News / National
Cash shortages threaten gold output target
11 Jul 2016 at 02:05hrs | Views
THE cash shortage being experienced in the economy is threatening to scuttle the 24 tonnes gold target that the government set for this year. Latest figures from Fidelity Printers and Refiners, the sole buyer of the country's bullion, indicate that Zimbabwe received 9,6 tonnes of gold for the half year ending 30 June.
The figure is a 15 percent increase from last year's 8,1 tonnes. Despite the increase in deliveries compared to last year, this year's figure falls short of the average six tonnes per quarter needed to achieve the target set by the Government. The cash shortages on the market have impacted negatively on the small scale sector which prefers cash payment.
In cases where Fidelity Printers and Refiners have run out of cash, the small scale miners have been reluctant to deliver their gold, which could have contributed to low deliveries.
To circumvent the cash challenges in the economy Fidelity Printers and Refiners have explored paying for gold deliveries using the South African Rand, a development which has been welcomed by the Zimbabwe Miners Federation (ZMF), a lobby group of small scale miners.
The rand is among the basket of currencies the country adopted since 2009 but has largely been shunned by the market following the firming of the greenback against major currencies.
Fidelity Printers and Refiners head of gold operations, Mr Mehluleli Dube told Business Chronicle that despite endorsement by ZMF, the response to rand payment by miners has so far been poor.
"The response to payments using the South African currency has been low from the small scale miners who are the target of this facility. We are trying our best to ensure that we have the preferred United States Dollars and continue to encourage miners to accept the rand as well as exploring other avenues such as using plastic money so that we pay our miners as and when they deliver gold," said Mr Dube.
"We are working hard to ensure that we achieve higher figures in the second half of the year. I believe we would make headway especially in the small (mining) scale sector." The Government has set a target of 14 tonnes for small scale miners this year from an average seven tonnes of the total 17, 3 tonnes produced last year.
Mr Dube said mechanisms to avoid side marketing of the commodity have been put in place such as the establishment of gold buying centres and the decriminalisation of the trade of the yellow metal aimed at ensuring that artisanal miners also deliver their gold using official channels.
The mining sector has been identified as one of the backbones to stimulate the country's economic recovery as espoused under Zim-Asset. ZMF spokesperson, Mr Dosman Mangisi has implored their members to embrace the new payment regime.
He said three quarters of the $1, 5 million import bill by the mining sector is spent in South Africa hence the usage of the rand will go round other processes such as the exchange rate.
"We welcome this development since miners have been transacting using the rand when they are importing their equipment from South Africa. As you are aware three quarters of the mining import bill is spent in South Africa where most Chinese and European suppliers have set up base," said Mr Mangisi.
"The payment in rand will also come in handy because there is no need for converting the currency where one will lose money through commissions charged." However, small scale miners argue that not all the money realised is for buying equipment hence they prefer to be paid in US$.
Gweru-based small scale, Mr Collet Ncube said by accepting the South African currency as payment, the miners stand to lose when they convert the money to the United States dollars.
"I'm uncomfortable with the payment system because it is the miner who stands to lose in all this because many businesses are not accepting the rand in transacting business and I stand to lose out when converting the money to United States dollars through commission charged by the money changers," he said.
Another miner, Mrs Nokuthula Masuku said the instability of the rand makes it unattractive. She said the rand can only be embraced by small scale miners if businesess start accepting it. According to ZMF the country is losing 500 kilogrammes (kgs) of gold monthly to the black market due the cash shortages.
The figure is a 15 percent increase from last year's 8,1 tonnes. Despite the increase in deliveries compared to last year, this year's figure falls short of the average six tonnes per quarter needed to achieve the target set by the Government. The cash shortages on the market have impacted negatively on the small scale sector which prefers cash payment.
In cases where Fidelity Printers and Refiners have run out of cash, the small scale miners have been reluctant to deliver their gold, which could have contributed to low deliveries.
To circumvent the cash challenges in the economy Fidelity Printers and Refiners have explored paying for gold deliveries using the South African Rand, a development which has been welcomed by the Zimbabwe Miners Federation (ZMF), a lobby group of small scale miners.
The rand is among the basket of currencies the country adopted since 2009 but has largely been shunned by the market following the firming of the greenback against major currencies.
Fidelity Printers and Refiners head of gold operations, Mr Mehluleli Dube told Business Chronicle that despite endorsement by ZMF, the response to rand payment by miners has so far been poor.
"The response to payments using the South African currency has been low from the small scale miners who are the target of this facility. We are trying our best to ensure that we have the preferred United States Dollars and continue to encourage miners to accept the rand as well as exploring other avenues such as using plastic money so that we pay our miners as and when they deliver gold," said Mr Dube.
"We are working hard to ensure that we achieve higher figures in the second half of the year. I believe we would make headway especially in the small (mining) scale sector." The Government has set a target of 14 tonnes for small scale miners this year from an average seven tonnes of the total 17, 3 tonnes produced last year.
Mr Dube said mechanisms to avoid side marketing of the commodity have been put in place such as the establishment of gold buying centres and the decriminalisation of the trade of the yellow metal aimed at ensuring that artisanal miners also deliver their gold using official channels.
The mining sector has been identified as one of the backbones to stimulate the country's economic recovery as espoused under Zim-Asset. ZMF spokesperson, Mr Dosman Mangisi has implored their members to embrace the new payment regime.
He said three quarters of the $1, 5 million import bill by the mining sector is spent in South Africa hence the usage of the rand will go round other processes such as the exchange rate.
"We welcome this development since miners have been transacting using the rand when they are importing their equipment from South Africa. As you are aware three quarters of the mining import bill is spent in South Africa where most Chinese and European suppliers have set up base," said Mr Mangisi.
"The payment in rand will also come in handy because there is no need for converting the currency where one will lose money through commissions charged." However, small scale miners argue that not all the money realised is for buying equipment hence they prefer to be paid in US$.
Gweru-based small scale, Mr Collet Ncube said by accepting the South African currency as payment, the miners stand to lose when they convert the money to the United States dollars.
"I'm uncomfortable with the payment system because it is the miner who stands to lose in all this because many businesses are not accepting the rand in transacting business and I stand to lose out when converting the money to United States dollars through commission charged by the money changers," he said.
Another miner, Mrs Nokuthula Masuku said the instability of the rand makes it unattractive. She said the rand can only be embraced by small scale miners if businesess start accepting it. According to ZMF the country is losing 500 kilogrammes (kgs) of gold monthly to the black market due the cash shortages.
Source - chronicle
