Roberta Katunga, Senior Business Reporter
MINING companies have implored the Government to reduce power tariffs for the sector in an effort to boost the country’s mineral output.
According to the Chamber of Mines Zimbabwe’s (CoMZ) 2016 state of the mining industry report, a majority of the mining companies particularly those in gold production interviewed said the tariffs were exorbitant and there was a need for them to be reviewed downwards.
“All respondents from the gold industry indicated that the current tariff applicable to gold of $12,80 per kilowatt hour (KWh) is too high and should be reviewed downwards. Ninety percent of other mineral categories felt that the prevailing tariff should be reduced and aligned to regional benchmarks. Ten percent of respondents proposed a commodity price linked electricity tariff,” read part of the report.
CoMZ further said demand for electricity was likely to increase to 170 megawatts (MW) from 130 MW.
“Demand for electricity is anticipated to increase to 170 MW in 2017 if the industry secures additional funding for investments, while at current levels of capitalisation, demand will moderately rise from the current 130 MW to 140 MW,” read part of the report.
Energy is one of the cost drivers in the economy and contributes a huge portion of the production costs in the mining sector.
In its audited financial statements for the year ended 30 September, 2016 Falcon Gold Zimbabwe said implementation of the Government’s recommendation early this year would go a long way in reducing the cost base of mines.
Announcing the mid-term fiscal policy statement in September last year Finance and Economic Development Minister Patrick Chinamasa said reduction in power tariffs would go a long way in attracting investment for recapitalisation of the mines.
“The concerted effort at industry level to lobby the authorities for a change in the tax and power cost base has been met with limited success,” said Falgold. Towards the end of fiscal 2016, the Government advised of an intention to reduce the cost of power to the mining sector by nearly 40 percent, from $12,80/kWh to $8,0kWh.
“Implementation of this recommendation early in fiscal 2017 would go a long way in reducing the cost base of the mines with the possibility of at least going into a cash neutral position,” said Falcon Gold.
The mining entity, however, said the implementation of this recommendation (tariff reduction) remains doubtful as the power utility seems to be reluctant to implement it.
Meanwhile, CoMZ said average capacity utilisation for the mining sector increased from 60 percent in 2015 to 64 percent in 2016 with the platinum sector operating at full capacity while gold recorded a two percent increase in capacity from 77 percent in 2015 to 79 percent last year.
However, declines in utilisation levels were recorded in the coal and nickel sectors with coal falling from 50 percent to 30 percent while nickel recorded a drop from 55 percent to 41 percent.
The sector recorded a 23,8 percentage drop in fatal accidents with 32 reported from January to November 2016 compared to 42 in 2015 with falls of ground-related accidents being the main cause of fatalities.
The report revealed that 13 people died from fall of ground while another eight people succumbed to collapsing pits and trenches with the rest of casualties due to shaft accidents, explosives, gassing and falling down excavations.
“The study established that the mining industry was implementing initiatives that empowered employees to take ownership of their own safety. Best practices are being implemented through such initiatives as Visible Felt Leadership, Value Based Safety, Behaviour Based Safety, and Zero Discharge of Effluent into the environment,” read the report.