Gold deliveries drop 19pc
Zimbabwe’s gold deliveries dropped by 19 percent to 2.80 tonnes during the month of September from 3.47 tonnes during the same period last year due to crippling power outages, inefficient mining and processing technologies in use, foreign currency shortages and suspected smuggling.
Cumulatively, gold deliveries decreased 26 percent to 20.63 tonnes during the first nine months of 2019 from 28.09 tonnes during the comparative period last year due to inappropriate ore hoisting machinery from the deep mine shafts.
Gold is now the highest single foreign currency earner ahead of tobacco as the country’s highest forex earner but its subdued performance continues to shatter the country’s hope of turning around the economy.
The yellow metal contributes 38 percent of the country’s total earnings and more than 60 percent to the mining sector which happen to be the highest forex earning sector in the country. Independent estimates show that over 20 tonnes of gold were smuggled out of the country due to unfavourable pricing regime of offering miners 55 percent forex retention threshold against 90 percent forex retention offered by side marketers.
This has created arbitrage opportunities in the gold sector and this will have a negative impact to the already fragile economy as gold is the most liquid commodity in the world as countries earn their forex within a fortnight.
Fidelity Printers and Refiners general manager Fradreck Kunaka told Business Times that the country is now pinning hopes on new gold centres and the small scale facility to increase production.
“In September gold deliveries went down 19 percent to 2.804 tonnes from 3.475 tonnes delivered during the same period last year due to forex currency shortages which should buy equipment and consumables together with serious power shortages which mainly affected primary gold producers.”
“Of the 2.80 tonnes extracted in September, 1.964 tonnes came from small scale miners while 0.84 tonnes came from primary producers. Meanwhile, during the same period last year small scale produced 2.72 tonnes against 0.755 tonnes,” said Kunaka.
On the 40 tonne target, Kunaka said the country might fail to reach the target because as it stands, by end of September deliveries still stand at 20.6 tonnes, which is almost half of what the country wants to achieve in the next three months.
He said the sharp decline in gold deliveries during the second quarter acted as a stumbling block in attaining the set target.
“The decline was mainly because of power outages which intensified during the month of June, inefficient mining and processing technologies in use, inappropriate mining methodologies especially at a time when most mines have deepened beyond 30 metres and inappropriate ore hoisting machinery from the deep mine shafts.”
“However, even if we fail to meet the set target, we project an increase in deliveries in the fourth quarter as artisanal and small scale miners are capacitated under the Gold Development Initiative Fund,” Kunaka said.
He said the Fund which aims at assisting miners in acquiring the appropriate mining equipment to enhance their gold production thus increase deliveries to FPR.
Gold Miners Association of Zimbabwe (GMAZ) chief executive Irvine Chinyenze said monetary authorities should increase forex retention to encourage deliveries to Fidelity.
“The fact that monetary authorities have reduced forex retention to 55 percent, gold miners don’t have appetite to sell their gold to Fidelity Printers and Refiners as they are better offers somewhere.
The trick is that they should have raised forex retention to above 80 percent to woo miners,” said Chinyenze.
Zimbabwe is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the sector to earn US$12 billion yearly and only if forex retention threshold, fundamentals and funding issues are addressed_Business Times