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Depressed gold prices force miners to stockpile

By Business Reporter – Monday 4 May 2020

HARARE (Mining Index) – UNFAVOURABLE gold prices being offered by Fidelity Printers and Refiners (FPR), market disruptions due to the current COVID-19 and price distortions have left some Artisanal and Small-scale miners opting to stockpile instead of selling the yellow metal at unfavourable prices.

Due to price distortions and FPR policies, ASM miners are often forced to sell their gold on the black market which fetches a higher price than Fidelity, promoting arbitrage, corruption and illicit financial flows in the gold sector.

Before lockdown, miners were selling gold at US$50 per gram to FPR.

Some ASM say poor prices due to COVID-19 have left them with no option but to stockpile.

“There are poor prices due to COVOD-19.  It is not really viable to continue operations. For now, it is better to stockpile than to stop operations outright. When prices pick, we will have stock to sell,” said a small-scale gold miner based in Shamva.

“The impact of COVID-19 has been felt in the ASM sector through uneven, unstable and fluctuating low prices being offered by gold buyers. As on the 6th of April 2020, miners who sold gold to FPR in Harare got US$47 per gram, although the FPR price would be subjected to the 55% in US$ and 45% in RTGS policy,”

“This means effectively FPR will be buying at more or less than US$24 per gram. On the other hand, black market buyers were buying at US$39 per gram in Harare, and US$36 per gram in Chinhoyi,”

“All these, prices are lower than US$50 which was being offered before COVID-19 disrupted the supply chain,” revealed a research by the Zimbabwe Environmental Lawyers Association (ZELA) in the second edition of their situational report on Mining Sector and Communities.

FRP General Manager Fradreck Kunaka said Fidelity still offers a competitive gold price benchmarked on the London Bullion Market Association (LBMA) international prices which are on an upward trend.

“We encourage miners to exploit the surge in gold prices internationally by producing more and selling to FPR than stockpile as they will likely lose out when they ultimately dispose the stockpiled gold after the international lockdown,” said Kunaka.

According to Fidelity, gold deliveries by the ASM sector for the month of March increased to 1.061.66 tonnes up from 696.39kgs in February. In January 2020, the ASM sector delivered 1813.63 tonnes.

“We are encouraging all gold miners to sell their gold through the formal channels and detest from going to the parallel market. This will go a long way in generating foreign currency for the nation which will be used for purchasing of medicines for hospitals, buying fuel for the country, importation of chemicals to purify water and chemicals used in mining and other national beneficiation projects,”

“However, if miners opt to sell gold to the parallel market, valuable foreign currency is lost, hence the failure to generate any forex for developing the country. The end result will lead to the crippling of the economy and suffering of the entire nation as critical requirements will not be met,” said Mr. Kunaka. ENDS//

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