55/45% the elephant in the room
Despite beating a 19-year record in gold deliveries, reports have it that, over 30 tonnes of the gold was smuggled out of the country last year due to unfavourable pricing following the spreading disparity between the RTGS dollar and the USD.
By Dickson Rudairo Mapuranga
Gold delivery to Fidelity Printers and Refinery the country’s sole gold buyer and exporter is hitting a major decline as predicted when the Reserve Bank of Zimbabwe governor John Mangudya announced the New Monetary policy
reducing gold forex retention from 70 per cent to 55 yet miners were advocating for an increase up to 90 per cent foreign currency retention.
The reduction of foreign currency retention from the previous mark has sparked anger and protests from the
small-scale miners over this issue which in actuality has reduced gold prices significantly thus, making gold
submissions to Fidelity unviable.
Deliveries in the first three months of the year declined to 6,5 tonnes from 7,3 tonnes delivered at the same time last
year.
The year 2018 saw small-scale miners delivering 66 per cent of the 33,3 tonnes that were delivered to Fidelity. But five days after the 2019 Monetary Policy Statement on February 20, according to Zimbabwe Miners Federation president Henrietta Rushwaya, only 20kg of was delivered, against 60kg-per-day on average.
There is an exploding situation when it comes to the delivery of gold to Fidelity Printers and Refiners, miners have stated that selling gold to Fidelity has become unreasonable and unviable.
Small-scale miners and experts speak out
One small scale miner identified as Chawanga said “It is unreasonable to sell gold to Fidelity considering the process miners go through which is painful, stressful, dangerous and tiresome then you get paid peanuts. The money will also be affected by inflation minutes from the bank, so bond is a no-no” he said.
According to the miners, selling gold to the parallel market has become a better option since the market has proven to be reliable and rewards the miners of their hard-earned money in hard currency. Although the amount paid on the black market is lower, the market has proven to be better than Fidelity.
“It is a well-known fact that the parallel market has become more viable since the market has proven to be reliable and rewarding the miners of their hard-earned money. Although the amount paid on the Parallel market is lower, the market has proven to be much better than Fidelity.’
“It is a well-known fact that the parallel market pays lesser per gram of gold, what is surprising is that miners are running to those people, the parallel market has become the formal market in Zimbabwe,” said one miner.
On our Mining Zimbabwe Facebook page
We asked why gold submissions to Fidelity have fallen and most miners expressed disappointment with the
current payment system.
A follower known as Johannes heartily said ” 55 %-45% payment system kills the mining business. How did they arrive at such a payment system? Gold is not just picked from the ground…. You invest money, incur losses.. The moment you start to get some recovery someone says the payment system is what is there? Just to harvest gold like that? It’s bad… The culture of bad policies must stop.. Pay 100 % to the miners, export the gold at a profit… Not to exploit miners then export and get profits, pocketing a fortune by blood-sucking your citizens.. We look up to those in authority to be fair on miners. Please, review that thievery policy!”
Seasoned geologist Kennedy Mthetwa said “Been there done that got the T-shirt in 2000 to 2008 policies which saw gold production decline to unprecedented levels. History repeating itself. RBZ and Fidelity learnt nothing from the 2000 to 2008 era?”
Speaking at a post-2019 Monetary Policy Statement review meeting with small-scale miners in February, Reserve
Bank of Zimbabwe deputy director for Financial Markets William Manhimanzi said the central bank was struggling to pay miners in hard cash as it was failing to import notes via South Africa.
“The only bank that remained was FNB, and they gave notice in December 2018 that they would no longer be supplying our own local banks with cash,” he said. However, miners slammed the government of hiding behind a finger, they accused the government of stealing exporter’s money to take care of their insatiable appetite of the USD thus, robbing exporters of their dues.
“It is clear that the government badly needs foreign currency to take care of its other obligations. However, the above scenario paints a picture of a government which is failing to protect the very providers of forex. This is not sustainable and has to be remedied at all costs. There must be incentives meant to encourage and support small scale gold miners because previous gold deliveries show that this is where most of the gold to keep Zimbabwe going is coming from”. said one miner.
The miners can see the elephant, the miners have pointed it out. The government will have to address the Elephant in the room and soon.
This article first appeared in the June 2019 issue of the Mining Zimbabwe Magazine