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Production and Investment Trends in the Zimbabwean Mining and Manufacturing Industries
Frost & Sullivan, June 2011, Pages: 76
This production and investment analysis study discusses the trends in and provides forecasts for Zimbabwe's mining and manufacturing industries from 2004 to 2015. The base year for this study is 2010, and the forecast period is from 2011 to 2015. The study begins with an overview of the Zimbabwean economy. The second section of the study discusses Zimbabwe's key growth industries. The third section provides a high-level analysis of the industry challenges and market drivers and restraints. The fourth section discusses the current and future production trends for each of the key growth industries. The study concludes with the provision of investment forecasts for each of the key growth industries from 2011 to 2015.
Research Overview
This research service titled Production and Investment Trends in the Zimbabwean Mining and Manufacturing Industries provides a comprehensive analysis of Zimbabwe's mining and manufacturing industry from 2004 to 2015. The research service provides a succinct analysis of industry fundamentals that drive growth and influence strategic planning and investment within these two industries in Zimbabwe. In this research, expert analysts thoroughly examine the following market sectors: mining (gold, coal, platinum and chrome) and manufacturing (cement and beverages).
Market Overview
Recapitalisation to Support Recovery of Zimbabwe's Mining and Manufacturing Industries
After 11 years of decline, the Zimbabwean economy is recovering, and it completed its second year of buoyant economic growth in 2010. This growth is supported by an increase in production output of the country's mining sector. “Supportive fiscal and monetary frameworks are chief among the factors expected to contribute to the recovery of Zimbabwe's mining and manufacturing sectors,” notes the analyst of this research. “The abolishment of all surrender requirements to the Reserve Bank from 19 March, 2009, has improved the business environment and helped Zimbabwean businesses in managing their foreign currencies in order to enhance their competitiveness in the world market.”
The stable macroeconomic environment, combined with the liberalisation of the gold sector introduced in 2009, has allowed gold mines that suspended operations to resume production. Increase in the capacities at five of Metallon Gold's mines through an investment of $800 million is anticipated to boost the output to 15.0 tonnes by 2015.
Higher international commodity prices and an improved business climate in Zimbabwe are driving investments in expansion programmes and recapitalising gold, platinum, chrome and diamond mining operations. In 2010, the Zimbabwe mining sector recorded a 47.0 per cent increase in production output and is expected to grow by a further 44.0 per cent in 2011, against the background of rising international commodity prices.
Stable Political Environment is Key to Sustained Economic Recovery
Mining and manufacturing companies in Zimbabwe are, however, expected to continue to struggle to raise funds to start or expand operations during the short term. Plant refurbishment requires substantial amounts of capital investment, and this places additional pressure on the investment and operating costs. “The Zimbabwean capital market lacks liquidity, and the absence of significant, reasonably priced long-term borrowings is placing constraints on capital expenditure projects,” states the analyst. “Most companies are funding their capital expenditure projects largely from operations.” Capital expenditure towards rehabilitation of plant and equipment is anticipated to be very high as a result of ageing and obsolete equipment in the manufacturing industry and outline plans for expansion drives in the mining industry. Investment in new plants and equipment remains the key to higher growth in terms of volumes and revenues for companies engaged in the manufacturing and mining industries.
“Investment in plant and equipment technology through strategic partnerships or supply chain alignment will remain the key to the growth of companies in the manufacturing and mining industries,” says the analyst. “It is imperative for companies to seek partnerships to secure constant supply of feedstock and capitalise on the available opportunities.” Despite the limited access to funding, huge private capital inflows are anticipated in the mining and manufacturing industry once the Government gives assurances to companies that no expropriations will occur.
“Political stability in Zimbabwe is key to an improvement in the investment climate in the economy,” concludes the analyst. “This will provide a clear indication to investors and international financiers that the Government is committed to improving its governance and transparency.” Furthermore, the insatiable global demand for commodities such as coal, iron ore and copper is expected to re-inject the much needed capital for the successful implementation of planned expansion projects.
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