Gold soars to record highs

PHILLIMON MHLANGA

From 35.3 tonnes in 2022 to 30.1 tonnes in 2023 and 36.8 tonnes in 2024 gold output in Zimbabwe continues to soar.

Gold deliveries to Fidelity Gold Refineries (FGR), the country’s sole buyer and marketer of the yellow metal reached an all-time high of 36.8 tonnes, reflecting an 21% increase from 30.1 tonnes in 2023, and surpassing the previous record of 35.3 tonnes achieved in 2022.

This remarkable growth highlights the sub-sector resilience and its position as a cornerstone of Zimbabwe’s ailing economy.

The past decade has seen consistent improvement in gold production, with notable milestones reached in recent years.

In 2021, deliveries stood at 29.7 tonnes, a decline from 30.1 tonnes achieved in 2020, which was a rebound from 27.66 tonnes in 2019.

The miners in 2018 delivered 33.29 tonnes to FGR while in 2017, they delivered 24 tonnes.

In 2016, the miners delivered 21.4 tonnes to FGR, up from 18.6 tonnes delivered in 2015.

The four-year period from 2021 to 2024 marked the most productive phase in Zimbabwe’s gold mining history.

Gold defied the odds

While other minerals faltered, gold stood resilient, continuing its upward trajectory.

A 27% price spike to US$2 665.21 at the end of December from US$2 059.61 in January last year, sent gold miners into overdrive, providing the sector with strong financial incentives, allowing them to increase production despite various challenges.

This price boost reinforced gold’s position as a critical pillar of Zimbabwe’s economy.

This favorable pricing environment motivated both artisanal miners and big mining houses to ramp up production, taking advantage of improved profitability in gold mining.

Apparently, artisanal and small-scale miners led the charge, delivering 23.7 tonnes—approximately 65% of the total production, according to FGR.

This represented a 27% increase in their deliveries compared to the prior year. Big mining houses contributed the remaining 12.7 tonnes, reflecting an 11.4% year-on-year increase.

The fourth quarter of 2024 emerged as the most productive period of the year, with total output reaching 12.2 tonnes. October alone recorded 4.3 tonnes, the highest monthly figure of the year, while December followed closely with 4.2 tonnes. This marked a remarkable rebound for the sector, which had struggled with delayed payments and other challenges in previous years.

Policy changes sparked the boom

A series of policy reforms and incentives played a crucial role in driving the sector’s resurgence. Among these, the removal of Value Added Tax (VAT) on gold sales, a measure introduced  in June, helped improve miners’ profitability.

This policy change, coupled with prompt payments by FGR,  further reversed the declines experienced in 2023, when delays in payments caused a 23% slump in deliveries from small-scale miners.

To further encourage production, the government introduced a 5% incentive for artisanal miners delivering over 10kg of gold. This initiative provided a direct financial boost, motivating small-scale operators to increase output.

“The supportive policies, coupled with rising gold prices, created a conducive environment for production growth,” noted Zimbabwe Miners Federation (ZMF) chief executive officer Wellington Takavarasha.

“These measures, combined with enhanced regulatory frameworks and increased investments, have underpinned the sector’s strong performance.”

Several big mining houses played a critical role in the sector’s success, with Kuvimba Mining House, Caledonia Mining, and Dallaglio leading the charge.

Dallaglio Mining, in particular, reported a 22% increase in gold sales during the first nine months of 2024. The company produced 2,025kg of gold during this period, up from 1,665kg the previous year. Dallaglio’s investments in transitioning Pickstone Mine from open-pit to underground mining have significantly boosted production capacity. The company’s production target for the year was set at 2,643kg.

Caledonia Mining also performed strongly, with an anticipated full-year output of 2,200kg.

Kuvimba Mining House, another key player, targeted a production volume of 3,500kg. These figures underscore the crucial role of large-scale producers in sustaining and expanding Zimbabwe’s gold production.

Energy costs pose a growing challenge

Despite the sub-sector’s impressive performance, rising production costs remain a significant challenge, particularly in the context of energy expenses. A recent survey conducted by the Chamber of Mines of Zimbabwe highlighted that miners are paying an average of USc14.21 per kilowatt-hour for electricity, with peak tariffs reaching USc19.

During periods of power outages, miners are forced to rely on diesel generators, which incur costs exceeding USc30 per kilowatt-hour. This reliance on expensive alternatives continues to strain profitability, particularly for small and medium-scale operators.

“Energy costs remain a major concern for miners,” Chamber of Mines president Thomas Gono, said.

 “Without affordable and reliable power, the sector’s growth trajectory could be undermined, especially as production scales up.”

The golden lifeline

Gold remains Zimbabwe’s top foreign currency earner. The yellow metal also plays a critical role in enhancing foreign exchange reserves and supporting the stability of the Zimbabwe Gold (ZiG) currency.

The Ministry of Finance, Economic Development, and Investment Promotion has projected that exports will sustain a positive growth trajectory, reaching US$7.9bn in 2025, driven by growth in gold, platinum group metals (PGMs), and lithium.

Looking ahead, the government is expected to maintain its supportive stance toward the mining sector, with a focus on further enhancing the regulatory framework and addressing cost challenges.

“Zimbabwe’s gold sector holds immense significance for the country’s economy and foreign currency generation,” the Minister of Mines and Mining Development, Winston Chitando told Business Times.

 He added: “Suffice to say that it anchors our new currency, the ZiG.

Therefore, there is a need to support the sector and maximise our gold deliveries so that we increase the level of reserves for the ZiG.

“We need a thriving gold sector and amongst other interventions, the Government will continue with the formalisation and continue to support the artisanal and small-scale mining operations with training, technology and funding.”

The ongoing transition of key mines, such as Dallaglio’s Pickstone Mine, to more efficient mining methods will likely boost production capacity. Additionally, continued investments in modern mining technologies and infrastructure will further strengthen the sector’s growth prospects.

However, addressing rising energy costs will be critical to sustaining momentum. Stakeholders have called for greater investment in renewable energy solutions and grid reliability to reduce miners’ dependence on costly diesel generators.

The Zimbabwe Miners Federation has also emphasized the need for continued incentives for small-scale miners, who contribute the bulk of gold production.

“Artisanal miners are the backbone of the sector,” said Takavarasha. “Ensuring their financial viability through favorable policies and incentives will be key to sustaining growth.”

Zimbabwe’s record-breaking gold production in 2024 is a testament to the resilience and potential of the country’s mining sector.

While global mineral markets faced headwinds, gold prices surged, enabling Zimbabwe to achieve unprecedented output levels.

Supportive government policies, rising prices, and increased contributions from both small-scale and large-scale miners have underpinned this success. However, challenges such as rising energy costs and operational inefficiencies remain significant hurdles that need to be addressed to ensure long-term growth.

2024 was a golden year. The challenge now as the sector looks to 2025 and beyond, is clear – sustain the boom.