‘No hurried return to London gold market’
ZIMBABWE should not rush to rejoin the London Bullion Market Association (LBMA), as the country is realising good returns from its gold shipments taken through South Africa’s Rand Refinery.
The country was suspended from the LBMA in 2008 after gold production slumped to 4 072 tonnes, way below the set 10-tonne per annum required by the London Bullion guarantee membership.
However, since 2015 the country’s annual production of the yellow metal has been above the 10-tonne minimum requirement, which ordinarily qualifies it for readmission to the trading platform.
From the 21 tonnes produced in 2015, gold output has continued to steadily improve.
Discussions around Zimbabwe’s readmission to the LBMA have been on the cards for years now.
The Rand Refinery was founded in 1920, which is accredited by LBMA, and is now one of the largest integrated single-site precious metals refining and smelting complex in the world.
It has refined more than one third of the world’s gold.
Secretary for Mines and Mining Development Onesimo Mazai Moyo referred all questions to Fidelity Printers and Refiners, the country’s sole authorised buyer of gold, chief executive Peter Magaramombe who said rejoining the LBMA remained “work in progress”.
In an interview, Parliamentary Portfolio Committee on Mines and Mining Development chairperson Edmund Mukaratirwa said given that Zimbabwe’s gold was reaching the international market through the South Africa Rand Refinery, the country’s readmission to the LBMA should not be a major worry.
“It’s not worrying why we are not readmitted at the LBMA because in the meantime, we have got the Rand Refinery where we are selling our gold directly through the country’s sole gold buyer, Fidelity Printers and Refiners.
“There are a lot of requirements that need to be fulfilled before readmission to the LBMA.
However, we have other markets such as the South Africa Rand Refinery where we are easily accepted,” he said.
Zimbabwe has options to join other major bullion markets, including selling through Dubai, India, Japan, Singapore, and China.
“I am quite happy that we are seeing consistency in terms of production as confirmed by the production statistics that we are registering,” he said.
LBMA is the biggest over-the-counter gold and silver wholesale market in the world where investment financial institutions, dealers, brokers and exchange traded funds, among others interact and trade with each other.
Last year, Zimbabwe produced close to 30 tonnes of the yellow metal compared to 27,66 tonnes the previous year.
The Government this year projects 60 tonnes.
Mr Mukaratirwa said there were a host of issues affecting Zimbabwe’s return to the LBMA with some of them beyond control by the authorities.
“Despite producing above the minimum 10-tonne target, we must take cognizant that there are other issues that need to be addressed before readmission to the LBMA.
“For instance, issues of transparency and accountability in the gold sector need to be looked into, but there are some of the issues that are beyond our control as a country.
“For example, we are under sanctions, which is one of the major hurdles that we have if we are to seek re-admission to the LBMA,” he said.
In an interview, ZMF secretary-general Morgan Mugawu said despite Zimbabwe’s readmission to the LBMA, their thrust was on boosting output and contributing to the attainment of the targeted US$12 billion mining industry by next year.
“Our thrust as miners is to make sure that we focus on improving output to achieve the set targets, we are enthralled by the level of discussions that are going on so far regarding Zimbabwe’s return to the LBMA. “But even without readmission our gold is still finding its way to the international market through the South Africa Rand Refinery.
“So, with or without LBMA it’s not something that we should worry about, our focus is on raising production, which is something we are doing as players in the small-scale mining industry,” he said.