- November 16, 2019
- Posted in LOCAL
Zimbabwe may have lost between 30 tonnes and 34 tonnes of gold to smuggling in neighbouring South Africa due to unfriendly mining policies that need urgent addressing, a government minister has said.
The development comes at a time when all the players in the gold sector are calling for the upward review of foreign currency retention levels to prevent arbitrage opportunities which lead to rampant smuggling.
“When we spoke to our colleagues in South Africa at the Rand Refinery in Cape Town, we saw a jewellery shop, they said that’s all your gold from Zimbabwe. A total of between 30 and 34 tonnes are smuggled into South Africa,” Finance Minister Mthuli Ncube said at the breakfast meeting organised by the Daily News and the Ministry of Mines and Mining Development.
“We will have a discussion with the [RBZ] Governor [John Mangudya] in terms of output and retention percentages to enable gold miners to sell their gold through proper channels. In terms of the gold output, we have seen some leakages but we are seeing [gold] production is actually going up.
“But the deliveries have been going down at Fidelity Printers because of leakages in the sector, which we are finding a way to plug so that output is accounted for in the formal sector,” the Finance Minister explained, adding that most smugglers go to South Africa as there is a rebate which attracts miners to sell gold.”
Ncube also said the country should come up with policies that encouraged miners to sell gold through the formal channels. Gold is now the highest single foreign currency earner in the country, ahead of tobacco. But gold’s subdued performance continues to shatter any hope of economic turnaround.
Since the RBZ decided on 55% forex retention in February this year, various gold miners have smuggled their produce to lucrative markets such as South Africa. The average price of gold is US$41 000 per kg, but with the 55% forex retention threshold, a miner will get around US$22 500 with the 45% being paid in Zimbabwean dollars.
Meanwhile illegal gold dealers pay around US$35 000 per kg. During the US$12bn roadmap mining conference yesterday, miners said gold production had not decreased as was said but they were diverting the yellow metal to informal channels to continue producing. Gold deliveries in Zimbabwe plummeted 19% to 2.80 tonnes in September, from 3.47 tonnes during the same period last year due to power outages, inefficient mining and processing technologies in use, foreign currency shortages, and suspected smuggling.
Cumulatively, gold deliveries decreased 26% to 20.63 tonnes during the first nine months of 2019, from 28.09 tonnes during the comparative period last year due to policy inconsistency in the forex retention threshold.
Mangudya has said the monetary authorities would soon discuss the win-win forex retention threshold with miners to woo them to sell to the formal channels in Zimbabwe.
“The country is losing a considerable amount of gold and revenue through smuggling via our porous borders but measures are in place to encourage miners to sell gold through Fidelity Printers and Refiners to boost exports,” Mangudya said. “Our door is still open for discussion as far as forex retention is concerned.”
Fradreck Kunaka, the general manager of Fidelity Printers and Refiners, said the country was now pinning hopes on new gold centres and small scale facilities to increase production.
Experts say the established mining companies with huge capital may be heavily involved in smuggling as they continue to be dominated by less-organised small scale producers who do not have basic machinery for mining. Zimbabwe is targeting 100 tonnes of gold per year by 2023, a figure which would increase the sector’s earnings to US$12bn a year.
Winston Chitando, the Minister of Mines and Mining Development, said yesterday that gold (at US$4bn by 2023) would be the leading mineral in the hunt for the US$12bn mining economy that the government wants to create, followed by platinum with US$3bn_Business Times