Zimbabwe’s gold deliveries have gone down 13% to 10.597 tonnes in the first six months of 2020 from 12,294 tonnes achieved in the same period last year as the sector takes a hit from foreign currency constraints and Covid-19 restrictions which affected small scale producers, latest data has shown.
The development comes at a time when the economy is suffocating from foreign currency constraints and relies on the yellow metal for the
greenback required to oil the economy.
Gold is the highest forex earner and contributes 38% of the country’s total earnings and more than 60% to the mining sector which is the highest forex earning sector in the country.
Zimbabwe’s gold exports were up in January and May with the rest of the months down during February, March, April, and June due to lockdown restrictions which limited artisanal miners to operate.
Government has increased fuel allocations to gold miners from last year but
the lockdown and the effects of coronavirus have thwarted miners to get useful consumables from China.
Experts say gold mining especially (small scale) was greatly affected by lockdown regulations as social distancing needs to be observed.
Fidelity Printers and Refiners general manager Fradreck Kunaka told Business Times that the gold deliveries are likely to go up in July after
miners familiarise with the new gold trading regulations.
“Gold deliveries were 6% down to 1,409 tonnes in June 2020 from 1,501 tonnes in June 2019. From 1,409 tonnes, small scale miners extracted 0,539 tonnes and secondary miners hauled out 0,869 tonnes.
“Deliveries during the month of June were recorded at 1.4 tonnes, the reason behind this decline could be Gold deliveries down 13% in H1
attributed to the fact that deliveries for the month coincided with the release of the new Gold Trading Framework published on May 26,” Kunaka said.
“Many stakeholders are still trying to understand the implications of the new payment method, hopefully, with time they will adjust and start bringing in their gold using the formal channels.”
The country’s gold export earnings have gone up 2,7% to US$409.7m from January 2020 to May 2020 from US$398.6m earned during the same period last year due to the review of foreign currency retention threshold
and increased fuel allocations this year.
In January, gold export earnings were US$98m in January 2020 from
US$70.4m, while in February export earnings were US$56.1m from US$77.8m.
In March, yellow metal export receipts were US$71.9m from US$88m in
March last year and during April 2020 gold exports were down to US$63.4m from US$76.4m.
In May 2020, exports were up to US$120m from US$85.8m last year.
Gold deliveries were down 31% in April to 1,46 tonnes from 2,12 tonnes in
March due to the Covid-19 pandemic which had already started affecting the countries from which mining chemicals such as cyanide are sourced
thus negatively affecting operations of various mines.
Movement of chemical consignments from the said countries were affected as early as February, with the ripple effects beginning to be felt by March.
Gold deliveries surged 44% to 2,54 tonnes during the month of January from 1,77 tonnes during the same period last year due to increased fuel
allocations to miners.
In February, gold deliveries fell 34% to 1,403 tonnes in February 2020 from 2,136 tonnes during the same period in 2019.
Zimbabwe’s gold deliveries fell 32 % to 1,77 tonnes in March 2020 from 2,61 tonnes in March 2019.
In December 2019, the yellow metal was up 72% to 2,77 tonnes from 1,6 tonnes during the same period in 2018.
Cumulative gold deliveries fell 16% to 27.6 tonnes in 2019 from 33.2 tonnes
in 2018 due to suspected smuggling and hostile mining policies.
Mines and Mining Development minister Winston Chitando said Covid-19 has affected the operations and a plan needs to be worked out to ensure
miners recover from the big slump. Last year gold export receipts, slumped
28% to US$946m in 2019 from US$1,33bn in 2018, leaving the country with
no alternatives for foreign currency as the second-highest forex earner tobacco also tumbled 7% to US$846.7m from US$907.8m due to prolonged droughts and unfavourable payment policies.
Since 2017, the economy has been grappling with foreign currency shortages, inefficient mining and processing technologies but the reduction of the forex retention levels by the Reserve Bank of Zimbabwe is believed
to have impacted negatively on the deliveries. This has created arbitrage opportunities for miners to smuggle gold outside the country’s borders.
Over 34 tonnes are believed to have been smuggled out of Zimbabwe.
Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said:“Covid-19 has negatively affected our operations as small scale miners were restricted to go to mines due to the ongoing restrictions.”
He said the underlying problems of forex retention continue to affect production as miners look for alternative markets. Some miners, especially large scale are believed to be selling their gold to the suspected smugglers to get more forex for their operations.
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.