HomeBusinessPrimary gold producers under stress - Falgold

Primary gold producers under stress – Falgold

-

FALCON Gold Zimbabwe (Falgold) has warned that big producers will be under stress unless government reviews the high direct and indirect taxes and other charges.

BUSINESS REPORTER

In a statement accompanying the group’s financial results for the half-year-ended March 31 2015, board representative Ian Saunders said the Chamber of Mines had for 18 months engaged government for a review of the direct and indirect taxes.

He said government significant changes to the tax and operating regime for the small-scale miners. This has seen an increase in gold production, he said.

“Unfortunately, to date, government has not reduced the levels of taxes charges and power rates to the large scale gold miners and as a result, the gold mining industry in Zimbabwe remains under significant pressure and production is falling,” he said.

In the first quarter ended March 31, gold output by small-scale miners increased 111% to 1 161kg from 550kg during the same period in 2014.

Saunders said governmenthad made changes in respect of the chrome sector hoping the incentive would be spread to gold producers.

In June, government reduced electricity tariffs for the chrome sector to 6,7 cents per kilowatt hour from 8 cents.

“Should the larger gold mines enjoy similar incentives, initiatives and price models, there could be significant growth in production from the large scale gold mines in Zimbabwe. Regrettably, until this happens or the gold price increases significantly, the larger gold mines will continue to suffer,” Saunder said.

The fall in gold output will be a setback for the sector that had recorded an increase in output since 2009. Output rose to 13,9 tonnes last year from 4 tonnes in 2009.

In the medium term, gold is projected to be the mainstay of the economy. Under the $50 million accelerated gold production initiative, gold output is projected to hit the 30 tonnes mark by 2020 generating revenue of $1,5 billion.

As part of measures to boost output, Fidelity Printers and Refiners will also enter into an agreement with the Zimbabwe Mining Development Corporation for the establishment of a special purpose vehicle to exploit gold under Fidelity’s ZimGold.

The vehicle will focus on harnessing low hanging gold resources with particular emphasis on alluvial and prolific reef deposits supported by bulk open pit mining and on old underperforming assets as a preferred mining method to enhance gold deliveries.

Recent Posts

Stories you will enjoy

Recommended reading