Zimbabwe’s gold export receipts were down 17 percent to US$273,5m in the first quarter of the year due to low deliveries attributed to reduced foreign retention threshold.
In the quarter, 6,5 tonnes of the yellow metal was sold. In the same period last year, gold export receipts were US$330 million from the sale of 7,3 tonnes of the yellow metal.
Economic analysts attribute the plunge to the reduction of foreign currency retention threshold for small scale miners to 50 percent from 70 percent last year, smuggling and crippling forex shortages for buying critical raw materials and consumables.
Of the 6,5 tonnes sold, 4,2 tonnes came from small scale producers, meaning that secondary producers still contribute 64 percent of the country’s gold deliveries despite the decrease in forex retention levels.
According to country’s sole gold buying entity, Fidelity Printers and Refineries (FPR), the country will reach 40 tonnes despite a significant decline in deliveries and exports.
“In January 2019, Zimbabwe sold 1770,9 kg at an average price of US$41 530 per kg, this certainly translates to US$73,5 million, in February the country exported 2136,1kg at an average price of US$42 441 per kg, this translates US$90,6m and in March earned US$109,4m after selling 2616,3kg at an average price of US$41 824,8/kg,” FPR said.
This year, monetary authorities project to generate US$4,2bn from minerals exports up from US$3,2bn realised last year.
Of the US$3,2 billion, gold contributed US$1,6 billion and this made the precious metal to be the single highest forex earner ahead of its bitter rival tobacco which earned US$900m.
This is against the background of crippling forex challenges, antiquated mining machinery and lack of advanced technology in the mining sector.
Though the gold sector broke an all-time record of reaching 33,3 tonnes, miners say over 30 tonnes were smuggled to South Africa.
FPR is expecting the sector to bounce back strongly in the second half of the year due to improved resources.
Government believes that the marked plunge, particularly for primary producers, was a result of the discord that existed in the country’s monetary system that had the US dollar pegged at par with the RTGS dollar before the Reserve Bank corrected the anomaly when presenting the 2019 Monetary Policy Statement.
After the MPS, RBZ governor John Mangudya resolved that miners will get 50 percent forex retention and the balance which is paid in RTGS dollar will be exchanged at the 1:3, 5 exchange rate.
This encouraged miners to deliver their mineral to FPR. Government is banking on tobacco and to play a key role in turning around country’s fortunes and improve liquidity in the market.
The country is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the sector to earn US$12bn annually.
Experts believe that if government pays the miners in line with the international gold prices, the 100 tonnes mark will be reached by 2020.
The Ministry of Mines and Mining Development is carrying out gold mobilisation workshops across the country’s eight mining provinces, through the Gold Mobilisation National Task-Force from April 28 to May 11 as part of efforts to curb gold leakages.
The Gold Mobilisation National Task-Force will also conclude visits to gold producing mines to establish mine output in comparison with FPR deliveries.
The visits could probably provide insight into primary gold producers’ delivery decline compared to small-scale miners.