Chamber: Gold Production to Increase Due to Rising Prices
The Chamber of Mines of Zimbabwe anticipates a significant increase in gold production driven by rising gold prices and the strengthening of the Zimbabwe Gold (ZiG) currency.
by Rudairo Mapuranga
This positive outlook was shared by the Chamber’s CEO, Isaac Kwesu, who highlighted the dual benefits of attractive prices and improved viability for mining operations.
“Naturally, most mines will increase output because, apart from being attractive, viability issues will be addressed. Mines that may not have been operating due to viability challenges will see higher prices as an opportunity to come back to life,” said Kwesu.
Kwesu further explained that the sector expects increased production from current mining operations and the initiation of new projects, along with fresh investments in gold entities.
“We expect increased production from current entities through their current operations. Additionally, new projects and investors with an appetite for gold entities will support gold output. This presents a positive outlook for our gold sector,” he added.
Positive Impact on the Zimbabwe Investment Group (ZiG)
The surge in gold production is set to benefit the newly introduced Zimbabwe Gold (ZiG) currency, designed to stabilize the nation’s economy.
Kwesu elaborated on the mechanism, noting that the increase in gold production will directly boost the gold reserves, which underpin the ZiG currency.
“As you know, the gold reserve is an offshoot of the royalty paid by gold producers. Half of this royalty is paid in kind. Therefore, as gold output increases, the royalty automatically increases, as it is a function of total production. Half of that royalty will be paid in physical gold, thus increasing the gold reserve to support the ZiG, naturally leading to an increase,” Kwesu stated.
Growth in Gold Deliveries
Recent data underscores the upward trend in gold production. Deliveries by large-scale gold miners rose by approximately 11.78 percent, reaching 1,168.7022 kilograms in March, up from 1,045.5575 kilograms the previous month.
Large-scale miners accounted for 51.995 per cent (3,143.0683 kilograms) of the total deliveries in the first quarter of 2024, surpassing Artisanal and Small-Scale Mining (ASM) contributions of 48.004 per cent (2,901.8006 kilograms). Historically, ASM has been the primary gold deliverer to Fidelity Gold Refinery (FGR), contributing over 61 per cent of total gold deliveries.
Strategic Introduction of the ZiG Currency
The introduction of the ZiG currency in April marks a strategic move by the government to stabilize the economy. The central bank governor, John Mushayavanhu, assured that the ZiG would be set at a market-determined exchange rate and backed by gold reserves to avoid the hyperinflation that has plagued previous currencies. The government aims to ensure that the local currency in circulation is matched by an equivalent value in precious minerals or foreign exchange.
This robust approach, combined with increased gold production and responsible sourcing, aims to create a stable and valued currency, driving Zimbabwe towards economic recovery and growth. Zimbabwe’s mining sector is thus making significant strides in ramping up gold production, a critical measure aimed at bolstering the newly introduced ZiG currency.
Backed by gold reserves, the ZiG currency represents the government’s latest effort to stabilize an economy that has faced inflation and currency devaluation for the past 25 years. The combined efforts of the mining sector and monetary policies are set to pave the way for a more stable and prosperous economic future for Zimbabwe.