Why gold delivery to FPR is declining
Last month the president of Zimbabwe Miners Federation (ZMF) Henrietta Rushwaya reportedly said that gold output to FPR in 2019 production had drastically dropped from 500kg to 20 kg a week. Fidelity used to average 1- 2 tonnes per month, end of February stats showed a paltry delivery of 20kg.
Rudairo Dickson Mapuranga
The drastic decline in gold delivery to Fidelity printers and Refiners (FPR) is as a result of many factors, last year miners were advocating for foreign currency retention of 90 to 100 percent because the 70 percent they were receiving was not viable and re-investing the money for operations and development was always a challenging to the them considering the fact that consumables are sold in USD or at a market RTGS dollar amount that reduces the real gold value.
FPR is the sole gold buyer, refiner and exporter of gold in Zimbabwe and subsidiary of the Reserve Bank of Zimbabwe (RBZ). Following the announcement of the new monetary policy in February, gold delivery to FPR extremely declined due to many factors chief among them is the lowering of forex retention percentage from 70 to 55. The following are the major reasons why gold delivery to Fidelity Printers and Refiners continue to decline despite increases in gold mining activities.
Miners suspended operations
Small scale and artisanal miners have been protesting over the reduction of foreign currency retention by the Reserve Bank of Zimbabwe, this has led some reportedly suspending their operations. However, representatives of small scale miners who refused to be named said that artisanal miners are only saying that they have suspended operations in a disguise to decoy the fact that they have only suspended delivering gold to FPR.
Fuel shortages
Following the high popular fuel shortages and price hikes, the delivery of gold to Fidelity Printers and Refiners have been on a precipitous decline, this is due to the fact that many small scale and artisanal miners who were delivering more gold to fidelity usually operate with machineries that uses diesel or petrol. ZMF even applied a license for the importation of fuel in order to improve production among small scale and artisanal miners, however, the association is complaining that, fuel import fees charged by the Zimbabwe Energy Regulatory Authority (Zera) are excessively high and prohibitive.
Gold milling centres under declaration
The deputy minister of Mines and Mining development Polite Kambamura was quoted by The Sunday News saying that, around 60 percent of gold millers in Zimbabwe were not declaring their production to Fidelity Printers and Refiners. The deputy minister went further saying that those gold milling centres will be forced to shut down. However this did not go well with some miners who accused the government of seeing ghosts.
One miner advised the government to withdraw unscrupulous licenses issued to private individual most of them he accused of being connected to top politicians and also advocated for the government through Fidelity to pay gold producers their money without delaying.
“The government should start by withdrawing the gold buying licenses, it issued to private individuals who are obviously the chief culprits in gold leakages, and then carry out a self-introspection of itself by making good the outstanding payments to various mining houses for gold delivered to Fidelity but not yet paid for, which is causing gold mine closures and therefore affecting a lot of working miners and their families. Government should not look at the speck in the eye of the milling houses ignoring the logs in its own eyes” he said.
Miners selling on the Black market
Following the announcement of the new monetary policy, gold delivery to FPR declined due to the fact that the RTGS to USD value being offered by the Reserve Bank of Zimbabwe is too low thereby in actual sense decreasing the value of gold in the hands of miners. This has reportedly caused miners to abandon formal channels of exporting their productions to informal channels that are reportedly paying a reasonable price.
Following an outcry by miners after the lowering of the foreign currency retention threshold from 70 to 55 percent by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya in his recent Monetary Policy Statement, the deputy minister reportedly said that the government is considering reviewing the RTGS incentive from 1:2,5 offered by banks to 1:3,5 for small scale and artisanal miners, “Initially there was a lot of noise before we engaged the RBZ Governor. After engagement he did not review the retention figure as such but put an incentive instead of 45 percent being in the ratio of 1:1 he reviewed to 1:3.50. So a lot of miners are happy and they are quiet and we actually expect our March production to improve,” he said.
However this did not go well with other miners who accused the government of being inconsistent in policies and being one sided instead of solving problems for every exporter.
“Another lopsided idea. Why not all gold producers? So the RTGS$ is not market driven if RBZ has to pay more? Zimbabwe’s problem is policy inconsistencies” Kennedy Mtetwa said.