No glitter as gold deliveries fell 20pc


ZIMBABWE’S gold deliveries fell 20 percent to 10,8 tonnes in the first five months of 2019 from 13, 59 tonnes during the same period last year due to suspected smuggling and crippling foreign currency and power shortages.

The development comes at a time when the reduction of forex retention levels to small scale miners to 55 percent from 70 percent has created arbitrage opportunities for various smugglers with South African authorities estimating that over 40 tonnes of gold was smuggled last year from Zimbabwe.

Mining experts believe that Zimbabwe’s gold target of 40 tonnes will not be reached given the subdued prices and low forex retention levels.

The fall of gold export earnings will mean more trouble for the already ailing and fragile Zimbabwe economy as the yellow metal contributes 38 percent of the country’s total exports.

Cumulatively, the country earned US$450,54 million in the first five months of 2019 against last year’s earnings of US$580, 7 million grossed during the same period last year.

Gold was the largest forex earner last year with US$1,6bn but with expected depressed performance forex and liquidity crunch will worsen.

Fidelity Printers and Refiners (FPR) general manager Fradreck   Kunaka told Business Times that small scale miners will start drawing down from the Gold Initiative Development Fund.

“In the first five months of  2019, gold deliveries amounted to 10,8 tonnes from 13,5tonnes  delivered during the same period last year due to crippling  forex, fuel  and power outages,” Kunaka said.

He said inappropriate mining methodologies especially at a time when most mines have deepened beyond 30 metres and inappropriate ore hoisting machinery from the deep mine shafts are also some of the challenges affecting this year’s deliveries.

“On power, the Reserve Bank of Zimbabwe is in partnership with other energy players especially independent power producers  who are setting up solar plants in mines to curb outages.

“Some international renewable energy companies are mounting solar stations to ensure miners have electricity at any giving time, thus power problems will be solved in the next two months,” Kunaka said.

Of the 10,8 tonnes delivered to Fidelity, 6,6 tonnes came from small scale producers and 4,1 tonnes from primary producers.

Kunaka projected an increase in gold deliveries as artisanal and small scale miners will be capacitated under the $150 million Gold Development Initiative Fund.

The drawdown of the fund will assist miners in acquiring the appropriate mining equipment to enhance their gold production thus increase deliveries to FPR.

However, Gold Miners Association of Zimbabwe chief executive Irvine Chinyeze said monetary authorities should move with speed to review gold retention levels to above 70 percent as part of efforts to improve deliveries.

“As long as RBZ sticks with 55percent forex retention levels, gold deliveries will not improve any time soon as there are some areas where miners are getting better returns than Fidelity prices. Since the announcement of the 55 percent forex threshold in February this year the situation hasn’t changed and it’s getting worse by the day,” Chinyeze said.

“Last year, we celebrated that we had a record breaking season reaching 33,3 tonnes of gold, little did we know that South Africa received over 40 tonnes of smuggled gold from Zimbabwe.

“That happened when we were at 70 percent forex retention threshold; imagine what would happen when we reduce it to 55 percent.

“By that simple analysis over 50 tonnes of the yellow metal may be smuggled to South Africa with our deliveries likely to be less than 30 tonnes.

“If we managed to earn US$1,6bn from 33,3 tonnes  of gold, the country might have lost over US$2bn worth of  export earnings.”

 Experts believe that if government pays the miners in line with the international gold prices, the 100 tonnes mark will be reached by 2020.

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