Mining poised for growth in 2021

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THE mining industry is expected to ramp up production and increase output in 2021 amid renewed confidence and optimism in the sector, a survey by the Chamber of Mines has revealed. 

The latest State of Mining Industry report commissioned by the Chamber of Mines (CoM), in partnership with The Financial Gazette, yesterday said mining executives had expressed a great deal of optimism and confidence about the mining industry growth prospects for 2021.

Gold output is expected to increase by 32 percent next year, up from this year’s target of 25 tonnes to 33 tonnes. Chrome output is set to grow by 33 percent from 1,2 million to 1,6 million kilogrammes, while coal and diamonds are expected to grow by 25 percent and 19 percent respectively.

“Survey findings show that most respondents are planning to improve capacity utilisation in 2021. The average capacity utilisation for the industry is expected to increase from 60 percent in 2020 to a five-year record at 80 percent in 2021,” the report notes.

“Most mining executives are optimistic about profitability of their businesses in 2021, with 70 percent of respondents indicating that they are projecting businesses to be more profitable compared to 2020 while 20 percent are expecting the same level of profit as in 2020.”

Coal producers are forecasting significant increases in both capacity utilisation from 48 percent in 2020 to 80 percent in 2021, while coal output will increase to three million tonnes in 2021, from 2,1 million in 2020.

The report attributed this year’s subdued growth to a number of challenges including the global Covid-19 pandemic, fiscal and monetary framework, power supply, capital constraints, which are all expected to have a less impact in the year ahead.

“In the PGMs industry, there is a lot of progress at new platinum projects including Great Dyke Investment, Karo Resources and Todal which are at various stages of development and resource quantification with platinum output expected to exceed 24 tonnes by 2025,” the report said.

The report however, stated that mining executives remained pessimistic about the prospects for the mining industry to raise adequate capital in 2021, due to “uncompetitive investment environment, high cost of doing business and the perceived country risk”.

“Survey findings show that mining executives are slightly less confident about economic prospects for 2021.

“Confirming this, about 60 percent of respondents expect the economy to shrink in 2021, while 20 percent anticipate the economy to be the same as in 2020.

“Approximately 20 percent of the respondents indicated that the economy would grow in 2021,” the report revealed.

According to the report, producers also raised concerns over delayed payments from gold deliveries to Fidelity Printers and Refiners, resulting in input shortages and production disruptions, while those in coal production complained about delays in payment for coal delivered to Zesa Holdings.

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