Govt gives up on 40-tonne gold target

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LIVINGSTONE MARUFU

ZIMBABWE will not reach the targeted 40-tonne gold output this year after gold producers endured a subdued performance in the year to date due to power, fuel, foreign currency challenges and suspected smuggling.

This comes after gold producers managed to deliver just above 12 tonnes of gold during the first half of 2019 from 17,2 tonnes  extracted  during the same period last year.

Producers of the “yellow metal” now need to produce more than 27 tonnes during the second half of the season – which is traditionally the strongest half in the sector – to reach record deliveries. Experts however say this was now mission impossible given the circumstances on the ground.

Reserve Bank of Zimbabwe governor John Mangudya said given the power cuts and fuel shortages the target was not going to be met.

“This year, we had projected a gold output of between 35 tonnes and 40 tonnes of gold but with the current power, fuel and forex challenges the target may not be reached,” Mangudya said.

He said the economy has continued on a downward trajectory since the beginning of 2019 as gold exports plunged 31 percent to US$490 million during first six months of 2019 from US$715 million earned during the same period last year.

In February this year during the monetary Policy Presentation, the central bank pronounced that the gold miners were going to get 55 percent forex retention on cash basis with the balance given on local currency at the interbank rate of the day. 

This was a significant decrease from 70 percent forex retention threshold which was given to small scale miners last year and this has created arbitrage opportunities for small miners.

The decrease in forex retention levels has led to suspected smuggling to neighbouring South Africa as cartels close to the corridors of power are offering gold producers 90 percent of forex. It is estimated that last year over 40 tonnes of gold were smuggled to
South Africa.

A ministry of Mines and Mining Development Ministry official who 
declined to be named said: “It’s now official that we are not going to
reach 40 tonnes this year given the power and fuel situation in the
country.

“The Ministry will soon carry out a meeting as to what can be done to improve deliveries. With expected smuggling the country will lose more.

“Earlier this month even the Minister himself (Winston Chitando) believed that the 40 tonne mark is no longer possible.”

When contacted for comment Chitando asked for written questions which
he did not respond to at the time of going to print.

Gold is Zimbabwe’s highest forex earner contributing over 38 percent of total export earnings.

Government is targeting 100 tonnes of gold by 2023.