Gold output tumbles 28%


GOLD deliveries to the State-run Fidelity Printers and Refiners (FPR) slowed to 14,76 tonnes during the nine months to September, from 20,64% tonnes delivered to the facility during the same period last year, official data has shown.

Experts blamed the COVID-19-inspired national lockdown for the slowdown.

FPR statistics also showed that large-scale gold mines had overtaken artisanal miners in shipments to the formal gold market after selling 976,66kg of the bullion during the period, compared to 385,47kg from small-scale miners.

Authorities had targeted a 35-tonne gold output this year.

However, with only two months before year end, analysts yesterday said there were little chances miners will ramp up output to achieve this target.

Lack of imported inputs because of the closure of foreign manufacturers and inability by FRP to match prevailing gold prices on the parallel market, are among the factors that will militate against this target, according to experts.

Small-scale gold producers funnel most of their output to the parallel market where it fetches higher prices than those prevailing at FPR.
Economic analysts also said the decline was unavoidable given that during the initial stages of the lockdown announced by government to limit the impact of COVID-19 in March, FPR struggled to pay producers.

“Small-scale and artisanal miners look for alternative parallel market buyers who pay in cash,” economist Victor Bhoroma said.

“Small-scale miners want instant gratification. Any procedures that delay payment will be detrimental to deliveries,” he told NewsDay Business.

Bhoroma said the decline in gold deliveries would have dire implications to foreign currency inflows to the economy as the bullion contributes significantly to exports.

He said without leakages, gold could easily earn the country US$2,5 billion annually.

Investment analyst Enock Rukarwa said COVID-19 only added to a crisis that was already affecting domestic trade.

“COVID-19-induced restrictions might be igniting dents in deliveries emanating from supply chain disruptions and thin accessibility to markets, but factors like payment delays and parallel market premiums cannot be underestimated,” Rukarwa said.

“Gold being the anchor for our export receipts, a bearish sentiment in this sector is disastrous,” he said.

The Reserve Bank of Zimbabwe has reviewed its contentious foreign currency retention threshold for gold to 70% from 55%, to improve shipments to the formal market.

However, deliveries have not responded positively.

The apex bank has also given small-scale gold producers 100% foreign currency retention to plug leakages. The country’s gold export receipts to August declined by 4,9% to US$641,3m, from US$674,4m earned during the comparative period in 2019. Gold and tobacco are the country’s top forex generators, but revenues continue to decline.

In 2019, gold export receipts went down 28% to US$946m from US$1,33bn prior year. Tobacco also dropped by 7% to US$846,7m from US$907,8m in 2018.