Written by Godfrey Marawanyika and Brian Latham | From Bloomberg

The mining industry in Zimbabwe, the world’s third-biggest platinum producer, will shrink for the first time in five years because of plummeting metal prices, high costs and a lack of capital, the Chamber of Mines said.

The industry may contract by 2 percent, the Harare-based chamber said in a report that’s a response to the southern African nation’s budget for 2015.

“The sector continues to operate below capacity amidst a host of challenges, not restricted to but including depressed metal prices, lower capital and FDI inflows, high cost structures, sub-optimal royalties and shortages of power,” it said, referring to foreign direct investment.

Commodity prices are near a 12-year low, with gold down 25 percent since the start of 2013 and platinum declining 8.2 percent. Zimbabwe, which has deposits of gold, coal and iron ore, has the world’s biggest platinum and chrome reserves after South Africa. Mining is the biggest source of foreign exchange, with platinum group metals and gold leading tobacco as the nation’s largest exports. Companies that operate in the country include Anglo American Platinum Ltd. (AMS) and Impala Platinum Holdings Ltd. (IMP)

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