NSSA to invest $80m in mining

NSSA to invest $80m in mining
NSSA's general manager, Liz Chitiga

NSSA’s general manager, Elizabeth Chitiga

THE National Social Security Authority is considering investing close to $80 million in the mining sector this year.
Elizabeth Chitiga, the pension administrator’s general manager, said her organisation, which has a $1,2 billion investment portfolio, wants to increase its participation in mining to support the country’s economic growth.
“We have been supporting the mining sector through debt instruments directly and indirectly via the banking sector,” she said last week. “Current mining investments under consideration amount to $80 million.”
NSSA, which is a shareholder in Zimbabwe Stock Exchange listed Bindura Nickel Corporation and Hwange Colliery Company, has over the past few years been criticised for ill-advised investments.
A 2015 Deloitte audit report revealed that NSSA lost over $350 million to market volatility, bad deals and mismanagement of public funds.
Chitiga, however, noted that the decision to invest in mining was done after considering that the sector has capacity to establish new industries and generate foreign currency for the country.
“Long-term gestation of mining projects is in sync with pension fund liabilities for the authority,” she said, adding that technology and skills would be transferred to the country.
“Mechanisation of mining activities also results in increased efficiencies and enhanced extraction rates,” she said.
Chitiga noted that since the inauguration of the NSSA board and management in 2015, the deep-pocketed social security authority has seen its total investment assets grow by 93 percent from $619 million to $1,2 billion.
In the two year period, NSSA’s total investment income grew 116 percent to $49,9 million from $23 million.
The 2017 Mining Industry Survey Report revealed that Zimbabwe’s mining sector requires nearly $400 million this year to sustain operations on the back of an uptick in capacity utilisation.
This was after the capital intensive sector injected $211 million last year for both sustenance and ramp-up.
Average capacity utilisation for the mining industry was up at 71 percent in 2017, compared to 64 percent in 2016.
The platinum group metals sector continues to operate at around 100 percent capacity utilisation, while chrome at 37 percent to 80 percent, diamonds at 58 percent to 70 percent and coal at 26 percent to 50 percent recorded significant upward utilisation levels in 2017, compared to 2016.
Decline in capacity utilisation levels was recorded in respect of gold and nickel, the report said.
It said all key minerals recorded output increases in 2017, compared to 2016, with the survey showing that 60 percent of respondents increased output by more than five percent.
The report further said 15 percent of respondents, who were all gold producers, recorded decline in output in 2017.
“In 2018, the mining sector is expected to record an output boom, with survey findings showing that 90 percent of respondents are planning to increase output by more than 10 percent,” the report said.
The survey showed that average profitability in the mining industry declined in 2017, with 30 percent of respondents having made losses in 2017, compared to 15 percent in 2016.
“Of the 30 percent who made losses in 2017, 70 percent made profits in 2016. In the outlook, average profitability is expected to improve in 2018, with 90 percent of respondents indicating that they are projecting profits in 2018,” the report added.
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