Govt cuts royalties for gold miners

THE government has reduced royalties payable by artisanal and small-scale gold miners from two percentage points to one percentage point for 500 grammes of the precious yellow metal per month.

This comes as the government is on a concerted drive to encourage gold deliveries to Fidelity Printers and Refiners (FPR), the sole official gold buyer in the country.

In a recent notice in the Government Gazette, the government announced the reduction of royalties, duty and fees for the precious yellow metal payable by small scale gold miners backdated to February 1.

"It is hereby notified that the minister of Finance and Economic Development has amended, by the repeal of paragraph 1 of the Schedule to Chapter VII of, the Finance Act.

"Gold produced by small scale miners 1 percent (for the first 0,5kgs delivered to a holder of a gold dealing licence in a calendar month)

"One percent (if the gold is delivered by a holder of a gold buying agency permit to a holder of a gold dealing licence in a calendar month)

"Gold produced by small scale gold miners two percent (if the gold delivered to a holder of a gold dealing licence in a calendar month exceeds 0.5kgs)."

Previously, royalties for gold that exceeded 0,5 kilogrammes was fixed at three percentage points.

Zimbabwe exports its gold to the world market indirectly through Rand Refining in South Africa.

The country is currently unable to sell gold directly to the international market because it lost its membership of the London Bullion Market Association (LBMA) in 2008 after failing to meet the minimum production of 10 tonnes per annum to maintain membership.

LBMA is the largest over-the-counter gold and silver wholesale market in the world where investment banks, brokers, dealers, Exchange Traded Funds (ETFs), jewellery companies, mining companies, refiners, and central banks (in the case of gold), interact and trade with each other.

Reached for comment, Zimbabwe Miners Federation chief executive Wellington Takavarasha welcomed the royalties cut but was quick to point out that more still needed to be done.

"Basically there is no change here. The gold sector needs more changes in order for Fidelity Printers and Refiners to get more deliveries. We need to fix the issue of prices and payments."

Last year, total gold deliveries to Fidelity Printers and Refiners fell to 19,05 tonnes from 27,66 tonnes in 2019. Small-scale producers sold only 9,35 tonnes last year compared with 17,48 tonnes in 2019.

The government says gold worth at least $1,2 billion is illegally exported every year.