Zimbabwe gold receipts plunge 35%

Zimbabwe's gold export receipts have plunged 35% to US$78.4m in May from US$120m achieved in the prior comparative period as the yellow metal deliveries to the country's sole buyer and marketer, Fidelity Printers and Refiners dropped.

While receipts in January this year were lower than of the prior comparative period, export receipts from February to April 2021 were higher than the same period last year.

But the continuous fall in gold deliveries has been attributed to the plunge in May.

Commenting on the plunge, the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told Business Times that subdued gold deliveries have culminated into a decrease in export receipts.

"The country made total gold shipments of US$78.4m in May 2021 from US$120.1m earned during the same period last year.

This is the first time since February this year that the country's gold export earnings have plummeted on a month on month comparison basis due to the subdued deliveries," Mangudya said.

Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year on subdued deliveries due to Covid-19 effects, heavy rains that the country has experienced in January and the failure to remove costs on small scale gold miners.

 In February  this year the country shipped out gold worth US$66.1m compared to gold shipments  worth US$56.1m while in March 2021 gold export receipts  reached US$81.2m  compared to  US$71.9m against the  same month in 2020.

Overall, gold export earnings decreased 8% to record US$375.8m during the first five months of the year against US$409.68m recorded during the same period last year.

Gold deliveries have bounced back for the first time in March 2021 after recording a positive improvement of 2% to reach 1.80 tonnes from 1.77 tonnes recorded during the same period last year due to the slowing down of the rains in the period under review.

Small scale producers' subdued performances have caused a general decline in gold output in the past year with the primary producers maintaining the same output over the years.

Ironically, small scale miners are getting 100% forex retention threshold while large scale miners are getting 60%.

Recently, Fidelity Printers and Refiners general manager Fradreck Kunaka revealed that the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling and unfavourable mining policies.

Kunaka said the country should totally liberalise the gold sector to combat smuggling and compete at the highest level with foreign gold buyers.

Meanwhile, Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze believed the country could earn more if fundamentals are addressed.

"…Government should come up with friendly policies that encourage the miners to deliver gold to the FPR.

"Unnecessary costs like that of importing cash should be removed and there is a need to bring in more new players to allow competition to improve bullion deliveries," Chinyenze said.

The country's gold output plummeted 31% to record 19.052 tonnes during 2020 from 27.66 tonnes recorded during 2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.

A recent mining report advised that the government should pay gold producers at world prices to woo them into selling the yellow metal through the formal channels.

The report blamed FPR's flawed centralised gold buying scheme and called for the law to bring complicit powerful politicians to book as they are believed to be sponsors of machete gangs' violence in the Midlands Province and in Mazowe District.

Economic analysts said the 100 tonne gold output target by 2023 can be achieved if the authorities put in place friendly mining policies and incentivise miners.