Zimbabwe mining exceeds expectations, contributed 20 percent to GDP

THE mining industry contributed 20 percent to Zimbabwe's Gross Domestic Product last year from an estimated 4 percent the prior year, Minister of Mines and Mining Development Obert Mpofu has said.

Minister Mpofu made the remark in his recent address to the Annual General Meeting of the Chamber of Mines in Victoria Falls.

The contribution came on the back of a 143 percent increase in mineral exports after Zimbabwe raked in US$1,7 billion from mineral exports in 2010.

Minister Mpofu said the increase in exports was attributable to increased gold exports after the liberalisation of the mining industry and firming gold prices.

Prices of gold are projected to remain firm in the US$1 200 to US$1 800 per ounce range having recently exceeded US$1 500/ounce in the last few weeks.

Exports were also significantly increased by shipments of ferrochrome and diamonds as a result of the certification of Zimbabwe by the Kimberley Process.

This underlies the Government's latest position that the mining industry will drive economic recovery and growth after a decade-long economic instability.

"The sector generated 65 percent of the country's total exports and contributed 20 percent to Gross Domestic Product for 2010," said Minister Mpofu.

He said the sector played a crucial role in socio-economic development drawing comparisons with Chile, South America's most successful economy.

Minister Mpofu said between 1990 and 2003 poverty in Chile fell by almost half and by more than 60 percent in the mining region of Antofagasta.

He added that mining had transformed Botswana and Namibia over the last 20 years while Brazil and South Africa turned around their economies on mining.

However, power shortages, liquidity crunch, lack of capital negative public about Zimbabwe have constrained optimal performance in the sector.

But despite these challenges the mining sector is expected to grow by at least 43 percent this year and drive the projected 9,3 economic target by year-end.

Gold production this is expected to reach 13 tonnes from 9,6 tonnes last year, an increase of 35 percent when compared with production figures for 2009.

The gold mining sector requires an estimated US$1 billion to retool. Platinum production increased 26 percent in 2010 as the mines operated at full throttle.

Output is set to rise after the opening of Unki Mine while Zimplats has reportedly started the second phase of expansion. Prices of platinum have remained largely encouraging above US$1 700 per ounce.

Chrome output increased from 194 000 tonnes in 2009 to 517 000 tonnes in 2010 reflecting an increase of 167 percent largely driven by resuscitation of Zimasco.

Ferrochrome production also increased from 72 223 tonnes in 2009 to 154 000 tonnes in 2010, an increase of 114 percent.

Zimasco has gone into full production and is looking at expanding its production facilities going into the future.

Coal production rose from 1,6 million tonnes in 2009 to 2,7 million tonnes last year after a 60 percent increase and the outlook appears bright.

Nickel output remains low after the closure of Bindura Nickel Corporation in 2008 due to financial constraints. Operations remain under care and maintenance.

Output at 6,1 million tonnes came from PGM mining.

But as prices remain firm on the international market it is expected that BNC will be able to secure the US$26 million it requires to restart operations at Trojan.

While there is huge potential of output from the Chiadzwa diamonds the potential remains constrained by the impasse with the Kimberley Process.

Significant output is also expected from the country's two kimberlitic operations in Murowa and Beitbridge with potential for two million carats a year.