SMALL SCALE gold miners are expecting to get one million litres of fuel monthly from the Mines and Mining Development Ministry as government moves to ramp up gold production.
The development comes after small scale miners were weaned off from Reserve Bank of Zimbabwe (RBZ)’s Gold Development Initiative Fund which will leave the central bank to concentrate on its disinflation programme.
Under the new arrangement, small scale miners are now getting funding directly from the Treasury under the Mines and Mining Development ministry budget kitty.
Zimbabwe Miners Federation secretary general Morgan Mugawu told Business Times that the proposed fuel allocation will improve miners’ operations as they were struggling to access the fuel which was now affecting production.
“After being weaned off from the central bank’s initiative, we now expect to get one million litres of fuel monthly for our mining activities from the Mines Ministry which directly made an arrangement with monetary authorities,” Mugawu said.
“If we can get that allocation we expect to improve on gold deliveries as our machinery needs that precious liquid to step up production which has been on the low side due to shortages that hit the country last year.”
Despite the fall in cumulative gold deliveries, the yellow metal recorded an increase of 30% to 1.84 tonnes 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’s output was up 72% to 2.77 tonnes from 1.6 tonnes produced during the same period the previous year.
RBZ said the increase in gold production towards the tail end of 2019 was due to increased fuel allocations to miners and the drawing down of the Gold Development Initiative Fund.
Mugawu said the new arrangement will enable the small scale miners to assert their dominance in the yellow metal sector.
From the 27 tonnes extracted in 2019, small scale miners delivered 17 tonnes against 10 tonnes by primary producers.
The yellow metal remains the economy’s single largest foreign currency earner contributing 38% of export earnings ahead of tobacco which contributed 19%.
Under the new arrangement, small scale miners are now fully registered under the Ministry of Mines and Mining Development.
Mugawu said gold deliveries will be better than last year as miners will have access to the Mines minister once per week therefore funding will be readily available rather than the previous facility where the central bank would avail funds to some miners and leave out others.
In 2019, gold was the leading forex earner with US$946m followed by tobacco at US$846.7m.
However, the drop in export earnings leaves the country in a difficult position as it mainly depends on these homogenous factors and does not have credit lines.
He said gold production is expected to spike in 2020 as miners do not have extra expenses of dewatering filled holes due to the poor rains experienced so far.
Despite extracting the second best gold mining output in the country of over 27 tonnes, Zimbabwe lost over 34 tonnes to smuggling to neighbouring South Africa due to unfriendly mining policies.
Small scale miners are still negotiating with the monetary authorities to get high forex retention levels than the current 55% put in place last February by the RBZ from 70% in 2018.
Gold is expected to be the leading mineral with export earnings of US$4bn under the government’s US$12bn mineral revenue by 2023 charge.