Zimbabwe mining sector facing $10bn funding shortfall in next five years

ZIMBABWE’S mining sector faced a funding shortfall of $10bn over the next five years, said Bloomberg News citing estimates by the country’s Chamber of Mines.

The country would struggle to attract capital owing to erratic power suppliers and exchange rate volatility, the newswire said citing the Chamber of Mines’ latest commodity outlook.

“Key risks to the Zimbabwe mining sector outlook include inadequate foreign exchange allocations to fund operational requirements and expansion projects,” the chamber was quoted as saying in the report.

Political instability and economic collapse as well as rules deterring foreign investment would also affect the country’s ability to attract investment. Nonetheless, the sector is projected to generate earnings of $5.5bn this year, said Bloomberg News.

Last year, the Zimbabwe announced rules forcing exporters to transfer 40% of their foreign currency earnings to the central bank, instead of 30%. That’s exchanged into local currency at little more than half the parallel market rate. Those foreign-exchange losses pose a risk to the mining industry, said the chamber.

One area where the southern African country has been able to bring in more foreign investment is in its platinum group metals sector. In the last two months, Impala Platinum said it would spend $204m expanding its Zimplats’ smelter while Tharisa said it would progress its $250m Karo platinum mine in the country.

Albeit on a smaller scale, Caldeonia Mining, a Toronto-listed gold producer, said it planned to press on with expansion. “We see huge geological potential in Zimbabwe,” said Steve Curtis, CEO of the company in January.