Gold export earnings down 9pc

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LIVINGSTONE MARUFU/GAMUCHIRAI TSOKOTA

ZIMBABWE’s gold export earnings are down nine percent to in the first four months of 2019 to US$383,9m owing to power and foreign currency shortages.

The fall in gold export earnings means more forex troubles for the already ailing and fragile Zimbabwe economy as the yellow metal contributes 38 percent of the country’s total exports. It also raises fears the 40 tonnes target for 2019 will not be met.

“In the first four months of 2019, gold earned US$383,9 million against US$425m earned during the same period last year,” reads part of the statement from Ministry of Mines and Mine Development.

Official figures gleaned by Business Times show that gold accounted for 38 percent of the value at US$383,9m followed by palladium and platinum at US$148,3m and US$108,7m respectively.

Overall, Zimbabwe’s extractive industry has raked in US$970,5m in the first four months of 2019 down from US$1,25bn attained during the same period last year.

Gold production volumes however, fell by 15 percent to 8 649,8kg from 10 196,9kg delivered during the same period last year as foreign currency shortages hamper productivity in large scale operations who are struggling to retool and buy raw materials.

Leakages of the yellow metal across the borders have also been on the increase as sole buyer Fidelity Printers and Refiners fails to pay hard currency to producers.

Of the 8,6 tonnes sold, 5,3 tonnes came from small scale producers and 3,3 tonnes from primary producers.

Fidelity Printers and Refiners general manager Fradreck Kunaka projected an increase in gold deliveries from the  second quarter as artisanal and small scale miners continue to seek funding under the Gold Development Initiative Fund.

The drawdown of the fund has assisted miners in acquiring the appropriate mining equipment to enhance their gold production thus increase deliveries to the sole gold buying unit.

Fidelity Printers and Refiners attributes the marked plunge, particularly for small scale producers, to the discord that existed on the payment of miners and the forex retention levels.

The reduction in forex retention levels caused the small scale miners to hold on to their gold and threatened to seek for alternative markets.

Despite beating the 19-year record in terms of gold deliveries last year by clocking 33,3 tonnes of gold , it is believed that Zimbabwe lost over 30 tonnes of gold to South Africa.

Given the low forex retention levels, mineral experts believe more gold will be smuggled to alternative markets.

Kunaka said the 55 percent forex retention threshold and payment of the balance on the parallel rate of US$1:8,5 would push up volumes to avoid smuggling.

“We are calling on the monetary authorities and relevant authorities to close the gap between official interbank market and forex parallel market. If we can have equilibrium on the market, miners are not likely to smuggle the precious metal as there will be no incentive to take gold outside,” Kunaka said.

Zimbabwe is targeting 100 tonnes of gold per year by 2023, raking in US$12 billion annually.