LIVINGSTONE MARUFU
The Reserve Bank of Zimbabwe (RBZ) has said the 55% foreign currency retention threshold given to the miners especially artisanal miners is adequate to cater for their production and continuity.
The development comes at a time when gold smuggling is rampant after the shift in forex retention levels to 55% in 2019 from 70% in 2018, creating arbitrage opportunities.
Experts say the 16% fall in production figures last year to 27.6 tonnes from 33.3 tonnes was due to unfriendly mining policies.
From 27.6 tonnes, small scale miners delivered 17.4 tonnes against primary producers who managed 10.2 tonnes. RBZ governor John Mangudya told Business Times that the central bank reached that figure after doing serious calculations.
“Forex retention for small scale miners will remain at 55% as their cost production is very low.
We have done the numbers ourselves and we know that 55% is sufficient for small scale miners,” Mangudya said.
He said the 45% will help the country to import maize, soya beans and fuel among other critical raw materials.
Last year, Finance and Economic Development Minister Mthuli said over 34 tonnes of gold was being smuggled into South Africa.
Experts said the 55% forex retention is critical in improving gold deliveries as most will be selling through formal channels. Zimbabwe Miners Federation secretary general Morgan Mugawu said good forex levels will lure miners to sell formally.
“If the government could raise the foreign retention, miners will bring precious stone formally to boost production. At some point, miners could queue to sell gold at Fidelity Printers and Refiners, this could happen if they increase forex retention,” Mugawu said.
Gold export earnings for 2019 also fell 28% to US$946m from US$1.3bn in 2018. Gold remains the highest foreign currency earner in the country and on average contributes 38% and followed by tobacco. 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 and only if forex retention threshold, fundamentals, and funding issues are addressed.
Gold is expected to lead the charge with US$4bn bullion export earnings by 2023.
