‘License more gold buying players’


Small scale gold miners say the government should consider liberalising fully the gold sector bringing in more gold buying players that can compete with Fidelity Printers and Refiners (FPR).

The small scale miners have upstaged big mining houses and have, for the past three years, been producing more gold than the big miners, becoming the cornerstone of the sector after smashing production records.

The central bank last week announced plans to unbundle its gold buying and minting subsidiary FPR into two entities-gold refining and printing and minting.

The central bank will allow private players to acquire a stake in FPR, a model similar to the Rand Refinery, South Africa’s biggest refinery, which is owned by some of that country’s biggest gold producers.

The deal will see large mining houses holding a 50% shareholding in FPR, while 3% will go to gold buying agents and the remaining 7 % to the small scale producers through their representative bodies.

However, small scale miners warned this week that that the sector would still be facing the same teething problems currently since the RBZ would still remain in control and will be the single largest shareholder in a new structure.

They are advocating for more players.“What the RBZ did on privatisation of the FPR is a welcome development but that is not the solution to our problems as the large scale miners and RBZ can still make their own decisions leading to the manipulation of prices and the sector as a whole,” Gold Miners Association of Zimbabwe chief executive officer, Irvine Chinyenze, told Business Times.

“This will not bring the long lasting solution to our problems as various miners and agencies will be swallowed into one entity.

We need more players that can compete with FPR and can offer competitive prices.”

Chinyenze said it could be one of the ways by the central bank to involve some miners in one of its ploys disguised as the liberalisation of the sector.“We want various players who can compete at the highest level and offer the same price as the world gold market price or even better.

It’s not surprising that those with the highest shareholding can connive to manipulate the sector and when that happens, other players will look for alternative markets,” he said.

“Basing on the recent performances and quantities, we were the best performers contributing over 60% of the national output.

We don’t know how the central bank came up with the 50% to the large scale miners, they are called large because of money and equipment only not output.”

Zimbabwe’s gold export receipts fell 21% to US$770.4m during the first 11 months of 2020 from US$971.5m recorded during the same period last year due to COVID-19 effects and rampant smuggling.

The gold deliveries reached 17.59 tonnes during the 11 months of 2020 from   24.88 tonnes recorded during the same period last year due to delays in payments. 

It is estimated that at least US$100m worth of gold is smuggled out of the country every month amid disgruntlement from producers with regards to pricing and payment modalities for gold delivered to FPR. 

FPR is offering 70% of the money which is US$5000 less than the world gold price at every kilogramme sold. 

“The FPR should be at par with the world market to attract miners to sell to them not offering US$5000 or less per kg, this would encourage smuggling,” Chinyenze said.

Delays in the payment of gold deliveries has in the past led to temporary mine closures by some of the country’s biggest gold producers such as RioZim, Falgold and Freda Rebecca, among many others.

Recently, gold mining companies wanted to dump the country’s sole gold buyer FPR and wanted to sell their yellow metal through the banks in order to get paid in time and access bridge finance to fund their operations.

However, with the latest 50% stake in FPR, the large scale miners may reverse their plan.

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