PLATINUM group metals (PGMs) and diamond output registered strong performance in the first quarter of this year, but other key minerals, including chrome and gold production, fell short of targets.
Mining contribution to the gross domestic product (GDP) is projected to outpace agriculture, despite the lacklustre performance of most minerals in the first quarter and the decline forecast for the year.
Notably too, gold deliveries are projected at 27 958 kilogrammes for the year 2020, which is lower than the 2019 levels despite the favourable international prices obtaining compared to the previous year.
Presenting the 2020 mid-term budget review Finance and Economic Development Minister Mthuli Ncube said during the first quarter of this year, total output of key PGMs surpassed output compared to same period in 2019, largely driven by increased throughput at Unki.
This was notwithstanding loss of production time due to scheduled maintenance of plant and equipment at the other PGM producers during this period.
PGMs benefited from favourable international prices, as well as relative stable power supply. International prices of platinum were about 10 percent higher than those of 2019.
Platinum output at 3 544 kg, was 3.7 percent above output produced in the same period in 2019. Platinum is projected to increase to 14 169 kg by the end of 2020, benefitting from the favourable prices, particularly of rhodium and palladium.
Despite higher average international gold prices by about 21.4 percent in the first quarter of 2020, gold deliveries (against expected increased output) under-performed.
Reduced deliveries reflect increased leakages (amid high production) through smuggling and diversion of gold to the informal market arising from issues around retentions.
“In order to increase gold deliveries, Government continue to engage mining companies including small scale miners on pricing and viability issues.
“The Government in conjunction with private investors is also establishing gold buying centres around the country and the Bubi Centre is already functional,” Minister Ncube said.
Growth for mining sector is now projected to slow-down to minus 4.1 percent in 2020, reflecting the impact of Covid-19 and other challenges including perceptions around retentions, erratic power supply and loss of skills in the mining sector.
The mining sector, being the largest foreign currency earner (60 percent of total foreign currency) is poised to surpass agriculture, which currently contributes between 9 percent-10 percent to GDP.
“Currently, mining sector contributes about 8 percent of total GDP and has set a target of generating US$12 billion revenues by 2023 from as little as US$2.7 billion in 2017,” Minister Ncube said.
Priority policy areas to attain this target and other transitional stabilisation programme benchmarks include reviewing and updating mining legislation, enhancing exploration and investment in mining, modernisation and computerisation of the mining title administration system (mining cadastre), improving transparency in the mining sector and establishing a viable fiscal regime.
Furthermore, beneficiation and value addition of minerals to create more jobs and earn more foreign currency are priorities for the sector.
Reforms in the above areas are ongoing and on course to attaining the US$12 billion target.
Nickel output stood at 3 936 tonnes during the first quarter of 2020, about 11 percent below output during the same period in 2019.
Output declines were attributed to scheduled maintenance at some of the major producers.
Nickel output was also affected by the Covid-19 pandemic induced shutdown of the manufacturing sector in parts of China that reduced consumption of base metals.
Chrome output for the first quarter of 2020 stood at 293 000 tonnes, about 30 percent lower than in the same period last year, largely due to a steep decline in ferrochrome prices.
Raw chrome prices and high carbon ferrochrome (HCF) prices registered declines of 47 percent and 23 percent, respectively, compared to the same period in 2019.
Coal output reached about 417 000 tonnes in the first quarter of 2020 (from two major producers), about 16.6 percent more than production realised during the same period in 2019, despite viability challenges facing the miners. – Herald
