Gold bounces back


Gold delivery volumes bounced back into positive territory for the first time in more than a year with the local bullion market reporting a growth in deliveries in March, owing to the slowing down of rains.

Official data obtained from the Fidelity Printers and Refiners (FPR), the country’s sole buyer and marketer of the yellow metal, shows that delivery volumes, which have been sliding in the past 12 months, increased 2% to 1.80 tonnes in March from 1.77 tonnes reported in the same period last year.

Of the 1.80 tonnes, the primary producers contributed 1.13 tonnes while the small scale and artisanal miners delivered 0.67 tonnes.

Gold output has been ravaged by unfavourable policies that caused miners to divert their gold to alternative markets.

It is estimated that Zimbabwe has been losing between US$1.2bn and US$1.7bn yearly due to hurting policies which are infested with high taxes, costs and low retention levels which do not allow miners to produce at a competitive level.

“For March 2021, gold deliveries have gone up 2% to 1.80 tonnes from 1.77 tonnes during the same month in 2020 due to the subsidence of the rains which contributed immensely to the decrease in deliveries.

“Mines had been flooded during the period December to mid- March 2021, now that there is a huge slowdown we expect an increase going forward,” FPR general manager, Fradreck Kunaka told Business Times on Tuesday this week.

Gold Miners Association of Zimbabwe chief executive officer, Irvine Chinyenze,   said rains could have contributed to the temporary increase.

But, he suggested that the fundamentals should be addressed if the country was entertaining hopes of getting high output.

“I agree with the authorities that the rains affected production during the past four months but  forex retention levels should be reviewed to above 80%  for primary producers, there should be timeous payments which are still erratic, high taxes should be cut and   costs of importing money should be removed forthwith.

“If they can do that, gold output will reach amazing heights. It is not that miners are not mining but they chose what to deliver to Fidelity due to uncompetitive prices,” Chinyenze said.

Small scale miners are getting 100% forex retention threshold while large scale are getting 60%.

In January 2021, from the output of 0.997 tonnes, primary producers delivered 0.64 tonnes against small scale who managed 0.355 tonnes, in February 2021, the small scale extracted 0.56 tonnes and primary producers delivered 0.61 tonnes.

During the 2021 first quarter total gold deliveries fell 31% to 3.977 tonnes from 5.72 tonnes achieved last year.

From the 3.97 tonnes, small scale delivered 1.58 tonnes while primary producers delivered 2.39 tonnes.

Kunaka recently told Business Times that the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling on unfavourable mining policies.

He said that the government should totally liberalise the gold sector to combat smuggling and compete at the highest level with foreign gold buyers.

Zimbabwe’s gold output plummeted 31% to record 19.052 tonnes during 2020 from 27.66 tonnes recorded during 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.

Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year due to subdued deliveries due to Covid-19 effects, heavy rains that the country has experienced in January and the failure to remove costs on small scale gold miners.

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