Gold output falls in the first quarter
Gold deliveries declined to 3,97 tonnes during the first three months of 2021 from 5,72 tonnes during the comparable period last year after heavy rains swamped shafts and kept artisanal miners from work for prolonged periods.
Following years of protracted droughts, Zimbabwe has just had a good rainfall which has resulted in a bumper crop harvest.
Artisanal miners, estimated at about 1,5 million in Zimbabwe, have been producing over half of the country’s annual gold output after a two-decade economic crisis triggered the closure of most big operators.
Big miners have been slowly reclaiming their position over the past two years, but slight disturbances to the operations of artisanal miners still result in falling national output.
Formal miners have faced several operational challenges including late payment for gold delivered to Fidelity Printers and Refiners (FPR).
Foreign currency retention thresholds imposed by the central bank have also affected mining operations.
Figures from FPR showed that large-scale miners, also referred to as primary producers, delivered 2,99 tonnes with small-scale miners coming in with 1,58 tonnes during the period.
FPR’s report came as Caledonia Mining Corporation announced on Monday that output at its flagship Blanket Mine was slightly subdued at 13 197 ounces during the period due to heavy rainfall and lost shifts.
Caledomia said it was on track to achieve a production guidance of between 61 000 and 67 000 ounces for the full year, before scaling up output to 80 000 ounces by 2022.
“Production in the first quarter of 2021 was slightly below our target and below the comparable quarter in 2020 albeit at a level which allows us to maintain our 2021 production guidance of 61 000 to 67 000 ounces for the full year,” Caledonia chief executive officer Steve Curtis said.
Economist Tafadzwa Chisango agreed with Caledonia, saying heavy rains had hampered operations.
“Given that most of the gold is produced by small-scale miners it was inevitable that there was going to be a decline in this year’s first quarter output, largely necessitated by heavy rains the country received in the quarter in question,” Chisango said.
“This, to a greater extent affected mining activities for artisanal and other small-scale gold mining operations as most do not have high end drainage machines to drain water from shafts.
“But addressing issues such as payments and continued extension of gold support schemes like the one that was unveiled by the central bank recently remain key in bolstering output in the remaining quarters,” Chisango said.
He projected that gold output would increase in the remaining quarters.
Another analyst, Victor Bhoroma said: “Delays in payments are yet to be solved.
“This leads to high levels of smuggling to markets such as South Africa and the United Arab Emirates.
“Gold worth at least US$100 million per month is leaving the country through illegal channels.
“I foresee gold production falling below 15 tonnes in 2021 if the exchange rate and payment delay issues are not addressed”.
Newsday