Gold deliveries plunge 61%

Gold deliveries plunged by more than half to 0.99 tonnes in January from 2.54 tonnes recorded in the same month last year weighed down by heavy rains which slowed mining activity, Fidelity Printers and Refiners (FPR) has said.

The plunge in deliveries will be a headache for monetary authorities that look up to the yellow metal to generate foreign currency for the economy.

Fidelity Printers and Refiners general manager, Fradreck Kunaka, told Business Times there was a need to dewater mines to ramp up production.

"The artisanal and small-scale producers were significantly affected by the rains from mid December 2020 to date.

The impact of rains has been brought to the fore by the numerous mine collapse accidents hence production fell significantly," Kunaka said.

Kunaka said large scale producers delivered 0.64 tonnes while small scale miners delivered 0.35 tonnes to FPR last month.

Delays in payments by FPR have exacerbated the situation resulting in miners, especially the small scale miners taking their yellow metal to alternative markets, where payment is done on the spot and in foreign currency.

While FPR pay prices well below the gold market, prices of the yellow metal in the alternative market is lucrative.

Experts, who spoke to Business Times this week, said the government should come up with favourable mining policies which will encourage miners to formally sell their precious mineral to Fidelity.

"……Friendly policies should be crafted and implemented to achieve high figures but surprisingly, the authorities give lower retention levels and pay way below the world market prices.

One wonders if the authorities are really serious about ramping up production and turning around the economy," Gold Miners Association of Zimbabwe CEO, Irvine Chinyenze, told Business Times.

Analysts say the drop in performance of gold production was a worrying development given that Zimbabwe largely depends on earnings from the yellow metal since the country is no longer getting credit lines from international financiers due to its failure to service its debts.

They said there was a need for the government to plug leakages to ensure the country sells its bullion through the formal channels.

The decline in gold figures comes at a time when Zimbabwe's other leading foreign currency earner, tobacco, is also subdued, leaving the country on the edge.

It is understood that Zimbabwe's "all weather lending institution", Afreximbank, is slowly tightening screws on the southern African country.

Analysts have now projected a tough year for Zimbabwe.