FGR confident of 40 tonnes of gold deliveries this year
The country’s sole gold buyer and exporter Fidelity Gold Refinery (FGR) is confident that gold deliveries to FGR will reach 40 tonnes this year as a result of notable expansion projects by Large producers as well as the growth in Artisanal and Small Scale Mining (ASM) sector.
Rudairo Mapuranga
Speaking at the Parliamentary Portfolio Committee on Mines and Mining Development’s All Stakeholders Workshop on Gold Sector Value Chain, Fidelity General Manager Mr Peter Magaramombe said his organization is confident that if the government maintains gold delivery supportive arrangements in place (gold incentives schemes, 100 per cent retention for ASM to mention a few) deliveries will increase to even surpass the 40 tonnes gold target.
“If the current gold conditions that are in place are maintained or improved, projections of gold deliveries to Fidelity Gold Refinery will be 40 tonnes as at 31 December 2022.
“Why 40 tonnes? FGR is expecting to see growth in gold deliveries from the Large Scale Miners sector mainly due to notable expansion projects by Blanket Mine, Freda Rebecca (Shamva), Eureka Gold Mine and Riozim (Cam and Motor). Growth in the ASM sector is to be sustained by favourable pricing, availability of cash and the retention of the incentive scheme.
“What are some of the measures that we have put in place to maintain the positive growth in gold deliveries to FGR? 1. Maintain the forex retention of the LSM 80-100% on the incremental gold delivered to FGR. 2. Maintain the current timeous payment to both large-scale and artisanal and small miners. 3. FGR to continue to lobby the government to continuously provide favourable policies to miners.
“FGR will continue funding the operations of the small scale miners and continue finding solutions of progressive growth of ASM so that they can graduate to become Large Scale miners. Fidelity shall continue to work closely with the Ministry of Mines and Mining Development and other Government departments to ensure that the gold leakages are minimised.
“In conclusion, the measures that I have highlighted were put in place to support an increase in gold production and shall be maintained and reviewed from time to time in order to achieve the 2023 vision of a Four Billion United States Dollar gold industry by 2023,” Magaramombe said.
FGR statistics show that there has been an improvement in gold deliveries from both the Large-Scale (LSM) Miners and the Small-Scale (ASM) miners as compared to the same period in the year 2021. As at 31 July 2022, a total of 18.9 tonnes of gold had been delivered to Fidelity Gold Refinery and in the year 2021 during the same period, a cumulative 12.9 tonnes were delivered. This represents an increase of 47 per cent.
According to Magaramombe, the increase in gold deliveries is due to incentives, timeous payments, increased gold buying centres, cash availability and Gold Development Initiative Fund (GDIF).
“A large-scale miner is ordinarily paid 60% in foreign currency and 40% in local currency at the prevailing official exchange rate. In order to promote increased gold production, the Incremental Gold Incentive Scheme (IGIS) was introduced in the year 2021. How does the scheme work? A miner is entitled to an 80% foreign currency retention for incremental gold production. The balance of 20% is paid in local currency at the official exchange rate. The incremental gold is based on the year 2020 average monthly gold deliveries to FGR for the past five years. For example, if a miner has been producing and delivering on average 80 kgs of gold over a period, on payment they are entitled to retain 60% of the foreign currency component. If the same miner increases their production to 100 kgs, they are entitled to retain 80% of the foreign currency component in respect of the additional 20kgs. The miner can choose to export the incremental portion to a destination of their choice and FGR will facilitate the export process. The funds earned from the export of the incremental portion may be used for offshore mobilisation of funding to plough back into mine development.
“To promote an increase in gold production, an incentive scheme was reintroduced in the year 2021. Under the scheme; An Artisanal or Small Scale Miner who delivers 20 kgs of gold or more to FGR within a calendar month is entitled to a 5% gold incentive. The incentive is paid based on the gross value of the delivered gold. The impact of this incentive was an increase in gold deliveries.
“Fidelity Gold Refinery is making sure that all gold delivered is timeously paid for and that cash is always available at all gold buying centres in order to avoid gold leakages.
“The GDIF was created primarily as a development finance unit for the capacitation of gold producers through capital expenditure finance (acquisition of gold mining plant and equipment, mine development, mine resuscitation, revamping of dormant assets) and working capital. This is in support of the National Development Strategy. Since inception, over 450 gold producers benefited across all provinces of Zimbabwe, deploying over ZWL$5 Billion in loan facilities,” Magaramombe said.