Improved forex retention boost gold output in May


An increase forex retention threshold to 70% saw gold production recovering to 2.015 tonnes in May up from 1.46 tonnes in April, latest
statistics have shown.

This comes as Zimbabwe is targeting 50 tonnes of gold this year
which has seen the government coming up with a cocktail of measures which include increasing the foreign currency retention threshold and plug leakages in the sector.

Before the review, the forex retention threshold was 55%.

The country last year failed to achieve its 40 tonne after a haul of
27.6 tonnes due to suspected smuggling caused by unfavourable mining policies.

Mines and Mining Development Deputy Minister Polite Kambamura told Business Times that the recent change in the foreign currency retention structure is one of the positive interventions that government
is doing in an effort to improve deliveries.

“…our April gold production was down to 1.46 tonnes (mainly
due to lockdown and protest deliveries from miners due to gold forex
retention factors), but improved to 2.015 tonnes for May.

“The new 70% forex retention and 30% local currency payment
structure, is one of the positive interventions that government is doing in an effort to improve deliveries to Fidelity Printers and Refiners,”
Kambamura said.

Gold deliveries fell 16% to 27.6 tonnes in 2019 from 33.2 tonnes in
2018 due to suspected smuggling, fuel shortages and lack of technology.
Gold export earnings for 2019 also fell 28% to US$946m from
US$1.3bn in 2018. From the 27.6 tonnes output, small scale miners
hauled 17.4 tonnes against primary producers’ 10.2 tonnes.

In the past three years small scale miners have contributed over 60%
of the total gold output. Despite the fall in cumulative gold deliveries, the yellow metal recorded an increase of 30% to 1.84 in November
2019 from 1.41 tonnes during the same period the previous year.

That was the second month in 2019 to record an increase from
the previous year month on month comparison.

In December 2019, the yellow metal was up 72% to 2.77 tonnes
from 1.6 tonnes during the same period the previous year.

Experts said the increase of gold production towards the tail end of
2019 was due to increased fuel allocations to miners The yellow metal contributes 38% of the country’s total earnings and more than 60% to the mining sector which happens to be the highest forex earning sector in the

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 by contributing US$4bn export earnings by 2023.

Meanwhile, government has floated a tender for the setting up
of gold service centres across the country as it seeks to safeguard gold
production from small scale miners.

The plan behind the gold service centre is to attract as many small
scale and artisanal miners as possible in order to safeguard production and flow of gold while avoiding leakages.

The tendering process is already being undertaken in consultation
with the Procurement Regulatory Authority of Zimbabwe.

“The committee and the board of the SPV set up within the Ministry
to drive the setting up of the gold centres, is in the process of setting
up gold centres in consultation with PRAZ. There were site visits and
consultations last week on the proposed gold milling centres.

“The tender was floated and there has been massive interest and it is
important to note that the Minister, Deputy Minister and the Permanent Secretary are not directly involved in this process and our duty is to implement policy,” Kambamura said.

A gold service centre is an establishment where all the functions
related to gold mining — from extracting to processing and sales
— are co-ordinated from.

A typical gold service centre would comprise a clinic, offices of the government’s official gold-buying firm Fidelity Printers and Refineries and firms that sell or hire mining equipment.

The centres will offer such services as gold milling, collection
points and assist with environmental impact assessments.

engineers and metallurgists will also be stationed at such centres. Millers and officials from the School of Mines will also set up bases at the
centres to teach miners on health and safety issues.

Gold service centres are aimed at boosting gold production and to curb leakages.

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