Zimbabwe’s gold producers are lobbying government to lower the energy tariff in a bid to ramp up production, saying the current regime will have impact on output on the back of tapering bullion prices, a leading miner has said.
Freda Rebecca general manager Toindepi Muganyi told journalists that an energy tariff of 14 cents per kilowatt hour is not sustainable for the sector at a time when other key economic sectors are enjoying lower tariffs.
Industry figures show that the gold sector is currently operating at 50 percent of potential capacity and the Chamber of Mines says gold miners require $420 million investment over the next four years to reach the country’s peak output of 27 tonnes recorded in 1999.
“The gold producers are paying electricity a high tariff of 14 cents per kilowatt hour while the rest of the industry, including even domestic consumption, are paying around 10 cents per kilowatt hour,” Muganyi said.
“So if mining is going to spur any growth, it is important that we reset our priorities in such a way that affordable electricity goes to the gold miners. The gold miners will then become more sustainable and they are able to either hold their production or increase their production in a declining gold price environment.”
Commenting on the reduction of royalty to five percent from seven percent, he said while the move came as a reprieve for the sector, subdued gold prices currently on the international market would not push volumes.
“The targets for this year will remain the same if the gold price holds where it is but should the gold price keeps going down, we will see a few other mines starting to curtail some of their production in marginal areas and focusing on the better areas,” Muganyi said.
The mining industry, which registered average 20 percent growth since the country unofficially dollarized in 2009, driving Zimbabwe’s economic rebound in the process, is this year expected to record a 1,9 percent decline due to weak metal prices and lack of significant new investment into the sector.
This year, Zimbabwe is expected to produce 13.8 tonnes of gold, down from 14 tonnes last year due to depressed gold prices.-The Source
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