Zimbabwe: Gold Deliveries Lose Glitter

10 December 2019

Gold deliveries to Fidelity Printers and Refineries (FPR), the country's sole legal gold buyer, are now certain to fall below Government set target of 40 tonnes for the year after the first 10 months managed just over 23 tonnes.

The Ministry of Mines and Mining Development had this year set a gold delivery target of 40 tonnes buoyed by the strong showing in the preceding year where miners had managed to haul 33,28 tonnes of the yellow metal.

The 40-tonne target had been seen as a precursor to the 2023 milestone in which the Ministry is targeting annual gold deliveries to top 100 tonnes per year thus feeding into the US$12 billion mineral exports target.

But this year's target has fallen flat due to a myriad of challenges chief among them erratic power supplies and inefficiencies at exclusive State buying entity, FPR, which has seen some miners opting to offload their produce on the parallel market.

The return in the first 10 months, January to October 2019, signifies a 23 percent decline compared to the same period in 2018 in which the State buyer had managed 30,03 tonnes.

2018 went on to register record deliveries with FPR managing 33,2 tonnes.

Of note in this year's statistics is that small-scale miners continue to deliver much more than their counterparts in the primary production sector having contributed 63,3 percent of this year's return.

In an interview, Zimbabwe Miners Federation (ZMF) president Henrietta Rushwaya said the decline is largely due to two main factors which if Government does not act on, could scupper the 2023 milestone.

"It's basically a result of a myriad of challenges but the main one would be energy -- both electricity and diesel shortages and the payment system by the State buyer," said Ms Rushwaya.

"We have been calling on Fidelity to revise their payment system from the current 55: (percent foreign currency) 45 (percent local currency) but all these calls have not been addressed.

"We are of the view that up to 70 percent of our gold produce is going to the parallel market as a result of the payment model that Fidelity is using. We thus continue to call on Government to set a framework that lure producers to the formal market," she said.

Ms Rushwaya said with the work that Government and other stakeholders have put in place so far to put mines to production, she is convinced the 2023 milestone of 100 tonnes will be achieved much earlier if the power and payment problems are rectified.

Reserve Bank of Zimbabwe Governor Dr John Mangudya is, however, on record saying while monetary authorities are willing to consider the forex allocation to miners, paying them 100 percent in hard currency was impossible.

This, he said is because Government has other services which it has to settle in forex such as healthcare and several other social services.

The decline is in sync with the Chamber of Mines of Zimbabwe's 2019 State of the Zimbabwe Mining Industry Survey which showed a plunge in mining executives' confidence in the sector's prospects.

The survey showed that the Mining Business Confidence Index (MBCI) fell to 2,2 percent from eight percent in 2018 with respondents predicting production to take a serious knock in 2019.

The executive however forecast a positive outlook for the mining sector in 2020.

Notable variables that contributed to the positive outlook include industry's forecast on profitability prospects, mining industry growth prospects, market outlook and employment prospects.

See What Everyone is Watching

More From: The Herald

Don't Miss

AllAfrica publishes around 600 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.