By Business Reporter – Monday 1 June 2020
LOCAL (Mining Index) – THE new gold trading framework announced on Tuesday 26 May 2020 by Fidelity Printers and Refiners (FPR) has been met with mixed feelings by gold miners across the country.
The Zimbabwe Environmental Lawyers Association (ZELA) together with the Zimbabwe Miners Federation (ZMF) tabled various recommendations to Fidelity for consideration.
Below are proposals made by ZELA.
- FPR must align the price for gold deliveries from artisanal and small-scale gold miners (ASGM) with international market to promote transparency and responsiveness of its gold price. Instead of coming out with a flat fee of US$45 per gram of gold, FPR must offer prices aligned to the international market as demanded by ZMF.
In a press statement last week, ZMF president Henrietta Rushwaya commented;
ZMF is of the view that in that situation, it will not be practically possible for FPR to continue paying the fixed US$45/ gram (which will be technically a price support scheme) given the current liquidity constraints in the economy.
ZMF believes in a gold trading framework that provides a win-win situation between FPR and the gold miner which minimises or eradicates the discrepancy between the world price of gold and local price of gold. This framework curtails side marketing and gold leakages while at the same time promoting delivery of gold to FPR.
1. A ratio framework as is the case for large scale producers is recommended as it enables scientific tracking of mineral prices. We also propose the fair compensation of any surrendered portion in line with market developments in order to converge the world and local price of gold to minimise side marketing and gold leakages; or
2. Full compensation in US dollars in line with prevailing world gold price.
- FPR must not only care about the golden eggs but the goose that lays them too. Considering the vulnerabilities of ASGM in COVID-19 times, FPR must push for ring-fencing of a portion of royalties for investment in COVID-19 prevention mechanism in ASGM – disinfection of hot spots, provision of hand sanitizers and masks.
- Arbitrage opportunities must be removed by ensuring that the gold payment arrangements for ASGM and Large-Scale Mining (LSM) are not differentiated except that FPR must continue paying ASGM in cash and LSM through bank transfers.
- A comprehensive reform package is needed to remove oxygen from the illicit gold trade by expanding focus to include legal and financial support to formalise ASGM. Therefore, reform of the Mines and Mines and Mineral Act must carter for ASGM and undue delays to this reform process must be avoided.
- FPR must have established clear milestones for re-joining the LBMA to ensure the country benefits from refining and export of gold directly to the international market as was the case before 2007.
- FPR must seize the opportunity to align its gold trading practice in line with the OECD’s Due Diligence Guidelines on Responsible Mineral Supply Chains. ENDS// miningindex.co.zw
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