Gold delivery to the country’s sole gold buyer and exporter, Fidelity Printer and Refiners has declined significantly as compared to the previous year due to various reasons. There is a big assumption that, although gold delivery to Fidelity has declined production has not declined but improved due to the coming of more investments and more players in the artisanal and small-scale mining sector.
Rudairo Dickson Mapuranga
According to the Chairman of the Institute of Mining Research at the University of Zimbabwe Lyman Mlambo, Fidelity can achieve more gold delivery through the following among other measures that he highlighted to Mining Zimbabwe.
(1) Offer a stable and good price.
To achieve that we need a gold price support scheme from we draw when prices are depressed and into which we add when the price is very good. This means Fidelity needs to build a reserve of Forex specifically for that purpose. This will curb side-marketing. In the long-term things will balance out as the price is generally fluctuating in the long-term.
(2) Fidelity needs to increase the forex retention
The country’s sole gold buyer and exporter must increase the component of the price from the current 55% to about 85 % because of equipment, spares and consumables are mainly imported. Despite miners advocating for higher forex retention last year from 75 percent they were getting, the central bank through the Ministry of Finance reduced the forex retention to 55 percent.
(3) Fidelity must settle payments in good time
This will ensure non disruption of operations. We have had cases where mines had to wait for several months to get paid, yet in the meantime they got imports to pay for. If Fidelity delays paying the RTGS component it will be insignificant value due to hyperinflation.
(4) Fidelity must be consistent in its loan support
Not to relax when it is getting loads of deliveries. This loan support should be well integrated into the ASM formalisation program so that eventually the ASM sector stands as a business entity, not livelihood or poverty-driven activity. Remember formalisation has two main aspects to it: mechanisation and legality (registration) – with the latter providing avenues to deal with issues of compliance on the environment, child labor, social welfare, SHE standards, etc.
(5) Training in technical skills to improve mining methods and levels of gold recovery.
There is an assumption that a lot of gold in Zimbabwe is going to waste due to poor mining methods by the small scale and artisanal mining sector, it is the due of the government to hold or support Mining Indabas that support miners to improve their mining methods and gold recovery processes.
(6) Work together with the Ministry of Mines and Mining Development to develop a database of deposits suitable for small-scale mining.
The ministry of mines has been called to work with small scale and artisanal miners through giving them documents that would identify them to suitable donors and loan providers.
(7) Government to finalize the mining policy and the main Mines Act Bill
Government must finalize the mining policy and the main Mines Act Bill which have provisions for recognition of SSM sector as well as those addressing the various issues in the sector.
(8) Simplify the fiscal regime
With regard to Fidelity, there is also the need to simplify the fiscal regime as a whole and to make it more competitive, for example by making royalty profit-based rather than gross revenue- based in which case we double tax profit when we exact corporate tax. But Fidelity has done well to make royalty deductible for income tax and also to index it to international prices.
9. Improve electricity supply
Zimbabwe is currently experiencing grueling power cuts. There is need for government to urgently address this issue as it has created days of downtime monthly. An alternative power source is needed in case of drought as the country’s major source of power is hydro. New generators are needed for Hwange as the current ones are too old and constantly breakdown.
Tax issues are the domain of ZIMRA so Fidelity can recommend these measures to the former.