Gold glittering streak continues

April 22, 2021

LIVINGSTONE MARUFU

Zimbabwe’s gold export receipts have spiked 15% to US$147.3m in February and March this year from US$128m recorded during the comparative period last year on the back of firming international gold prices, latest data has shown.

The importation of United States dollars and raw materials have been much easier this year compared to same period last year when the pandemic was still new and at its peak, given that most countries across the world have relaxed Covid-19 restrictions.

Between February and March last year, world gold prices were above US$55,000 per kilogramme against this year’s prices of above US$60,000 per kg.

In written responses, Reserve Bank of Zimbabwe governor John Mangudya told Business Times that the central bank expects gold exports to continue improving on the back of the end to the rainy season which made mining difficult.

 “The country made total gold shipments of US$147.3m between February and March 2021 from US$128m during the same period last year. In February last year the country shipped out gold worth US$56.1m compared to gold worth US$66.1m while in March last year gold export receipts were at US$71.9m against US$81.2m recorded last month,” Mangudya said.

“The increase in gold export shipments is due to improvement in gold deliveries to Fidelity Printers and Refiners as a result of slowing down of rains. The firming of world gold prices could be another reason for the increase.”

Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year on subdued deliveries due to Covid-19 effects, heavy rains that the country has experienced in January and the failure to remove costs on small scale gold miners.

Despite, good gold performances in February and March, gold export receipts for the first quarter of 2021 were US$200.4m against  gold shipments of US$226.1m recorded during the same period last year.

Gold deliveries have bounced back for the first time in March 2021 after recording a positive improvement of 2% to reach 1.80 tonnes from 1.77 tonnes recorded during the same period last year due to the slowing down of the rains in the period under review.

Zimbabwe is losing between US$1.2bn and US$1.7bn yearly due to smuggling and unfriendly policies such as  high taxes, costs and low retention levels which do not allow miners to produce at a competitive level.

According to the figures obtained from the FPR, from the total of 1.80 tonnes, primary producers hauled 1.13 tonnes which is their highest recorded total while small scale miners recorded 0.67 tonnes in the process.

Small scale producers’ subdued performances have caused a general decline in gold output in the past year with the primary producers maintaining the same output over the years.

Ironically, small scale miners are getting 100% forex retention threshold while large scale are getting 60%.

From the output of 0.997 tonnes in January 2021, primary producers delivered 0.64 tonnes against small scale who managed 0.355 tonnes.In February 2021, the small scale miners extracted 0.56 tonnes and primary producers delivered 0.61 tonnes.

In the first quarter of 2021, total gold deliveries fell 31% to 3.977 tonnes from the 5.72 tonnes achieved in the same period last year.

From the 3.97 tonnes, small scale delivered 1.58 tonnes while primary producers managed to deliver 2.39 tonnes.

 Recently, FPR general manager  Fradreck Kunaka revealed that the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling and unfavourable mining policies.

He said the country should totally liberalise the gold sector to combat smuggling and compete at the highest level with foreign gold buyers.

Meanwhile, Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze   said the quarterly figures would have been two months’ production if fundamentals were addressed.

“Authorities may be happy that there is an improvement but in actual fact if there was full liberalisation of the sector, good forex retention thresholds and competitive prices we could be making over US$100m monthly,” Chinyenze said.

The country’s gold output plummeted 31% to record 19.052 tonnes during 2020 from 27.66 tonnes recorded during 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels. A recent mining report advised that President Emmerson Mnangagwa’s government should pay gold producers at world prices to woo them into selling the yellow metal through the formal channels.

The report blamed FPR’s flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs’ violence in Midlands and Mazowe. The report said the development of the gold sector is crucial if Mnangagwa’s government is to salvage prospects for Zimbabwe’s economic recovery from decades of economic stagnation.

Mining experts warned that the monetary authorities should address fundamentals to reach the 100 tonnes target by 2023.

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