Gold deliveries near 3 tonnes as incentives propel performance
Zimbabwe’s gold deliveries more than doubled to 2.92 tonnes in June from 1.409 tonnes during the same period last year on incentives as experts say the upward trajectory would be maintained throughout the year.
Last month, the Reserve Bank of Zimbabwe (RBZ) introduced a 5% incentive for those who deliver above 20kg a month.
In addition, the RBZ cut royalties and the cost of importing cash on small scale miners to improve gold production in the country amid revelations the economy was losing over 2.5 tonnes per month to smuggling.
The central bank also allowed small scale miners to sell gold at the prevailing international gold price.
Fidelity Printers and Refiners (FPR) acting general manager Peter Magaramombe told Business Times that the June output was bound to exceed two tonnes by a huge margin, given how miners flocked the premises.
“The June 2021 gold deliveries clocked 2.92 tonnes against 1.4 tonnes in the same period last year due to a reviewed buying price of gold for the artisanal miners and small scale miners,” Magaramombe said.
“This has resulted in a positive response that propelled June deliveries to breach the 2 tonnes line for the first time since May 2020.”
Small scale miners delivered around 1.7 tonnes against large scale miners’ 1.1 tonnes.
Overall, gold deliveries for the half year fell 6% to 9.948 tonnes from 10.6 tonnes during the same period in 2020.
In May gold deliveries fell 5% to 1.38 tonnes from 1.46 tonnes recorded during the same period last year with the positive output only recorded in March where deliveries improved 2% to reach 1.80 tonnes from 1.77 tonnes.
However, with the recent surge in production, mining experts are projecting a huge recovery during the second half of the year.
In January 2021, from the output of 0.997 tonnes, primary producers delivered 0.64 tonnes against small scale who delivered 0.355 tonnes, in February 2021, the small scale extracted 0.56 tonnes and primary producers delivered 0.61 tonnes.
Recently, an FPR executive revealed that the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling and unfavourable mining policies.
With all miners paid to date and payment at the prevailing international gold prices, a major surge in deliveries is expected.
Gold experts say the country’s sole gold buyer is guaranteed huge volumes of gold given the current set up.
Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said leakages are expected to drop due to the new lease of life given by the central bank.
“We expect more gold to be delivered to Fidelity as miners don’t want risk and prefer to use the formal channels. Low prices, taxes and high costs were pushing miners to sell to alternative markets,” Chinyenze said.
The country’s gold output plummeted 31% to 19.052 tonnes in 2020 from 27.66 tonnes recorded in 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.
In last year’s mining report, mining experts advised that President Emmerson Mnangagwa’s government should pay gold producers at world prices to woo them into selling the yellow metal through the formal channels.
The report blamed FPR’s flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs’ violence in the Midlands Province and Mazowe, Mashonaland Central.
The report said the development of the gold sector is crucial if Mnangagwa’s government is to salvage prospects for Zimbabwe’s economic recovery from decades of economic stagnation.
But with all amendments done in June, the country could be heading towards a good direction with experts expecting gold output to near 100 tonnes next year if the current trend continues.