Small scale miners have accused Fidelity Printers & Refiners of manipulating gold prices by paying a fixed US$45,000 per kg below those prevailing on the world markets amid fears this will strengthen smuggling cartels.
Gold fetches over US$50,000 per kg on the world markets.
The development comes at a time when the gold deliveries are down
14% to 9.19 tonnes in the first five months of the year from 10.78 tonnes
during the same period last year.
Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze told Business Times that there is still a long way to go before sanity prevails as there are various inconsistencies in the mining policies despite the central bank reviewing the forex retention threshold for the sector.
“We commend the central bank for reviewing the forex retention threshold but we remained subdued in the yellow metal sector as Fidelity is buying gold at US$45,000 per kg which is way below world prices which is around US$50, 000,” he said.
“Why control gold prices when they are sold at a world market where
the market determines the price, leakages will continue to be there if
the sole buyer continues with this monopoly?”
Fidelity Printers & Refiners general manager Fradreck Kunaka said the US$45 000 per kg was a starting point as it will be reviewed according to events on the world market.
“We have pegged the gold price at US$45 000 per kg to stabilise the sector as there were a lot of uncertainties in the market. We will certainly review to reach the world market prices after firstly bringing stability. We have not said that is the end but it was a starting point,” Kunaka said.
The yellow metal is now the highest forex earner and contributes 38% of the country’s total earnings and more than 60% to the mining sector which is the highest forex earning sector in the country.
In January export earnings were US$98m in January 2020 from US$70.4m, while in February export earnings were US$56.1m from US$77.8m.
In March 2020, yellow metal export receipts were US$71.9m from US$88m in March last year and during April 2020 gold exports were down to US$63.4m from US$76.4m.
While in May 2020, exports were up to US$120m from US$85.8m last year.
Cumulative gold deliveries fell 16% to 27.6 tonnes in 2019 from 33.2 tonnes in 2018 due to suspected smuggling and hostile mining policies.
Last year gold export receipts, slumped 28 percent to US$946m in 2019 from US$1,33bn in 2018, leaving the country with no alternatives for foreign currency as the second highest forex earner tobacco also tumbled 7% to US$846.7m from US$907.8m due to prolonged droughts and unfavourable payment policies.
Experts said the underperforming of the small scale was due to
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 with US$4bn.
The central bank recently reviewed foreign retention to 70% from 55%
to woo miners to sell gold to the formal sector.
The move has resulted in the improvement of gold deliveries to above 2 tonnes in May from 1.46 tonnes in April.
Chinyeze said machete-wielding gangs have continued on sporadic
raids in the gold-rich areas and some small scale miners have since stopped
He said forex, fuel and electricity challenges have not deserted the sector as they remain hindrances to reach desirable output levels adding that Covid-19 has restricted movement of small scale miners.
The gold sector has been faced with bottlenecks which have fuelled
smuggling amid claims by Finance minister Mthuli Ncube that over
34 tonnes of the yellow metal were allegedly smuggled to South Africa.
Zimbabwe’s gold export earnings soared 3% to reach US$409.7m
during the first five months of 2020 from US$398.6m earned during
January to May period in 2019 due to review of foreign currency
retention and massive drought which allowed miners to mine in January.
Forex-starved Zimbabwe is banking on gold and tobacco to turn
around a forex starved economy.
Zimbabwe’s gold exports were up in January and May with the rest of months down during February, March, and April due to lockdown
restrictions that limited artisanal miners to operate.
Government has increased fuel allocations to gold miners from last year but the lockdown and the effects of coronavirus have thwarted miners to get useful consumables from China.