Gold production set for rebound

Africa Moyo
GOVERNMENT will target the gold sector as the prices of other key metals like platinum and nickel continue to tumble on international markets.
However, there are concerns that an anticipated electricity tariff increase will scupper efforts to haul in more than the targeted 24 tonnes of gold this year.
Gold is viewed as a lucrative investment avenue even when commodity prices are dropping.
Mines and Mining Development Deputy Minister Engineer Fred Moyo said last week because of gold’s stability, Government would focus on its production.
While minerals such as platinum are capital intensive, gold can be extracted using rudimentary tools.
“One of the most stable minerals is gold . . . Its market is always there so it is a mineral that we can rely on; that is why you will see that with other minerals, Government has not quite set production targets, but for gold, they set the target and since 2009 the output has been rising,” said Eng Moyo.
Zimbabwe’s gold output peaked at 29 tonnes in 1999 before sliding to three tonnes in 2008.
It has since rebounded steadily, with output climbing to 19 tonnes last year.
Small-scale miners, who produced five tonnes of gold last year, have been key to the sector’s revival.
In October 2014, Government downwardly reviewed the royalty rate on gold from primary producers from seven to five percent.
Further interventions were made in the 2016 National Budget when Government reduced the royalty rate of three percent on incremental output of gold “using the previous year’s production as a base year” effective from the beginning of the year.
As part of measures to reduce leakages, Government will visit “mine by mine” around the country to check potential production and follow up on a quarterly basis to ensure accountability.
New projects at Metallon Gold’s Redwing Mine, Vast Resources’ Pickstone Peerless Mine in Chegutu, and RioZim’s Cam and Motor Mine in Kadoma are likely to come on stream and boost output.
Eng Moyo said availability and affordability of power remained a “pressure point”.
The Zimbabwe Electricity Supply Authority is selling power to miners at USc13 per kilowatt hour while most consumers pay USc9,86/kWh.
“If the tariff is reviewed upwards, it is another big challenge. We understand that the power utility has to remain afloat but at the same time we need to keep the mines alive as well, protect employment and try to create some revenue for the fiscus.
“At USc13/kWh for gold, you can’t increase the tariff, it is simply impossible. So I am hoping that Zesa will engage the Chamber of Mines of Zimbabwe to discuss this issue adequately to the extent that it requires inter-ministerial dialogue.
“I am not saying Zesa must not increase the tariff because if they are failing to operate and they keep the tariff where it is, they will fail to supply power. So it becomes necessary for Zesa and miners to critically search for internal opportunities of managing costs before passing the costs.
“There are also discussions to see if the power tariff can be tied to the price of gold such that when the price of gold is doing well, Zesa benefits more and when the price is going down, both parties take the pain so that “they protect each other,” explained Eng Moyo.
Zesa wants to raise tariffs to finance new power generation projects and import more electricity to augment local supplies.