STAFF WRITER
Gold producers will emerge with a controlling stake in Fidelity Printers & Refiners (FPR) under an unbundling exercise of the sole gold buyer as the Reserve Bank of Zimbabwe (RBZ) moves to increase compliance, Business Times can report.
The unbundling will result in the creation of two business entities, gold refining and printing and minting.
RBZ will retain 40% shareholding in FPR and dispose of 60% shareholding to large-scale and small-scale gold producers.
Using a three-year average delivery of gold to FPR, RBZ will offer 50% shareholding in FPR to the large-scale gold producers, 3% to major FPR gold buying agents and the balance of 7% to the small-scale producers through their representative bodies, RBZ governor John Mangudya said in a statement yesterday.
The central bank will have 100% equity in the printing and minting business for national security reasons.
“The unbundling of FPR is designed to partially privatise the gold refining business by allowing private players to acquire a stake therein and in the process secure and endear the private sector’s interests in the production and marketing of gold in Zimbabwe,” Mangudya said.
“By being part of the decision making process on gold trading, it is expected that the gold producers’ compliance levels in the trading of gold will significantly increase.”
The FPR unbundling and the disposal of Tuli Coal was approved at the bank’s board of directors meeting on December 9.
Tuli Coal will be sold to the government, a move which fulfils RBZ’s long-held desire to sell its entire equity in the asset, according to Mangudya.
Gold producers accused FPR of giving them a raw deal by offering spot prices below the world’s gold prices. FPR was also accused of delaying payment to gold producers. The low prices and payment delays have been attributed to a dip in deliveries. Official data obtained from Fidelity Printers and Refiners (FPR) this week shows that gold deliveries plunged to 17.59 tonnes during the 11 months of 2020 from 24.88tonnes recorded in the same period last year.
It is estimated that Zimbabwe loses over 30 tonnes of the yellow metal to smuggling annually.
The unbundling of FPR comes at a time there are calls to liberalise the gold buying sector to allow more players and end the monopoly of the RBZ’s unit. Mangudya has in the past warned that liberalisation would see annual output plummeting to 4 tonnes on rampant smuggling.
“We all know that the last time the gold was liberalised production dipped to 4 tonnes and we were disqualified from London Bullion Market Association (LBMA) because we were below 10 tonnes so we have got history we know the experience,” Mangudya said at a recent breakfast meeting held in the capital.
“Miners should market their gold through FPR as it refines miners’ gold and stores it as a national asset and reserve asset.
But if we do what we did in 2004 and 2005 thereabout whereby we liberalised we will go back to four tonnes again.”
