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Gold deliveries up 34%

ZIMBABWE’S gold deliveries have surged 34,1% in the first 10 months of the year to reach 29,5 tonnes as industry restores normalcy from COVID-19 restrictions.

The deliveries, according to latest Fidelity Printers and Refiners (FPR) figures, puts the county just 5,5t shy of the set 35t delivery target in the current year.

On average, deliveries averaged 2,9t a month compared to 1,3t per month over the same period last year.

This comes after the country introduced gold coins to mop-up excess liquidity in the market in a move seen to likely increase local demand for gold.

Furthermore, government offered a sweetener to major gold producers, paying them 80% of production in US dollars once they breach targets.

This compares favourably to the normal scenario where 60% of the deliveries are paid for in foreign currency and the balance in the volatile Zimbabwe dollar.

Deliveries, according to latest gold spot prices, add up to about US$1,6 billion, about 13,3% of government’s ambitious target to achieve a US$12 billion mining economy by 2023.

According to the statistics, primary producers accounted for about 67,8% of deliveries in 2022 at 20t, up from 59% of deliveries, totalling 13t in 2021 as government incentives to the industry bear fruit.

The third quarter of the year had the most deliveries at a total of 9,7t compared to the second quarter, which recorded 8,2t.

The first quarter of the year saw purchases at FPR at a combined 7,7t.

Traditionally, deliveries slow down during the rainy season particularly from small-scale miners, now contributing the bulk of the gold, due to poor equipment.

Despite the growth in volumes, estimates are that a significant chunk of gold is smuggled into neighbouring South Africa, where it is sold for cash upfront as FPR struggled to pay in hard currency on delivery.

A July report by watchdog Centre for Natural Resource Governance (CNRG) showed that illicit financial flows in the artisanal mining sector in Zimbabwe were responsible for leakages of an estimated three tonnes of gold, valued at approximately US$157 million every month.

The sector, CNRG said, has now spread its tentacles from alluvial gold deposits along rivers and riverbeds to large-scale disused mines that are now patronised by politicians and ruling Zanu PF party officials.

Dealers have flooded the market, siphoning gold from production points into neighbouring countries while cash barons pounce on desperate small-scale producers who often struggle to capitalise their operations and provide tools of trade.

Meanwhile, a second gold refinery to be constructed in Bulawayo has been licensed.

The new refinery is owned by Scott Sakupwanya’s Better Brands, which is among the major gold buyers in the country. – (Newsday)

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