Where there are economic challenges, the cost of establishing and or running a business becomes complicated. Such is the case with the Zimbabwean mining sector which seems to be brimming with skepticism.
A new report recently revealed that miners in Zimbabwe are expecting a drop in the profitability of mining operations, owing to an increase in costs of production and a dismal outlook for platinum and lithium in 2025.
The report titled; Chamber of Mines of Zimbabwe, as seen on Reuters revealed that a combination of domestic and international factors is expected to weaken mining income.
“The issue of costs continues to dampen the spirit of profitability,” the COMZ’s chief executive officer, Isaac Kwesu stated.
Production cost in the sector is projected to rise by 8% on average within the next fiscal year.
Additionally, miners expect that energy demands would increase from 600 megawatts per day this year to 800 megawatts in 2025.
Th aforementioned challenges as well as the country’s unstable currency continues to plague Zimbabwe’s mining sector.
As a result of the currency’s struggle in the unofficial market, the official exchange rate was devalued to 25 ZiG per dollar, up from 14 ZiG per dollar.
The currency was introduced in April to replace the Zimbabwean dollar.
Lithium saga in Zimbabwe
Zimbabwe, Africa’s top producer of lithium, gave miners until March 2024 to submit their plans for creating battery-grade lithium domestically.
The overproduction of lithium in China and the decline in demand for electric cars have resulted in a more than 80% decrease in the metal’s price over the past year.
Companies have been severely impacted by the decline in lithium prices.
Major players in the market, such as China’s CATL, have stopped production at multiple mines, while Albemarle, the biggest producer of lithium worldwide, started a second round of cost-cutting initiatives and layoffs early this year.
