HomeBusinessZim gold smugglers shipping over US$1,5bn a year

Zim gold smugglers shipping over US$1,5bn a year

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GOLD worth over US$1,5 billion is smuggled out of Zimbabwe every year, depriving the cash-strapped economy of crucial foreign-exchange revenues, according to research organisation International Crisis Group.

The gold is illegally shipped from the southern African nation’s small-scale mines, often to the bullion-trading hub of Dubai, ICG said in a report Tuesday.
Some of those artisanal mines were overwhelmed by violent gangs that have political connections, it said.

Smuggling is flourishing under a Zimbabwean law that forces miners to sell their precious metal to a unit of the central bank, which pays for the gold 70% in United States dollars.

The balance comes in local currency, which is not only worthless outside the country but is paid at an official rate that’s well below black-market levels.

“Zimbabwe’s centralised gold-buying scheme underpays producers, a practice that encourages smuggling and erodes industrial mining profits, leading companies to close mines,” ICG said.
“Idle industrial mines become targets for intrusion by artisanal miners.”

Payments to small-scale miners were “considerably lower” than the spot price of gold, pushing them to look for more lucrative markets, according to ICG.

The organisation didn’t say how it estimated the value of illegal gold shipments.

Larger gold producers, which were also impacted by payment delays, were pressing the government to scrap the law obliging them to sell to the central bank, according to the Chamber of Mines of Zimbabwe.

Zimbabwe’s mining sector was key to rebooting an economy suffering from acute shortages of local and United States dollars.

Official gold exports fell 23% to less than US$700 million in the first 10 months of this year as output slumped, according to central bank figures.

“As government, we are working to minimise smuggling,” Mines deputy minister Polite Kambamura said.

Home Affairs minister Kazembe Kazembe told the state-owned Chronicle newspaper in September that gold smuggling could amount to at least $100 million a month. Kazembe didn’t respond to calls seeking a comment. —Bloomberg

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