The Sunday News
Roberta Katunga, Senior Business Reporter
THE mining industry requires about $3,8 billion to recapitalise over the next five years amid revelations that the platinum sector accounts for 70 percent of the industry’s capital requirements.
According to a State of the Mining Industry survey report 2015, conducted by Nu Times Innovations through facilitation and sponsorship by the Zimbabwe Chamber of Mines, the sector was encountering difficulties in raising the requisite capital for ramping up production.
“Of this, $1,2 billion is required for ‘stay in business’ while $2,6 billion is for developmental investments. The platinum sector accounts for about 70 percent of the industry’s capital requirements followed by gold, coal, chrome and nickel sectors,” read part of the findings of the survey.
The survey revealed that 90 percent of the respondents reported that they encountered difficulties in raising capital to meet operational costs while 62 percent of the respondents said their equipment was antiquated and inefficient.
In the survey, shortage and high cost capital was ranked first as undermining the viability of the mining sector.
Meanwhile, the mining industry bemoaned high charges by Rural District Councils and recommended that uniform levies at local authority level be applied across the entire mining industry.
“All respondents indicated that RDCs charges are set at unaffordable levels increasing the fiscal burden to the mining industry. All respondents raised concerns on the decentralisation of powers to set these charges to RDCs and their determination based on individual RDC budgetary requirements,” read part of the report.
According to the survey, the mining industry recommended that RDC levy be part of a broader mining sector effective tax administered through treasury which would distribute the collections to RDCs.
“In addition, all respondents were of the view that the levies should be reduced and be based on the ability to pay and must be determined in the context of all the other taxes, fees and charges that are applied to the mining industry,” read the report adding that 70 percent of respondents recommended that uniform RDC levies should be applied across the entire mining industry.
The report also highlighted that the mining industry’s woes were far from over as the confidence score on capital stood at minus 18.2.
At least 37 percent of the mining houses according to the survey, have no confidence that they would access capital to fund their operations.
“The results of the State of the Mining Industry Survey show that mining businesses have no confidence that they will access capital to fund their operations and even if they do they are wary about the high finance charges that are prevailing in the market at present and are showing no signs to go down any time soon. 18.2 percent of survey respondents are all the same less confident about their businesses’ access to and cost of capital in the next 12 months while 9.1 percent expect their access to and cost of capital to remain about the same,” the report stated.
Speaking on the survey, chamber president Mr Toindepi Muganyi said the state of the mining industry survey was launched in 2015 to promote the use of evidence in policy making and foster a shared mining vision among key stakeholders—Government, the mining industry, labour and communities.
“The provision of adequate and accurate empirical and factual data is fundamental to the crafting of stable and competitive fiscal and regulatory policies that support the growth and development of the industry. It is a precondition for the maximum of the socioeconomic development agenda of the country enshrined in the Zim Asset vision,” said Mr Muganyi.
