Reserve Bank of Zimbabwe mulls incentive for small gold producers

Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has said the central bank is looking at recommendations made by small-scale gold miners for an incentive they need to maintain viability of operations.

He told The Herald that the bank received the recommendations at a meeting held with the miners last week.

Dr Mangudya said while the bank could not agree to the miners' request for the local currency component of payments for gold to be made at 1 US dollar to 3.5 RTGS dollars, it was looking at the possibility of an incentive.

Small scale gold producers, including artisenal miners, are now an integral part of the gold production in Zimbabwe, accounting for 65 percent of the 33,2 tonnes the industry delivered last year.

"Regarding small scale gold producers, the miners made submissions to the Reserve Bank at a meeting with officials from the bank on Tuesday," said Dr Mangudya.

"They want the bank to consider an incentive to the gold producers because of prices they are facing in the market where goods are priced at 3.5 to the US dollar.

"We did not yield to their request (for payment at the rate of 3.5 to the US dollar for 35 percent of deliveries ), after they made submissions to the Reserve Bank. But the Reserve Bank will consider providing an incentive so that they can increase gold production."

The Reserve Bank is considering the submissions made by small scale gold producers to ensure they remain viable. This comes after the central bank last week took the decision to create an interbank platform for trade in currencies after floating the US dollar exchange rate against all electronic money, and other currencies in the multi-currency basket.

Currently, the rate is at around 2.5 RTGS dollars for every United States dollar, which is the rate at which the bank settles the local currency component for all gold delivered to it.

The RBZ is the sole buyer of gold in the country through its gold buying unit, Fidelity Printers and Refiners.

The miners have also expressed reservations over the export retention threshold, which Dr Mangudya set at 70 percent from 55 percent when he presented the 2019 monetary policy statement.

Last year, small-scale miners delivered 21,7 tonnes or 66 percent of the 33,3 tonnes that were delivered to Fidelity Printers and Refiners, a unit of the RBZ.

Gold deliveries to Fidelity Printers and Refiners totalled 24 tonnes in 2017, and deliveries for 2018 reflect the success of interventions the central bank has instituted in recent years to boost production.