- August 21, 2020
- Posted in LOCAL
Zimbabwe’s exclusive gold buying and marketing arm, Fidelity Printers and Refineries (FPR), is envisaging a boom in gold deliveries following new payment modalities that have been roundly welcomed by miners on the back of a slump in deliveries.
Statistics from FPR show that gold deliveries for the month of July plunged by a staggering 49,3 percent compared to the same month in 2019 after miners delivered only 1 406 tonnes this July compared to 2 776 tonnes in the same month last year.
The magnitude of the slump is further illustrated by the fact that last year was not necessarily a good year as far as gold deliveries to the state buyer and marketer are concerned as annual deliveries totalled 27, 6 tonnes against a set target of 40 tonnes.
The 2019 retain marked a 16 percent from the record-breaking level of 2018 which stood at 33.2 tonnes.
It is against this background that on July 17th, FPR adopted a new payment system anchored on the London Bullion Market Association (LBMA), which saw official gold price rising from US$45 to US$52 overnight.
“The decline could be attributed to the fact that miners are still coming to terms with the adjustment in our payment method,” said FPR general manager Fradreck Kunaka in reference to July deliveries.
“As from July 17, 2020, the payment of gold was reviewed from paying US$45 flat fee on fine gold to 100 percent US dollars payment benchmarked against the prevailing LBMA exchange rate.
“A move meant to encourage gold miners to sell using the formal channels and to shun the black market. We envisage the deliveries will start to improve going forward,” he said.
Of note is the fact that market watchers and authorities are agreeable that a decline in deliveries doesn’t necessarily reflect a decline in production but rather a parallel market, which is always on the prowl to pounce on official market inefficiencies.
FPR will, however, for now, find comfort in that their latest intervention has been welcomed by miners.
In an earlier interview with The Herald Finance & Business, the Zimbabwe Miners Federation, which represents the country’s biggest gold mining constituency, said the new payment system has the potential to effectively eradicate the parallel market.