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THERE are no compelling reasons yet for Zimbabwe to increase the number of gold authorised refiners because its bullion output still falls far short of the minimum thresholds required to sustain the profitability of multiple refinery operators. 

This, though comes against the background that the only refinery in the country has at times failed to offer globally competitive prices or settle deliveries for cash, prompting smuggling. 

It is believed that Zimbabwe loses hundreds of millions of United States dollars each year through the smuggling of gold. 

Zimbabwe produced 21,44 tonnes of gold in 2016, 24,44 tonnes in 2017, 33,89 tonnes in 2018, 27,589 tonnes in 2019, and 19,05 tonnes last year. Lack of formalisation seriously affected production and deliveries from small and artisanal miners in 2020. 

Fidelity Printers and Refiners (FPR), Zimbabwe’s sole authorised gold buyer, chief executive Fraderick Kunaka said Zimbabwe has never reached the minimum output for profitability of 50 tonnes. 

However, he said the mineral rich Southern African nation has made the initial steps towards bringing in private players into gold refining after the Government initiated partial privatisation of FPR. 

The Government has started the process to privatise the gold refining business which will see, both large and small producers acquiring shares in FPR based on their shares of annual bullion deliveries.    

A unit of the Reserve Bank of Zimbabwe (RBZ) FPR will be unbundled into two business units, gold refinery and printing and minting. 

The RBZ said the unbundling of FPR is designed to partially privatise the gold refining business by allowing private players to acquire a stake therein and in the process secure and endear the private sector’s interests in the production and marketing of gold in Zimbabwe. 

Accordingly, the central bank shall retain 40 percent shareholding in FPR and dispose of 60 percent shareholding to both the large-scale and small-scale gold producers. 

Using a three-year average delivery of gold to FPR, the bank will offer 50 percent shares in FPR to large scale producers, 3 percent to major FPR gold buying agents and the balance of 7 percent to small scale producers through their representative bodies. 

Small and artisanal gold miners account for about 60 percent of bullion output in Zimbabwe while the balance comes from large-scale miners. 

Globally,  Kunaka said, gold production has not increased markedly, continuing to hover around 3000 tonnes, yet multiple refining licences have been issued. 

“You would find that based on the process that you are you using, you find that there is a minimum threshold that you need to be able handle to operate viably. 

“So, in terms of the technology that we are using (in Zimbabwe), you need to be operating at a minimum of 50 tonnes per annum, which we have not achieved since inception. 

“That calls for the question; is it necessary to bring in additional refineries given that the one that we have we are not fully utilising it. 

“What it means is that even when we bring these (additional refineries), it means someone must be subsidising their operations because they will be far lower, in terms of their capacity utilisation, than the threshold (required),” he said. 

The Fidelity Printers and Refiners boss said given that the highest output that Zimbabwe has ever achieved was 33 tonnes, the country needed to ramp up output multi-fold to sustain just two refineries. 

“So, you would look at it and say ‘What exactly would we be trying to address (by adding refineries)?’, if the country can process all its gold through a single plant.” 

Besides the issue of tonnage required to profitably run and sustain a gold refinery, Kunaka said a multiplicity of licences increases loopholes for entry of smuggled gold into the country, which creates problems. 

The comments come after reports that leading gold producers on the continent, Ghana and South Africa had dished out refining licences over the last two years to private players. 

Gold is one of Zimbabwe’s single largest export earners, accounting for about 30 percent of annual foreign currency earnings. 

Mineral earnings though account for over three-quarters of the country’s total foreign currency earnings.

Business Weekly

Fidelity Printers and Refiners (FPR) is paying artisanal and small scale miners on the spot gold  at prevailing world prices but deducting royalties and costs of importing cash into the country which is forcing players to look for alternative markers.

Yesterday’s gold spot price was at US$55,016 per kilogramme and FPR’s prices after deductions was under US$50,000, a situation which pushes small scale miners to search for an alternative market, according to industry experts.

In the past three years, small scale miners contributed 60 tonnes of gold against large scale producers who delivered 42 tonnes during the same period.

FPR general manager Fradreck Kunaka told Business Times that the sole buyer of gold has moved to plug some of its shortcomings to encourage miners to sell the bullion through formal channels.

“On small scale miners we are paying 100% United States dollars at the prevailing gold world market price but the price differs a bit with the international price in that we deduct royalties and the cost of bringing in United States dollars into the country and this may be the reason for other miners to opt for other markets,” Kunaka said.

He said the small-scale miners are paid as they step in with their gold into FPR while the large- scale miners are paid within seven days of delivery.

FPR through the Reserve Bank of Zimbabwe imported enough cash and payment periods have improved, he said.

While Kunaka did not come up with a solution, he said forex retention levels should be looked into.

“We have a challenge on the 60%-40% forex retention of large scale miners where they are getting 60% forex and 40% local currency on the prevailing rate of the day because there is a big disparity between the parallel market rate and the auction system rate.

Large scale miners argue that they are charged at the parallel market rate when they want to procure raw materials in local currency,” he said.

The country’s gold output plummeted 31% to record 19.052 tonnes during 2020 from 27.66 tonnes recorded during 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.

Gold deliveries for the month of January 2021 were 0.99 tonnes from 2.54 tonnes during the comparable period last year.

Large scale producers delivered 0.64 tonnes while small scale miners delivered 0.35 tonnes to FPR.

Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year due to subdued deliveries caused by the effects of Covid-19, heavy rains and the failure to remove costs on small scale gold miners.

Gold Miners Association of Zimbabwe CEO Irvine Chinyenze said: “The failure by the sole buyer to match the world prices only imply that the gold miner will sell his or her bullion to an alternative market where prices are high. Till they look into the matter seriously the problem will continue.”

Gold’s export receipts fell 16% to record US$891.5m in 2020 from US$1.064.5bn in 2019 due to Covid-19 implications, side marketing, smuggling and delays in payments.

In his 2021 Monetary Policy Statement, Mangudya said side marketing was one of the reasons for the decline in gold deliveries last year.

The Covid-19 pandemic restricted the purchasing of raw materials in China and Russia and the bringing in of United States dollar notes to pay miners.

In a recent mining report, experts advised that President Emmerson Mnangagwa’s government should give artisanal mining cooperatives legal standing, pay gold producers at prevailing world prices and strengthen mining dispute resolution mechanisms.

The report blamed FPR’s flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs’ violence in Midlands and Mazowe.

The report said the development of the gold sector is crucial if Mnangagwa’s government is to salvage prospects for Zimbabwe’s economic recovery from decades of economic stagnation.

Zimbabwe is targeting 100 tonnes of gold per year by 2023, however, with a number of challenges in the gold sector, the figure is likely not going to be reached.

Recently, Mangudya said the central bank will capacitate miners and incentivise them to ramp up production.

The constraints facing the sector has seen  gold losing  its top spot as  the highest foreign currency earner to platinum in the past two years.

Business Times

Zimbabwe’s gold export receipts plummeted 46% to record US$53.1m in January 2021 from US$98.1m during the same month last year due to delays in payments and heavy rains, the Reserve Bank (RBZ) has said.

With heavy rains, delays in payments, gold export receipts are likely to plunge further this year, according to industry players.

“Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year due to subdued deliveries due to Covid-19 effects and heavy rains that we have experienced in January,” RBZ governor John Mangudya said in emailed responses.

Gold deliveries for the month of January 2021 were 0.99 tonnes from 2.54tonnes during the comparable period last year.

Large scale producers delivered 0.64 tonnes while small scale miners delivered 0.35 tonnes to FPR.

The unfavourable gold mining policies have caused gold production to fall in the last two years as miners prefer side marketing where buyers are almost at the same level with the international prices for gold.

Wednesday world gold spot prices were said to be around US$55,482 per kilogramme against the FPR’s US$52,000 per kilogramme, this is likely going to affect the selling of gold to the formal market.

Gold Miners Association of Zimbabwe Irvine Chinyenze said: “The failure by the sole buyer to match the world prices only imply that the gold miner will sell his or her bullion to an alternative market where prices are high.”

Gold’s export receipts fell 16% to record US$891.5m in 2020 from US$1.064.5bn in 2019 due to  Covid-19 implications, side marketing, smuggling  and delays in payments.

In his 2021 Monetary Policy Statement, Mangudya said side marketing was one of the reasons for the decline in gold deliveries last year.

The Covid-19 pandemic restricted the purchasing of raw materials in China and Russia and the bringing in of physical United States dollars to pay miners.

Resultantly, gold was knocked off its top spot by platinum last year as the highest forex earner. The yellow metal is now the third largest foreign currency earner after platinum and diaspora remittances.

Mining experts say President Emmerson Mnangagwa’s government should give artisanal mining cooperatives legal standing, pay gold producers at world prices and strengthen mining dispute resolution.

In a recent report on Zimbabwe’s gold subsector, the report blamed FPR’s flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs’ violence in Midlands and Mazowe.

The report said the development of the gold sector is crucial if Mnangagwa’s government is to salvage prospects for Zimbabwe’s economic recovery from decades of economic stagnation.

Zimbabwe is targeting 100 tonnes of gold per year by 2023. Analysts say the figure is unlikely to be reached with the number of challenges in the gold sector.

Business Times

MIDLANDS-based ferrochrome producer, Zimasco, is carrying out rehabilitation works at its West Plant, as it prepares to restart operations at the furnaces.

The development comes after the expiry of a five-year lease agreement between the company and Portnex, who ceased operations in 2019.

Portnex and Zimasco signed a lease deal in 2015 that saw the former inheriting the Western Plant while Zimasco operates the Eastern Plant, which has two furnaces.

The East Plant has two furnaces while the West Plant is the bigger one with three furnaces.

Portnex stopped using the plant in 2019 citing ‘operational challenges’ before its lease expired in December 2020.

Zimasco has been using the East Plant, which it switched on in October last year after a seven-month break induced by the Covid-19 disruption.

General manager marketing and administration, Clara Sadomba, confirmed the development.

“At this stage we can confirm that indeed it is Zimasco’s intention to restart operations at our West Plant furnaces as soon as practicable and assessment of the same is currently ongoing,” she said responding to emailed questions.

She, however, could not be drawn into commenting further on the Portnex deal.

“As you will be aware the lease with Portnex came to an end at the end of 2020 after they had ceased operating West Plant at the end of 2019. You may also be aware that there are various litigation matters still ongoing between Portnex and ourselves and other parties as well. These legal matters preclude us from answering some of the questions,” said Sadomba.

The West Plant, which has three furnaces, is expected to increase production by more than 100 percent for the company.

Zimasco is currently smarting from a knock of losses incurred during the Covid-19 shut down.

The company temporarily halted operations last year as the European market for stainless steel weakened as a result of Covid-19.

When operating at full throttle, Zimasco has an average annual turnover of about $200 million with a potential to employ over 2 000 people directly and more than 4 000 indirectly in its outsourced functions.

At present, the mining and smelting concern employs about 700 workers directly and if the reopening of the West Plant is successful, the number is expected to double.

Zimasco is an integrated ferrochrome producer in Zimbabwe and operates chromite mining locations in Shurugwi, Guinea Fowl, Lalapanzi, Mutorashanga and tributary operations along the Great Dyke of Zimbabwe.

Zimasco’s non-core operations include coal-bed methane and ranching assets in Zimbabwe.

Business Weekly

AN illegal gold panner from West Nicholson in Gwanda allegedly fatally stabbed his colleague for mocking him for ditching his wife and cohabiting with a sex worker.

Linos Nsingo (30) and the late Mr Cabanga Ncube were conducting illegal gold panning activities together with several other gold panners at Geelong Mine in West Nicholson when a misunderstanding ensued between the two.

Mr Ncube had allegedly provoked Nsingo by telling him that he left his wife at his rural home to cohabit with an HIV-positive sex worker.

Nsingo was angered by Mr Ncube’s utterances and he immediately pulled out a knife and stabbed the deceased several times leading to his death.

This emerged when Nsingo, through his lawyers Dube and Associates filed an application for bail pending trial at the Bulawayo High Court citing the State as respondent.

The State did not oppose the bail application.

Justice Christopher Dube-Banda granted Nsingo $5 000 bail and ordered him to report at Gwanda Police Station every fortnight as part of the bail conditions.

Nsingo was further ordered to continue residing at his given address and not interfere with State witnesses until the matter is finalised.

In his bail statement, Nsingo is denying the charge, arguing that there is no evidence linking him to the offence.

The applicant who has been in incarceration for three years awaiting trial, said there were no compelling reasons warranting his continued detention.

“It serves the ends of justice to grant me bail since I have been in custody for three years. I have not been tried as a result of the State’s failure to secure witnesses and the delay infringes on my right to be tried within a reasonable period,” said Nsingo.

According to court papers, it was stated that on June 16, 2017, Nsingo and Mr Ncube were at Geelong Mine panning for gold when an altercation ensued. Mr Ncube allegedly told Nsingo that he ditched his wife in order to stay with an HIV-positive sex worker.

This did not go down well with Nsingo who pulled out an okapi knife and stabbed Mr Ncube and he died on the spot.

After committing the alleged offence, Nsingo fled from the scene leaving the body lying in a pool of blood. He went to the bush where he threw away the knife to conceal evidence.

The matter was reported to the police leading to Nsingo’s arrest.

The Chronicle