adminHarare Bureau
ZIMBABWE’S gold output marginally fell 2 percent last year after Government banned all mining activities along river banks in a bid to halt environmental degradation.Gold output declined to 12,66 tonnes from about 14 tonnes produced a year earlier, figures obtained from the Finance and Economic Development Ministry show.
Small scale miners, who produce about 60 percent of the country’s gold production, were mostly involved in gold mining along river beds.
In October last year, the government directed that all mining activities along the river beds be stopped following realisation that the activities were affecting the communities downstream.
Some big producers also cut production following the decline in global prices last year. Global gold prices fell 28 percent last year, notching up its biggest annual decline in 32 years as prospects for global economic recovery prompted investors to switch to riskier assets.
Gold prices reached all-time high of US$1, 920.30 an ounce in September 2011 but ended at US$1, 201.13 in December last year.
Zimbabwe targets to become one of the top five gold producing countries in Africa within the next three years.
“This was expected especially when Government issued a directive to halt mining activities along river beds. Production levels at big mining companies could have also been affected after by the falling gold prices,” said a Harare based commodity analyst.
DTZ-OZGEO Ltd, a Manicaland based gold company, said it lost about US$1 million in potential revenue after the ban. It was producing between 20-30kg gold per month.
The ban also affected eleven small scale miners who were mining along Mazowe river. Finance and Economic Development Minister Patrick Chinamasa said government would implement various strategies to boost gold output, particularly from small scale miners.
Meanwhile Zimbabwe is now eligible to apply for readmission to the London Bullion Marketers Association. Presenting the 2014 Monetary Policy Statement yesterday, acting governor Dr Charity Dhliwayo said. Fidelity Printers and Refinery would apply for accreditation to the LBMA once they refine gold in excess of 10 tonnes per annum.
Fidelity Printers and Refinery, a State-owned gold refiner, resumed operations in December after a major facelift. The company, a subsidiary of the central bank ceased operations in 2007 after gold output hit a record low of three tonnes in eight years.
“Notably, the framework would pave way for the country to directly export refined gold to the international market, build gold reserve buffers as well as resuscitate the domestic jewellery industry,” she said.
Prior to 2006, gold produced by both small scale and large scale miners exceeded 15 tonnes. During this time, Fidelity was the sole buyer and refiner of gold and an accredited member of the LBMA.
This was largely so, as the gold output realised by the country, exceeded 10 tonnes annual threshold required to maintain membership with LBMA.
Under this arrangement, gold produced and refined in the country was directly exported at the international gold prices obtaining at the LBMA, without any middlemen or intermediary.
Before Fidelity resumed operations, Zimbabwe has been sending its bullion for refinery and marketing to Rand Refinery of South Africa.
Dr Dhliwayo said Fidelity was working on modalities of entering into hedging arrangements which would ensure that it buys gold at favourable prices even during times when the price of gold was declining. To ensure access to the market by gold producers, including artisanal miners, Fidelity was in the process of setting up more buying points.
Additionally, the Reserve Bank will also issue detailed operational modalities on how Fidelity will execute its role as the sole buyer and exporter of gold,” said Dr Dhliwayo.
“Small scale producers will immensely benefit from being paid the ruling international gold price which is transparent. These new measures…neatly dovetail into value addition initiatives as encapsulated in ZimAsset,” said Dr Dhliwayo.
Online Reporter