Gold production under threat from forex shortages

By
TEPE
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THE country’s gold sector is in a precarious situation after it emerged that the Reserve Bank of Zimbabwe (RBZ) has not been paying primary gold producers for the last three months, NewsDay has established.

The current state of affairs has resulted in gold suppliers threatening to cut off their supplies to large-scale gold producers as they were now also owed large sums of money.

Primary gold producers get 55% of their delivery in foreign currency, with the rest paid in bond notes (a local fiat currency).

Industry sources told this paper that primary gold producers have been involved in marathon meetings with the central bank to find a lasting solution to the biting problem.

Chamber of Mines chief executive Isaac Kwesu confirmed the delays and indicated that the miners were engaging the RBZ to resolve the problem.

“Yes, there have been these delays and we are engaging with the RBZ so that they expedite the process,” he said.

“The problem we have is that our suppliers now demand payment in US dollars and yet we get 50% in forex and the other 50% in RTGS. We expect our authorities to avert the situation because once payment is delayed or stopped, the production cycle is affected”.

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Suppliers of critical raw materials who spoke to NewsDay said they had not received payment for their supply from gold producers for almost two months, as such they were reeling under serious operational challenges.

“We are not getting any payments for supplying consumables.We supply drilling consumables, which are used to blast the stones underground. We also supply drill steel, drill bits and jack hammers, but it’s now almost three months without getting paid. We are grounded,” said one supplier on condition of anonymity.

Efforts to get a comment from Fidelity Printers and Refineries (FPR), the central bank’s subsidiary, which is licensed to buy gold from large-scale producers, small-scale producers and holders of gold buying permits did not yield any results.

In 2018, gold deliveries to FPR hit a record 33,2 tonnes, up from 24,8 tonnes recorded in the previous year, which was mainly driven by small-scale miners.

Small-scale miners contributed 21,7 tonnes, while primary producers accounted for the remaining 11,5 tonnes last year.

Last year, Rio Zim closed three of its gold mines citing inadequate allocation of foreign currency, which then stood at 30%. It then resulted in the central bank increasing allocation to 55%.

NewsDay