THE Reserve Bank of Zimbabwe (RBZ), through its wholly-owned subsidiary Fidelity Printers and Refiners (FPR), is planning to increase Gold Development Initiative Fund (GDIF) by 566% for small-scale miners to $1 billion from the current $150 million in a bid to capacitate and lure the yellow metal miners to sell their mineral through formal channels.
The development comes at a time when most miners are opting for alternative markets due to an unfavourable pricing system and currency volatility in the country.
Gold deliveries have gone down 15 percent to 8,64tonnes in the first four months of 2019 from 10, 19 tonnes during the same period last year due to crippling foreign currency and power shortages.
The decrease in deliveries was mainly attributed to the reduction of forex retention levels to small scale miners to 55% from 70% thereby creating a room for smuggling the precious mineral to other countries.
FPR general manager Fradreck Kunaka told Business Times the small scale miners need huge chunk of money for retooling to boost gold production.
“For small scale miners to continue dominating in delivering gold to Fidelity, they need to be capacitated with ZWL$1 billion funding for new machinery and state of the art equipment to ramp up production.
“RBZ through Fidelity is working out on a plan to raise around $1 billion funding for small scale miners to improve production. The money will help to buy compressors, generators, fuel and solar plants among other equipment in order to carry out proper mining techniques with safety precautions,” said Kunaka.
He said the $150 million funding was no longer viable given the currency volatility and high exchange rates hence there was an urgent need to increase funding to capacitate miners.
Mining experts believe that gold deliveries have been going down due to unfavourable pricing regime and lower forex retention levels.
At 70% forex retention levels for small scale miners, over 30 tonnes of the yellow metal are believed to have been smuggled out to South Africa, with 55% retention levels more gold is expected to be smuggled out.
Kunaka believes the $1 billion funding will lure small scale miners to sell their precious metal to FPR in a bid to boost country’s total export earnings.
FPR is buoyant of a strong second half performance of reaching 40 tonnes of gold despite crippling forex challenges and power outages.