Zimbabwe’s gold export earnings has soared 3% to reach US$409.7m during the first five months of 2020 from US$398.6m earned during the same period last year due to review of foreign currency retention and drought which allowed miners to mine in January.
The development comes at a time when the economy is grappling with
foreign currency challenges and is banking on gold and tobacco to turn
around the forex-starved economy.
Zimbabwe’s gold exports were up in January and May with the rest of months down during February, March and April 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.
The yellow metal is now 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.
Reserve Bank of Zimbabwe governor John Mangudya told Business Times that the country’s gold export earnings were pushed by May earnings thanks to 70% forex retention threshold.
“The country’s 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,” Mangudya said.
In January 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 2020, 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, exports were up to US$120m from US$85.8m last year.
Zimbabwe’s gold deliveries fell 31 % to 1.46 tonnes in April 2020 from 2.12 tonnes in April 2019 due bottlenecks in imports caused by a global lockdown as government s moved to combat the spread of coronavirus.
Gold deliveries were down 31% in March to 1.46 tonnes from 2.12tonnes in April 2020 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.
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 from 2.136 tonnes during the same period in 2019.
Zimbabwe’s gold deliveries fell 32 % to 1.77 tonnes in March 2020 from 2.61tonnes in March 2019.
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 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.
Experts said the underperforming of the small scale miners was due to
unfavourable mining policies which remained stagnant at 55% foreign
currency retention threshold against 70% in 2018.
Since 2017, the country has been grappling with foreign 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 impacted on the drop of gold figures due to restrictions on the movements of small scale miners.
“The restrictions were lifted this week but we were greatly affected by
the lockdown. We are not established as primary producers who have
enough resources as they had proper documents to continue working
unlike us who had several members turned down at roadblocks,”
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 suspected smugglers to get more forex for their operations.
Experts suggested that established mining companies with huge capital
can’t be dominated by less organised small scale producers who don’t have
basic machinery for mining.
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.