ZIMBABWE’S large mining companies are optimistic that firm commodity prices on the international market will this year spur growth of the mining industry at a time the domestic economy is in distress.
According to the Chamber of Mines of Zimbabwe, which will this week hold its annual conference in the resort city of Victoria Falls, the mining sector, the country’s largest economic driver, will register strong growth in 2022.
The mining conference which runs from June 2 to 4, comes at a time new mines in key sub-sectors such as gold, coal and lithium have been commissioned. The outcome of the conference is expected to assist in promoting the development and growth of the mining sector in the medium to long term.
“The outlook for the mining industry is positive, buoyed by encouraging commodity price upturn that has seen mineral prices surpassing their long-term averages. (Most key minerals recorded growth, with gold at 86%, lithium 83%, diamond 51%, coal 21%, platinum 13% and nickel 13%.),” Isaac Kwesu, the Chamber of Mines chief executive, said.
“The industry is on a recovery path, having rebounded by almost 3.4% in 2021 from the Covid-induced contraction of -9% in 2020.”
Experts say prices of gold and other precious metals on the global market are this year expected to reach new highs driven by a surge in demand triggered by the Russia-Ukraine war.
As global economies continue to feel the shocks of the conflict in Eastern Europe, Zimbabwe’s large mining companies have projected a bullish outturn of the commodities market, with gold being a haven for those seeking to preserve capital.
Zimbabwe’s economy is projected to grow by 5.5% underpinned by an anticipated strong recovery in mining (8%), manufacturing (5.5%) and construction (17.4%).
The gold price has already responded to the unfolding crisis in Europe, surging above the US$2 000 per ounce mark during the period of conflict, from an average of US$1 750 per ounce in December 2021.
Amid growing geopolitical tensions, palladium price increased by over 55% to US$21 440 by end of February 2022. The imposition of sanctions on Russia is expected to result in the shrinking of platinum group metal (PGM) supply to the rest of the world, propping up PGM prices.
The imposition of Western sanctions on Russia, one of the biggest producers of nickel, according to market analysts, will result in supply constraints and high prices in 2022. Production disruptions in Ukraine (another big player in the nickel industry) due to the current war will hurt the supply of nickel, they say.
Russia accounts for approximately 38% and 10% of global palladium and platinum, respectively.