31 January 2016

Zimbabwe: No Salary Increases in Mining Sector

The mining sector is unable to increase salaries and wages this year because of a host of challenges threatening the viability of the industry, a new survey has shown.

According to the Chamber of Mines of Zimbabwe (COMZ) industry survey report 2015, profitability for the mining industry has declined across most minerals, with a high number of respondents recording losses during the period under review.

The report showed that production costs had gone up to the extent that minerals were sold at a loss per unit. Data showed that while in 2015 coal was sold at $58,90 per tonne, the actual cost was at $69 per tonne resulting in a loss of $10,10. This was in contrast to 2014 when coal was sold at $70,1 per tonne but produced at a unit cost of $59.

Data also showed that last year, the price of platinum was $1 053 per ounce where costs were at $1 582. In 2014, the platinum price per ounce was $1 385, whereas costs were at $1 517. This gave platinum producers a profit of $868 per ounce.

The situation was the same for nickel and gold which were sold at a loss due to the decrease in prices and increase in production costs.

COMZ predicted that they would not be any profitability in 2016 as the industry was hamstrung by shortage and high cost of capital, high and static royalties, high procurement costs, high wages costs, low commodity prices, power shortages and high power tariffs, among others.

"All mining houses interviewed said they would not afford any salary increments in 2016, while 22% reported that they had negotiated and agreed salary reductions with their employees in 2015," COMZ said.

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