No increase of forex allocation to miners – Mangudya
Zimbabwe’s Apex bank, the Reserve Bank of Zimbabwe (RBZ) has declined to increase foreign currency allocation to gold miners, preferring to work on improving material support to the sector in a bid to ramp up production and arrest smuggling.
According to the Herald, the plan was revealed by RBZ Governor Dr John Mangudya, when he presented the 2020 Monetary Policy Statement (MPS) on Monday.
Over-reliance on rudimentary mining methods and equipment has long been identified as one of the major drawbacks curtailing the small scale gold mining sector.
Small Scale miners are particularly important to the country’s overall gold output as they now account for close to 60 percent of the country’s deliveries.
In 2019, the sector accounted for 17,47 tonnes of the country’s 27,66 tonnes.
It is, however, at variance with miners’ demands who have been lobbying for exclusive legal gold buyer, Fidelity Printers and Refineries (FPR), to effect an upward review of the foreign currency component from the current 55 percent.
The miners contend that the alternative market has managed to thrive because it pays 100 percent on the spot for gold deliveries as opposed to FPR, which pays the other 45 percent in local currency using the interbank exchange rate.
The RBZ has, however, been arguing that it cannot pay 100 percent to the miners as the other component goes towards other essential services like importing consumables for the health and agriculture sectors.
But presenting the MPS on Monday, Dr Mangudya noted a decline in deliveries to FPR last year compared to 2018.
He said the central bank hopes to stop this by tightening systems in the marketing of gold as well as formalising small scale mining.
“Gold deliveries to Fidelity Printers and Refiners (FPR) for the period January to 31 December 2019 were 27, 66 tonnes, a decline of 17 percent from 33, 29 tonnes recorded during the same period in 2018,” said Dr Mangudya,
“The decline is attributable to electricity challenges coupled with inadequate equipment for small scale miners to access deep gold reefs and gold leakages through smuggling.
“Future efforts to increase gold deliveries to FPR shall include enhanced capacitation of gold producers and formalisation of artisanal miners, coupled with rigorous monitoring of gold production and marketing,” he said.
Although there will be qualms from miners who are holding out for more foreign currency, capacitation of the sector is set to go a long way towards the attainment of Government’s 2023 mining sector milestone.
The milestone seeks to attain US$12 billion annual exports from the mining sector with gold expected to contribute US$4 billion through the export of 100 tonnes of the yellow metal. The Herald