Coal production down 43% in year to July

Published: 23 September 2019
The mining sector had another mixed month in July with changes in output varying across the board while total earnings from mining commodities fell by 13% to US$205 million. Positively, gold, the country's highest earning mining commodity rebounded with output rising by 77% to 2.9t and earnings rising by 80% to US$129 million. Meanwhile, diamond output had the sharpest decline at 59% to 2.1 million carats.

The mining sector has had a turbulent year so far facing disruption from erratic electricity supplies and fuel shortages. Recently, the government had to abandon its 40-tonne gold output target after acknowledging the challenges facing the mining sector. The table above illustrates the impact of the operating environment on mining, with the 2019 output so far, generally lagging behind the 2018 comparative in most minerals. Positively, the government has been making efforts to address the challenges facing the industry through facilitating electricity imports for the sector as well as prioritizing it on the domestic grid.
Economic observers have also pointed to the foreign currency retention ratio as another disruptive force to productivity in the mining sector. It was also suggested that the retention rates and the interbank rate were incentivizing smuggling activities in the sector. The second "liberalization" of the exchange rate in June saw the interbank rates align closer to the parallel rate. This might in some part explain the sharp rise in output from small scale miners in the gold sector.

More on gold; the average price increased by 4% to US$1,412.98 during the month. The rising output was primarily pushed on by rising production from small scale miners, whose output grew by 169% to 1.8 tons and setting a new high for the year. Output growth from large scale miners was comparatively slower at 14% to 0.9 tons, which is the second highest for the year. In total, the sector has produced 16.2 tons of gold in 2019, down 26% from the 2018 comparative while total earnings for 2019 stand at US$680 million.
The output performance of the three large scale PGM producers mirrored the slow growth in large scale gold miners. Aggregately, output from the producers rose by 1.2% to 2.93 tons with platinum output increasing by 7% to 1.3 tons although earnings fell by 53% to US$13.6 million. Among the producers, Mimosa was the only mine to experience a decline in output at -11% to 0.7 tons while Anglo-America controlled Unki experienced the highest growth at 25% to 0.6 tons, although Zimplats remained the biggest producer at 1.58 tons.
Looking ahead, expectations are for the government to ramp up support for the sector as it remains central to the country's economic recovery prospects. More so with the country still struggling to access a much needed bailout package from the international community to manage the recovery process. So far the minerals have generated US$1.64 billion in earnings, despite the operating challenges and remains the country's main source of export revenue.
- finx
Tags: Coal,


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