Martin Kadzere : Senior Business Reporter
GOVERNMENT is working with China to finalise the guarantee needed for the $100 million loan meant for the small scale gold sector, Deputy Minister of Mines and Mining Development Fred Moyo has said. “It has been very slow,” said Mr Moyo. “Government is guaranteeing so many transactions as such it has been difficult to come up with another option as we are not easily bankable.”
China has however agreed to release equipment worth $5 million, which is expected by the end of May.
“While we are working on guarantees for the bigger loan amount, China has agreed to start with a small amount and we hope this will give them confidence.”
In 2014, Government, through the Zimbabwe Mining Development Corporation, entered into a $100 million facility agreement with Xuzhou Construction Machinery Group of China for provision of small scale mining equipment on credit in line with the ZimAsset thrust.
While the loan facility is expected to mostly benefit small scale miners in gold, chrome, tantalite, large scale gold miners are also expected to benefit.
With respect to small scale gold miners, loan recoveries will be made by Fidelity Printers and Refiners through CBZ Bank Limited, which will purchase all the gold from small scale miners.
Zimbabwe is targeting to produce 24 tonnes of gold this year, after producing about 18,6 tonnes last year, earning the country $692 million in export earnings.
The expansion in gold output was underpinned by the increased contribution of the small scale sector from an average of 25 percent realised over the past five years to about 40 percent in 2015.
Increase gold output by small scale miners largely benefited from concerted efforts in monitoring of the sector by the Gold Mobilisation Committee comprising officials from the Ministry of Mines and Mining Development, the Zimbabwe Republic Police’s Border Patrol Unit and the Reserve Bank of Zimbabwe.
The good performance by the small scale sector also reflects that sector’s positive response to the decrease in royalty fees effected by Government in September last year.
The royalty on gold produced by primary and small scale producers was reduced from 7 percent to 5 percent and 7 percent to 3 percent, respectively, in response to declining gold prices in October 2014.
The royalty rate for small scale producers was further reviewed downwards from 3 percent to 1 percent in September 2015 to curb leakages.
Last year, the Reserve Bank of Zimbabwe availed $25 million to support gold mining companies. The bank has also engaged supplies of mining equipment to help small scale miners.