Gold output rockets as new assets dig deeper
OUTPUT from Zimbabwe’s gold mines firmed to 7,6 tonnes during the first quarter, driven by fresh investments into resuscitating idle assets, as big operators deepened shafts.
The sector produced four tonnes during the same period in 2021, according to market data.
But already, experts are seeing production gaining traction during the coming quarters, with output potentially hitting the 50-tonne mark by year end, from 29,6 tonnes last year.
Along with fresh investments, government chipped in with a string of intervention to bolster production in the past year, including setting up incentive schemes that defused the appetite to smuggle, according to Irvine Chinyenze, chief executive officer at the Gold Miners Association of Zimbabwe.
Firming international prices were also behind the rebound, experts said.
Chinyenze told this publication that miners benefited from Fidelity Printers and Refineries’ consistency in paying for gold delivered.
“We have a lot of investment going towards mining,” he said.
“Outside of manufacturing and probably agriculture, mining is the next best thing in terms of economic activity with very significant returns. We have seen quite a bit being done and being channelled into the mining sector. And obviously when that happens, the result is an upward trajectory. We have also seen consistency in terms of payments and the pricing regime at the refinery has improved, which is quite commendable,” Chinyenze told NewsDay Business.
Victoria Falls Stock Exchange listed resources giant, Caledonia Mining Corporation saw its output rise after completing a major shaft deepening project, while Padenga reopened a major operation in Mashonaland Central.
Chinyenze said that as a result of incentives and timely payments, the appetite to smuggle gold had fizzled.
“There is very little motivation to smuggle at present as far as small scale miners are concerned. Somebody can’t take risks to smuggle to South Africa, Zambia or any other nation. So this has been one of the major factors towards the deliveries that we are seeing. While prices are not at par with those obtaining on the world markets, they are significant enough to deter smuggling and improve deliveries,” Chinyenze said.
Economist Victor Bhoroma told this publication that higher output was underpinned by increased forex retention thresholds.
“The increase in gold production is largely to do with the gold incentive scheme (GIS), which allows producers to retain 100% of the export earnings,” Bhoroma said.
“Under the GIS, the RBZ allows some gold exporters to retain up to 100% of their gold earnings depending on their output. Under the arrangement, gold producers are also allowed to export their processed mineral equivalent to the incremental portion and secure loans for production. There is a lot of momentum due to firm world prices, government incentives and increased investment by large scale producers. Production will be between 45 and 50 tonnes this year,” he said.
Central bank chief John Mangudya early this year said Zimbabwe was targeting gold deliveries to rise to between 35 and 40 tonnes.
Gold is envisaged to rack in US$4 billion and expected to drive government’s ambitious plan of a US$12 billion mining industry by 2023. Output is envisaged to reach 100 tonnes in 2023.