Mining ZimbabweLatest Mining News, Policy and Industry Updates

Gold deliveries to the country’s sole buyer Fidelity Printers and Refiners (FPR) are expected to plunge 35% this year due to increased smuggling and the negative impact of the Covid-19 pandemic.

Gold is the country’s single largest generator of foreign currency and, resultantly, inflow of foreign currency into the country is expected to take a knock by year-end and the first quarter of 2021 on low deliveries.

FPR had projected gold output to reach 35 tonnes this year after it increased fuel allocation to the miners.

But at the end of October, miners had delivered 16.12 tonnes. With two months to year-end, FPR now expects deliveries to reach 18 tonnes, the lowest national output since 2015.

Last year, miners delivered 27.6 tonnes, reflecting a 35% decline.

“We are only left with two months to end the year, we are hoping to reach about 18.5 tonnes for the year 2020 excluding gold from PGM sources,” FPR general manager Fradreck Kunaka told Business Times. 

Cumulatively, the country’s bullion export receipts retreated 23% to US$697m in the first 10 months of this year from US$906.7 m earned during the same period last year.

Zimbabwe was on track during the first half of the year when the country’s export earnings for the half year went up 2,6% to US$476.2m from US$464m earned during the same period last year due to the review of foreign currency retention threshold and increased fuel allocations this year. However, rampant smuggling began in July when Fidelity delayed payments by up to eight weeks, forcing miners to opt for alternative markets.

Miners bemoaned the lack of working capital due to delays in payments by Fidelity.

Last month, Chamber of Mines of Zimbabwe chief executive Isaac Kwesu said the fall in gold deliveries was inevitable due to the fact that production cycle was disturbed due to delay in payments hence there was no working capital to support production. He advocated a payment within seven days to improve production.

Experts said the instability in the gold sector has eroded the gold export revenue that the government urgently needs to keep the country’s struggling economy afloat.

Mining experts advised that 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, miners 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 the Midlands Province and in Mazowe, Mashonaland Central Province.

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

RBZ governor John Mangudya said FPR’s monopoly in the buying and marketing of gold will stay, warning that liberalisation would see annual output plummeting to less than five tonnes owing to rampant smuggling.

“We all know that the last time the gold was liberalised, production dipped to four tonnes and we were disqualified from London Bullion Market Association because we were below 10 tonnes so we have got history we know the experience,” Mangudya said.

“Miners should market their gold through FPR as it refines miners’ gold and store it as a national asset and reserve asset. But if we do what we did in 2008 thereabout whereby we liberalised, we will go back to four tonnes again.”

Gold contributes 38% of the country’s export receipts.

Gold prices have not dropped radically during the worldwide pandemic as the yellow metal prices ranged between US$53,000 per kilogramme to US$63,000 per kilogramme during the reported time.

When the world gold prices are around US$61,000, FPR pays gold producers between US$45,000per kg and US$53,000 per kg, a practice that encourages smuggling and erodes industrial mining profits, leading companies to close.

Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said deliveries and export receipts will not improve as miners will look for an alternative market due to payment delays.

“I think it is high time the political figures and powerful business people become frank with themselves to stop that rot as long as they control these syndicates the anti-smuggling unit is toothless,” Chinyenze said.

Experts say gold mining, especially small scale, was greatly affected by lockdown regulations as social distancing needs to be observed.

The country reviewed forex retention levels to 70% in July from 55% in 2019.

Zimbabwe is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the sector to earn US$12bn yearly if forex retention threshold, fundamentals and funding issues are addressed.

Gold is expected to lead the charge with US$4bn.

Business Times

More than $1.5 billion of gold is smuggled out of Zimbabwe every year, depriving the cash-strapped economy of crucial foreign-exchange revenues, according to research organization International Crisis Group.

The gold is illegally shipped from the southern African nation’s small-scale mines, often to the bullion-trading hub of Dubai, ICG said in a report Tuesday. Some of those artisanal mines are plagued by violent gangs that have political connections, it said.

Smuggling is flourishing under a Zimbabwean law that forces miners to sell their precious metal to a unit of the central bank.

“Zimbabwe’s centralized gold-buying scheme underpays producers, a practice that encourages smuggling and erodes industrial mining profits, leading companies to close mines,” ICG said. “Idle industrial mines become targets for intrusion by artisanal miners.”

Payments to small-scale miners are “considerably lower” than the spot price of gold, pushing them to look for more lucrative markets, according to ICG. The organization didn’t say how it estimated the size of illegal gold shipments.

Zimbabwe’s mining sector is key to rebooting an economy suffering from acute shortages of fuel and food, as well as dollars. Official gold exports fell 23% to less than $700 million in the first 10 months of this year as output slumped, according to central bank figures.

“As government, we are working to minimize the costs of smuggling,” said Deputy Minister of Mines Polite Kambamura.

Minister of Home Affairs Kazembe Kazembe told the state-owned Chronicle newspaper in September that gold smuggling could amount to at least $100 million a month. Kazembe didn’t respond to calls seeking comment.

Bloomberg News

As the sun sets marking the end of another day, the mining town of Shamva suddenly comes to life. People from all walks of life including illegal gold miners, some already intoxicated ll-up the numerous nightspots in the town enjoying their daily harvests.

The night clubs in Shamva are already buzzing with sounds of Zimdancehall, popular music genre in Zimbabwe at the moment in preparation for another fruitful business day as small scale miners popularly known as Makorokoza start trickling from every corner ready to spend their hard-gained cash on young girls who could be seen standing on every dark corner of the town in search of ‘clients’.

One striking feature about most clubs in Shamva is that their bigger population of ladies are young girls below the age of 16.

Here, sex is on sale all year. Seven days a week. As in all markets of this kind, sellers and buyers favour the darkness of the night.

The young girls are not deterred by age or being surrounded by older people as they chase the greenback which of late has been scarce in Zimbabwe but in abundance in Shamva such that a visitor to the area would easily think he/she is in some other country due to its negligible exchange of hands without hassle.

Scantily dressed young girls could be seen gyrating at blessers in reference to Makorokoza’s habit of spending cash on women, wiggling their bottoms as if their lives depend on it.

In effortless rhythm, they seductively dance in front of their ready-to-attack male counterparts. Within minutes, one of the “blessers disappear” from the night club in the company of a young girl into the nearby bush for some business that anyone can guess is transactional.

For these girls, business blooms during weekends as the miners take a break from their exhausting sedentary lifestyle of spending hours digging deep into the earth for the precious mineral.

“I can handle 10 clients a night, USD $20 with a condom and US$15 without a condom,” says one the minors.

She, like the rest of the children, is scared to be seen out in the open, so her business thrives in the darkness.

She says she has been in the game for quite a while, enough to be called a “professional sex worker”  Across the road, a few old women who are also in the trade, linger in search of other customers and blame the minors for snatching their customers.

“They should go back to school, they are taking us out of business. We now have to scrap hard for a living because all our clients prefer young blood,” a lady identified as Charlene tells this reporter.

Yes, she is right, these girls must be in school. But, one after the other, these teenagers tell similar stories.

The death of a parent or the wickedness of loved ones robs them of their innocence, dignity, and ambition.

Lisa (no real name, 15) says she has never been to school. She has been living on the street since her mother died.

This girl left her family home in Mutoko where she was staying with her aunt. She started by selling onions at night with her friends, then ended up selling her body.

“When I was 8, my parents sent me to one of their cousins. One day, accusing me of stealing US$5, which I did not do, my aunt beat me violently.
“Blood was owing from my nostrils. So I decided to run away from home and ended up at Wadzanai market where I saw girls my age who had the same difficulties. I spent the night with them under tables at the market place’ Lisa says.

Unfortunately, at 14, she fell pregnant and has a one-year-old baby who she says she is struggling to cater for. In the end, she is forced to engage in sex work. During the day she sells vegetables, but at night she indulges in prostitution to support herself. A double life her family is far from imagining.

“I have no news from my parents. I did not go to my aunt’s house where they left me”. As in all markets, prices are negotiable. With or without a condom and depending on the time spent with the client.

One of the men who occasionally pry on the kids, Tonde* (not real name) says they lure the girls with money from their gold sales and often demands unprotected sex, which exposes the minors to sexually transmitted infections and teen pregnancies.

“I’m 32 years old and an artisanal miner here. I know this place well. When I want to have fun, I choose a girl. I approach her with greetings and express the need to make love to her. Automatically, she gives me the price and we go to a place nearby,” he says.

“We spend the night in lodges with some older guests. With them, the fare goes from $50 to $70 we sometimes pay them half of the amount we make” he adds.

Sadly, most of the girls end up married o early or alone with unwanted pregnancies and are forced into at that tender age but mostly face gender-based violence due to lack of control.

Statistics show that In Mashonaland Central Province, child marriage is ranked at 50%, and this makes it the highest in the country.
Chief Busha, who is one of the three traditional leaders in Shamva and Murehwa Districts working to end child marriages, told this publication recently that gold has become a big enabler of teen pregnancies and child marriages.

“We have gold in this area and that has become a big problem for us because at a time most children are lured by mukorokoza. They are promised heaven on earth and in the end, they get married at a very early stage.

“In turn, they contract sexually transmitted infections and some drop out of school which leave them vulnerable to the harsh reality of the world,” he said
Rozaria Memorial Trust, an organisation engaged in the promotion of well-being and defence of human rights, in particular, those of children and women, is on the ground trying to offer a second chance and a new life to the girls who are victims of sexual exploitation.

The Trust is a temporary support system for these girls who are victims of sexual exploitation, abuse, tracking, economic exploitation, and the worst forms of gender-based violence in and around Murehwa and Shamva districts.

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