Mining sector bullish about outlook

Mining sector bullish about outlook
Published: 13 December 2017
Zimbabwe's capital intensive mining sector is bullish about the outlook with the projected overall Mining Business Confidence Index (MBCI) at 21,6 in 2018 from -6,6 this year on the back of the new political dispensation, a sector report has shown.

The MBCI is a measure of business sentiment (optimism or pessimism) about prospects of the mining industry and economy in general in the next 12 months, according to the 2017 Mining Industry Survey report released last week.

"The new index shows that respondents are bullish about the prospects of the mining industry in 2018 given the new political dispensation, with the majority of respondents (90%) optimistic that the new government will endeavour to resolve all legislative and policy bottlenecks affecting the mining industry," the report said.

The index measures variables such as economic prospects, profitability prospects, growth prospects, market outlook, access to and cost of capital, employment, investment plans and commitments, mining title security and investment competitiveness. It also measures stability and optimality of mining fiscal regime, consistency and predictability of mining policies and perception of political risks.

"… all of the 12 measured indicators recorded improvements for 2018, compared to those recorded for 2017. Only two variables, political risk and access to capital remained in the negative territory, however, they also recorded improvements for the comparable periods," the report said.

The economic prospects confidence indicator for 2018 was at +4, compared to -50 recorded for 2017, indicating overall optimism about the economic prospects in 2018 with survey findings showing that 90% of respondents were optimistic of positive economic growth in 2018.

The profitability prospects confidence indicator for 2018 stood at +18%, compared to +11 recorded for 2017, indicating strong optimism of profitability of mining businesses in 2018, with 70% of respondents anticipating profits in 2018 and 20% expecting just to break even, the report said.

The growth prospects index for the mining industry for 2018 was at +78, compared to +50 for 2017, shows that the mining industry is bullish that the industry will record strong growth in 2018, compared to 2017, with 90% of respondents anticipating the industry to grow by more than 10%, while the rest are of the view that the industry will post a moderate output growth.

The access to capital index for 2018, though in the negative territory at -15, improved from -72 or 2017, with 60% of respondents expecting availability of capital to improve in 2018, compared to 2017 according to the report.

The mining industry is positive on employment prospects in the next 12 months, with the confidence index of +32 in 2018 compared to +28 this year.

The report said the investment plans index is at +50 for 2018 reflecting strong desire by mining companies to spend on investment projects when compared to +39 for 2017.

"About 90% are planning to spend on capital projects in 2018, while 10% are not sure as to whether they will spend or not," the report said.

There is also an improvement in the competitiveness index for 2018 projected at +50 from +3 this year.

Respondents were of the view that mining title will be more secure in 2018, as reflected by the title management index of +2, compared to -11 for 2017, the report said.
- newsday
Tags: Mining,

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