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Gold

Business Reporter

GOVERNMENT has secured a $20 million gold development initiative facility for small-scale miners.The initiative, which is expected to boost production, also entails the formalisation process of small-scale gold producers in line with responsible gold mining standards.

Presenting the Mid-Term Monetary Policy Statement yesterday, Reserve Bank of Zimbabwe governor Dr John Mangudya said the initiative will be complemented by policy measures that are in sync with enhancing production.

“The RBZ has secured $20 million for Fidelity Printers to support small-scale and artisanal mining operations in order to increase gold production in the country.

“Zimbabwe’s gold reserves are clearly under-exploited,” said Dr Mangudya.

The country has an estimated underground gold reserve of around 13 million tonnes which provides scope for tapping into the rich resource to liquefy the economy.

Between 1980 and August this year, the country has extracted only 586 tonnes of gold. From 1980 to date, gold production reached its peak in 1999 at 30,2 tonnes and recorded its lowest in 2008 where production volumes were three tonnes.

In the six months to June, gold deliveries to Fidelity Printers and Refiners increased 18 percent to 9,6 tonnes compared to 8,1 tonnes during the same period in 2015.

Annual production for the yellow metal is projected to reach 24 tonnes in 2016.

Official figures from the RBZ show that inclusive of gold processed from Platinum Group of Metals which reached 1,1 tonnes between January and June 2016, total gold production for the period amounted to 10,7 tonnes.

“In this regard, the half year delivery of 10,7 tonnes indicates that the targeted 24 tonnes is achievable as more gold is usually produced during the second half of the year,” said Dr Mangudya.

He added the gold development initiative will be supported by other measures to enhance production such as the reduction of licence fee for explosives.

The number of registered small-scale producers reduced from 5 000 to 300 following an increase in the licence fee from $100 to $2 000.

In addition to that, Dr Mangudya also highlighted the need to reduce milling fees from the current $8 000 to attract more millers.

This is on the basis that the number of millers sharply declined from 485 to 51 after milling fees was hiked from $2 000 to $8 000.

“The challenge is that there are many millers who cannot afford to pay the required fee of $8 000 but are still operating and selling their gold on the black market and or smuggling gold out of the country,” he said.

Gold production in the first half of the year improved on the back of firming international gold prices from an average $1 181,21 per ounce in the first quarter to about $1 259,35 per ounce during the second quarter of the year.

In addition to that, there has been stability in power supply in the second of the year as well as the reduction in royalties.

Government reduced royalties from 5 percent to 3 percent on incremental output with a cap of 5 percent for large-scale primary producers and from 3 percent to 1 percent for small-scale and artisanal miners.