- Costs of operating a business in Zimbabwe are increasing, particularly in the mining sector
- Miners in Zimbabwe expect a drop in profitability due to rising production costs and a bleak outlook for platinum and lithium
- Zimbabwe's mining sector is facing challenges including energy demands and currency issues
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The economic situation in the Southern African country of Zimbabwe has been precipitating sequential consequences. One of such underlying problems is the cost of operating a business.
Where there are economic challenges, the cost of establishing and or running a business becomes that much more 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 components is expected to diminish the mining income and profit in the southern African nation.
"The issue of costs continues to dampen the spirit of profitability," the COMZ's chief executive officer, Isaac Kwesu stated.
Production costs are projected to rise by 8% on average within the next fiscal year.
Subsequently, miners expect that energy demands would increase from 600 megawatts per day this year to 800 megawatts per day in 2025.
Recurrent power outages as well as currency challenges continue 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 then poor performing Zimbabwean dollar.
Zimbabwe, the continent'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, which is mostly driven by its usage in battery technology.
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.
English (US) ·