Is there need to strip off Fidelity monopoly?
In November the Parliamentary Portfolio Committee on Mines and Mining Development advised that the government strip off Fidelity Printers and Refiners (FPR)on their position as the only legal gold buyer and exporter to promote competition, in their report, the committee claimed that the monopoly was overshadowing the ability of large scale miners in being responsible gold handlers.
By Dickson Rudairo Mapuranga
Giving other players power to buy gold would be welcomed and might be referred as overdue by many miners. Currently many mining experts believe that miners deliver small quantities to fidelity just for compliance’s sake but a huge chunk finds its way to the lucrative black market because of different reasons some which might blame FPR’s monopolistic stance.
Government stands to rake in foreign currency from legal gold buyers as well from taxes paid by these firms, FPR being the sole gold buyer could be tempted to suppress prices for their own benefits, and this could be one of the
reasons why gold is finding its way on the illegal market, the move by the Parliamentary Portfolio Committee on Mines and Mining development is therefore justified. Calling in another player in the gold market might create a balanced and fair share of money to both the miner, the buyer and the government.
One expert in media Dr Jasper Maphosa said that monopoly in every sector breeds a cocktail of hazardous outcomes and the move to demonopolise gold purchase will bring competitive prices and presumably underhand dealings will be eliminated.
“Miners stand not to benefit as monopoly has a huge bearing on prices” Said Dr Maphosa.
Large scale miners were reported commercing with small scale miners in selling their gold to FPR since small scale
miners were given 70% of their money in USD while large scale miners were only receiving 30%, miners believe that the licensing of other players is long overdue, it will bring in competition and reduce corruption and unscrupulous
behaviour of some miners who are inviting backdoor buyers and exporters.
On the other hand bringing in new buyers at this point in time would be of no sense, in terms of accountability gold might end up in the hands of the buyers instead of the government, one mining expert said that, at the moment FPR’s accountability is even questionable, bringing in other players would be even worse, “official figures had 30 tonnes of gold delivered to fidelity between January and September, which is a market increase year on year, but it’s not the total amount produced because of the black market.
We still have a lot of gold sold to black market buyers which might be more or less than what is sold to fidelity bearing in mind that a large percentage of fidelity deliveries are by small scale miners” he said. The government short a way of verifying if the 30 tonnes of gold delivered to FPR is really the exact gold produced, what can be expected from other buyers? The government need to be careful on whom to give licences because considering the level of corruption in Zimbabwe, some self proclaimed big man in town if given licences might make it more difficult for the government to monitor the movement of gold.
Chairperson of the Parliamentary Portfolio on Mines and Mining Development Hon Temba Peter Mliswa believe that, it is an advantage to the miners if other players are to be introduced, “I don’t think it’s fair for one entity to monopoly, the critical issue is to give people a tool to go and sale their product at a right price ,whether the price will
regulated or not is another issue, the more the players, the better in any situation” said Hon Mliswa.
This article first appeared in The mining Zimbabwe Magazine December 2018 issue