Zimbabwe’s mines cannot afford wage rises this year and a fifth of the firms have agreed with workers to cut pay to remain viable, blaming low commodity prices and high electricity costs, results of a survey showed on Thursday.
Mining is the biggest export earner in the southern African nation, but its contribution to earnings has declined from a high of 57% in 2012 to 50% last year after the global prices of its major minerals, gold and platinum, fell.
The survey commissioned by the Chamber of Mines of Zimbabwe, which represents major mining firms, showed that mines expect the industry to contract for the third consecutive year after 70 percent of the industry recorded losses in 2015.
The majority of mines had increased salaries 11 times since 2009, when Zimbabwe ditched its inflation-ravaged currency in favour of foreign currencies. The mining minimum monthly wage is $248.
“All mining houses interviewed said that they will not afford any salary increments in 2016, while 22% reported that they have negotiated and agreed salary reductions with their employees,” a statement on the survey said.
Mining sector wage negotiations in Zimbabwe, which holds the world’s second largest platinum deposits, often pass without incident unlike in South Africa, which has in the past seen violent wildcat strikes over salaries.
Wages account for 32% of mining companies’ costs.
The mining sector lost $60 million in mining output in 2014 and 2015 respectively, the survey said. Most mining firms said expensive capital and machinery and high royalty fees were also impacting production.
Electricity cuts have hurt Zimbabwean industry and mines, who are opposing a state power company move to increase tariffs by 42% shortly to help afford power imports.
Patson Mbiriri, a senior official in the energy ministry, said Zimbabwe should have sufficient power by 2018 and be in a position to export two years later. He added that an increase in tariffs was imminent in order to afford power imports.
Mbiriri said Zimbabwe was buying 300 MW off-peak power from South Africa and will double imports from Mozambique to 100 MW.
The mining sector, the survey added, needs $3.8 billion for new investment to enable it to double platinum and gold output in the next five years.
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