LIVINGSTONE MARUFU
Zimbabwe’s sole buyer and exporter Fidelity Gold Refinery (FGR)’s delays in payments will threaten the government’s 60 tonne gold target as fear swells the move could fuel selling into alternative channels to raise working capital.
The delays in payment comes as gold deliveries to FGR dipped 13% to 11.446 tonnes in the first five months of 2023 from the 13.167 tonnes delivered during the same period last year.
Gold Miners Association of Zimbabwe CEO Irvine Chinyenze told Business Times that the government’s piecemeal application of measures has affected production.
“We continue to have erratic payments, incapacitated small-scale miners and taxes among other challenges.
“Fidelity is saying it’s paying within a week but that is not being met most of the time as they take more than 10 days to pay,” Chinyenze said.
He said if FGR pays within a week, the cycle is too long as miners need instant cash payments so that the cycle is not broken.
“Remember, we are dealing with people who are not adequately capacitated as they are using their own resources to fund mining without support from banks.
“For one to get a loan from the bank, one can securitise a house or a stand and that same person is given at an interest, he or she cannot wait for a week to get paid as employees will be anxiously waiting for payments otherwise they will dump for another who is paying on time,” Chinyenze said.
“The cycle is too long; we would envisage that when a person brings gold he or she should be paid at that moment to pay various obligations.
“We continue to have the same conversation we have been having three years ago as the challenges remain unaddressed. We have not become consistent in addressing these issues.”
The plunge in gold export deliveries comes at a time when the Qatar-headquartered broadcasting network Al Jazeera exposed how gold was smuggled out of Zimbabwe through illicit deals thereby robbing the country of over US$1.2bn in potential revenue.
“We will never support illegality but the cash barons and smugglers will take advantage of these flaws in our systems to do illegal deals.
“Those who think delays are impacting his or her productivity will sell through informal channels; one will sell to sustain the business. This is business it needs constant capital and one does not care about the illegality as these are issues to do with people’s livelihoods,” Chinyenze said.
He said small-scale mining should not remain primitive by using a pick and a shovel but should have gone beyond that by mechanising, getting technical ability, skills and resourcing miners but miners remain incapacitated.
“We will have a situation where most of the miners are living on hand to mouth and they will remain like that for 20 years. This has an impact on production,” he said.
“Taxes have remained a pain in the back for miners and the situation continues to affect production and productivity.
“This will promote gold smuggling and destroy the building of gold reserves.”
FGR general manager Peter Magaramombe said gold output has continued on the downward trend when compared to the same period last year due to low output experienced during the first two months caused by heavy rains.
“We are well aware of the challenges but we will continue engaging to ensure these challenges are addressed,” Magaramombe said.
Gold export earnings fell 19% to US$376.73m in the first quarter of 2023 from US$463.10m attained in the prior comparative period, attributed to low deliveries to the country’s sole buyer and marketer of the yellow metal FGR.
