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Gold deliveries decline 73 percent



Gold deliveries decline 73 percent

Zimbabwe’s gold deliveries in September plunged by 73% to close at 1.36 tonnes from 2.8 tonnes in the comparative period in prior year owing to rampant smuggling by small scale miners who blamed payment delays being faced by the miners.

The country’s small scale and artisanal gold miners have emerged as the cornerstone of the sector in the past few years producing and delivering more gold than large-scale mining houses.

Zimbabwe has more than 4,000 recorded gold deposits and has an ambitious plan to grow the mining sector annual earnings to US$12bn by 2023, with gold expected to contribute US$4bn.

Although there are no official statistics, estimates suggest small-scale gold mining control more than 60% of active gold deposits in the country.

And the bulk of the yellow metal is delivered by small scale miners.

The sharp fall, notwithstanding that gold mining was declared an essential service during the Covid-19 lockdown period, paints a gloomy picture.

The downturn in output coincided with the country’s sole gold buyer, Fidelity Printers and Refiners (FPR)’s failure to pay for deliveries on time, a situation which has forced the small scale miners to sell their yellow metal to alternative markets.

Recently, Home Affairs Minister, Kazembe Kazembe, said Zimbabwe was losing more than US$100m worth of gold due to smuggling.

Finance Minister, Mthuli Ncube, concurred with Kazembe.

It is understood that some buyers pay United States dollars on the spot.

This would mean it would be difficult to meet the target.

FPR, a unit of the Reserve Bank of Zimbabwe, committed to make 100% United States dollars as part of efforts to improve bullion deliveries.

But, this has been hampered by the delays in payments, resulting in them selling to other markets.

They said if the Reserve Bank of Zimbabwe and FPR start making payments on time, it would be easier to speed up economic recovery.

Subdued gold deliveries will likely affect gold export receipts.

The crisis is likely to worsen Zimbabwe’s foreign currency woes.

Gold is the largest foreign currency generator followed by tobacco.

FPR general manager, Fradreck Kunaka, blamed Covid-19 pandemic as the major contributor to decline in gold deliveries and the late payments to gold producers.

“Gold deliveries have gone down 73% to reach 1.36 tonnes during September 2020 from 2.8 tonnes last year due to restrictions imposed by Covid-19 pandemic which hampered operations as it restricted the movement of mining raw materials and people especially the small scale miners,” Kunaka told Business Times, warning of a likelihood of sustained low deliveries till year-end.

Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said FPR should make payments on time.

“We can’t deny the effects of Covid-19 as it delayed the shipping in of raw materials from China and other countries but the major reason for the fall in gold deliveries was that FPR continues with some talk shows telling people that their money will be paid, the way to go is just look for the US dollars then clear the backlogs and begin paying on spot.

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Certainly by so doing everyone will deliver to them,” Chinyenze said.

“As long as small scale miners do not get paid instantly the country will lose a great deal of minerals and revenue as miners search for alternative markets for their precious minerals.”

He said small scale gold producers “don’t protest in the streets” and the fall in gold deliveries showed the sector’s “sign of displeasure in gold payments”.

Cumulative gold deliveries figures up to September 2020 have fallen 28% to 14.76 tonnes compared to 20.64 tonnes delivered during the first nine months of 2019.

This comes as Zimbabwe’s cumulative bullion export receipts to August have gone down 4.9% to reach US$641.3m during the first eight months of 2020 from US$674.4m earned during the comparative period in 2019 due to a huge fall in July and August gold deliveries.

During the first eight months of the year the exported yellow metal was 24.9% down to 11.7tonnes from 15.5tonnes shipped during the same period last year.

The yellow metal is now the highest forex earner and contributes 38% of the country’s total earnings and more than 60% to the mining sector which is the highest forex earning sector in the country.

Zimbabwe is battling leakages attributed to late payments amid indications that over 34 tonnes are believed to have been smuggled out of Zimbabwe.

It is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the mining sector to earn US$12bn yearly.

Gold is expected to lead the charge with US$4bn_Business Times

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