Gold deliveries surge

LIVINGSTONE MARUFU

Gold deliveries to Fidelity Printers and Refiners (FPR) nearly doubled to 7.695 tonnes in the first quarter of the year from 4.016 tonnes recorded in the same period last year attributed to incentives and firming prices on the international market.

The yellow metal is Zimbabwe’s third largest foreign currency earner after platinum and diaspora remittances.

“We are now expecting a further increase in gold deliveries following firm prices on the international market which have surpassed US$60 000 per kilogramme of gold,”

FPR acting general manager Peter Magaramombe told Business Times.

Of the 7.695 tonnes delivered during the first quarter of 2022, small scale delivered 4.949 tonnes while  the big mining houses delivered 2.746 tonnes.

With pricing firming due to the Russia-Ukraine conflict and global inflation, large scale miners are expected to get large export revenues thereby  ramping up production.

The Chamber of Mines of Zimbabwe  CEO, Isaac Kwesu  said various miners were riding on the current strong mineral prices hence strong investments are needed.

“Miners should invest wisely on the proceeds of the good prices  that have  characterised the country’s  mining industry,” Kwesu said.

He said there was still a long way to go to achieve an average of 8.3 tonnes per month  for the sector to reach 100 tonnes a year by next year, although the output is fairly good.

Zimbabwe’s  gold export receipts also gone up 42% to US$1.7bn  in 2021 from US$1.2bn earned in 2020 due to improved gold output and firm prices.

The gold sub-sector, which is expected to be the main driver of the resources industry, is this year expecting capacity utilisation to increase to 87% from the current 80% on the back of increased production in the sector.

Kwesu said  gold producers were upbeat about the  2022 prospects with more than 80% of gold producers planning to increase production both in 2022.

“Average capacity utilisation for the gold industry is expected at 87% in 2022, up from 80% in 2021. Gold  production is expected at 35 tonnes with the firming prices expected to persist in 2022,”Kwesu said.

He added: “Gold revenues are expected to surpass US$2.1bn in 2022.”

The gold price is expected to remain elevated above US$1,900/oz throughout the year.

Experts said  the gold price has already responded to the unfolding crisis in Europe, surging above the US$2,000/ounce mark during the period of conflict, from an average of US$1,750/ounce in December 2021.

Gold will also have support from high demand from central banks and jewellery sectors.

“For the greater part of 2022, precious metals will find support as a safe haven on the back of the crisis in Europe. We anticipate gold prices to trend towards the all-time high reached in 2020,” Kwesu said.

“In the second half of 2022, we anticipate the gold market to revert to macro drivers such as real rates, U.S. Federal Reserve policy as well as the growth outlook. We, therefore, expect the gold price to taper off at prices above the 2021 average.”

He said various mines will ramp up production on the back  of improved access to deeper areas of the mine and strong capital injection in various mines.

Eureka Gold Mine, Gold Quarry Mine and Shamva Gold Mine  have  resumed operations and are expected to ramp up production given the serious capital injection that was done with the respective shareholders.

The mines have reopened at a good time when prices are very high on the international market thereby helping companies to improve their export revenues.