees. The 51% local ownership requirement now only applies to foreign owned diamond- and platinum mines.

The chamber of mines commissioned study also shows that investors in the Zimbabwean resource sector expect an improvement in profitability prospects and certainty in the political framework following the exit of Robert Mugabe and swearing in of Emmerson Mnangagwa as new President.

“Perception of political risk, though still in the negative territory, improved in view of the new government to -10 for 2018, compared to -41 for 2017, with 50% of respondents expressing confidence in the new political dispensation, while 30% remained pessimistic and still feel that political risk will remain high in 2018.

"About 20% of respondents were indifferent to political risk,” says the report.

Zimbabwean mining companies had faced difficulties in raising capital to sustain operations and to ramp up production. They had, however, “injected $211m in 2017 for both sustenance and ramp up” while the industry “requires around $392m in 2018 to sustain” operations.

There are also expectations that the Zimbabwean mining policy framework will improve under Mnangagwa, who appointed former Mimosa executive chairperson Winston Chitando to head the Mining Ministry. 

Demand for electricity in the mining industry is anticipated to improve to 2.2 million MWh in 2018, from the current 1.7 million MWh on the back of new and expansionary projects. In 2017, all of the larger mining companies in Zimbabwe had not undertaken any new projects as the policy framework under Mugabe deterred investments, according to analysts.

According to the survey findings, mining executives and investors in Zimbabwe are mostly concerned about fiscal issues, monetary policies, indigenisation, energy and infrastructure, labour, and Investment promotion and protection.

Unfavourable conditions under these frameworks were described as “undermining the performance of the mining” sector in Zimbabwe.

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