Zimbabwe’s gold export receipts were up 40% to US$98.1m in January this year from US$70.4m during the same period last year on the back of firming bullion prices and an uptick in exports, latest statistics have shown.
Exports were 1.96 tonnes in the month from 1.69 tonnes in the same period last year.
The development comes after gold deliveries surged 44% to 2.54 tonnes in January 2020 from 1.77 tonnes in the same period last year due to increased fuel allocations and drought.
Experts say more gold could flow into the formal channels if the central bank increase foreign currency retention threshold for the yellow metal from the existing 55%.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told Business Times that not all gold that is produced locally is exported as some is reserved for the local market.
“The country’s gold export earnings increased by 40% to US$98.12m in January this year against US$70.4m same period due to increased output and strengthening of world gold prices in January,” Mangudya said.
In January gold averaged US$39,500 per kg up from US$32,300 recorded in the same period last year.
He said if this becomes the trend up to December, the country will earn a considerable amount of forex which can go a long way in lubricating the starving market.
The earnings from gold exports in January this year.
Not all gold produced locally is exported as some is reserved for the local market.
Gold is the highest single forex generator ahead of tobacco and contributes 38% of the total export receipts.
Small scale miners continue to dominate primary producers as they contributed 1.81 tonnes from a total of 2.54 tonnes in January 2020 and 17 tonnes from a total of 27.6 tonnes in the whole of 2019. In 2019, cumulative gold figures went down by 16% to 27.6 tonnes from 33.2 tonnes due to suspected smuggling and hostile mining policies.
From June last year, the mining sector experienced serious power outages with some miners only working three days a week and the gold sector was not spared.
In 2019, gold export earnings slumped 28% to US$946m from US$1.33bn in 2018.
In February last year, RBZ reviewed forex retention downwards to 55% from 70% the previous years, therefore created arbitrage opportunities for smuggling to South Africa.
Last year, Finance and Economic Development minister Mthuli Ncube said close to 34 tonnes of bullion were smuggled to South Africa where it was processed into expensive jewellery.
Gold is the most liquid mineral which can be changed into money within a fortnight but smuggling and corruption will cancel out the benefit of having such a jewel.
Zimbabwe has been experiencing crippling power outages, forex shortages and rampant inflation and look up to gold, tobacco, and platinum for forex.
Mangudya said the 45% of forex retained from gold miners is helping the country to buy medicines, grain, electricity and fuel among other commodities as the country has no meaningful lines of credit.
Fidelity Printers and Refiners are targeting 35 tonnes of gold while Mines and Mining Development ministry is targeting 50 tonnes.
The country is targeting to earn US$12bn by 2023 with the yellow metal leading the charge with an output of 100 tonnes and export earnings of US$4bn.