THE country’s mining sector has predicted lowered prospects FY2023 on the back of tight commodity markets, the latest Chamber of Mines report has revealed.
The report titled ‘State of the Mining Industry Report 2022’ says executives in the mining sector are also anticipating global recession.
“Commodity market outlook survey findings show that commodity market outlook prospects are lower in 2023 compared to those recorded for 2022. Mining executives cited the anticipated global recession in 2023 to result in tight commodity markets.
“Approximately 46% of respondent mining executives expect commodity market conditions to soften while 39% anticipate the conditions to improve in 2023 compared to 2022,” the report said.
The survey findings show that the mining executives’ profitability prospects for 2023 are subdued compared to those recorded for 2022.
About 53% of respondent mining executives expect profitability to soften while about 34% of the respondents are anticipating profitability to improve in 2023. Most executives reported that their profitability will be weighed down by the anticipated high-cost structure in 2023, characterised by increased electricity costs and tariffs.
Survey findings also show that approximately 47% of respondent mining executives expect the overall cost of production to increase by between 10 to 20% in 2023.
About 33% of respondents expected costs to increase by below 10% while 20% of respondents expect costs to increase by above 20%. Data shows that respondent mining executives are expecting approximately 42% increase in the proportion of electricity costs to total cost of production,” the report said.
However, despite the prediction, CMZ president Collin Chibafa said the mining industry continues to be an important sector in the Zimbabwean economy.
“Currently, the mining industry contributes 73% to Foreign Direct Investment, 83% to exports, 19% to government revenues, 2% to direct formal employment, and 11% National Income (DGP and GNI). These levels of contribution are on the upper end of the contribution ranges for Middle Income and Low Income economies,” he said. – (New Zimbabwe)