THE mining sector is most likely to miss the 14 743kg gold output target achieved last year partly owing to closure of operations by major players and the general difficult operating environment.’ OWN CORRESPONDENT
An official with the respected Zimbabwe Chamber of Mines said Falgold’s closure of its Dalny Mine in Kadoma this year would partly contribute to the gold mining sector missing the target.
“We are in the last month of the year, but our gold output is at around 12 kgs,” the official, who asked not to be named due to the sensitivity of the issue, said.
“We will be lucky to reach 14,7kg because of the shutdown of operations by some players.”
In September this year, Falgold shut Dalny Mine down after Zesa Holdings disconnected power supplies to the mine over debts.
As a result of the closure, Dalny Mine was placed under care and maintenance while its 900 employees were placed on unpaid leave.
The official said serious liquidity problems arising from a substantial fall in the price of gold against rising cost of production this year would to weigh down this year’s output with the high cost of royalties also said to be threatening the survival of the mining sector.
Last year the government pegged the royalties for gold at 7%, platinum at 10% and diamonds at 15%.
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The high rates of royalties are criticised for scaring away investors, making Zimbabwe a less competitive destination for business, according to mining experts.
Rural District Councils, unit tax, Environmental Management Agency discharge fees and levies from the Minerals Marketing Corporation of Zimbabwe coupled with rising cost of production, weigh down on mining.
The Chamber of Mines has been lobbying the government to reduce royalties to allow sustainable growth of the sector.
Players in the sector eagerly await the announcement of the budget by finance minister Patrick Chinamasa on Thursday to see if the government would review royalties as proposed during consultations.
The mining sector remains one of the key drivers of the economy.
Mineral exports rose by about 230% between 2009 and 2011 to make the mining sector the country’s leading export earner.
Last year, minerals accounted for more than 50% of exports with platinum, gold and diamonds contributing more than 90% of the sector’s value.
