40-tonne per annum gold target within reach: Govt The Government is implementing a cocktail of measures to boost gold production and many investors have been lured into the sector. (File photo)

Business Reporter

The Government says it will continue implementing a cocktail of measures to boost gold production to achieve the 40-tonne target stakeholders in the sector set in 2019.

Gold is Zimbabwe’s major foreign currency earner whose output last year according to the country’s exclusive buyer of the yellow metal, Fidelity Gold Refinery (FGR), dropped by 14,7 percent to 30,1 tonnes compared to a record high of 35,3 tonnes in 2022.

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Since 2019, the country is yet to achieve the projected 40 tonnes largely weighed down by erratic power supply and smuggling of the mineral to countries such as South Africa and the United Arab Emirates among others.

In a production update for last year released last week, FGR indicated that of the 30,1 tonnes delivered, small-scale miners who conventionally produce the bulk of the gold, again in 2023 sustained the momentum producing 18,7 tonnes.

On account that the gold sub-sector is the anchor of the mining industry, which is Zimbabwe’s major economic mainstay, the Second Republic under President Mnangagwa, has of late been putting in place a host of initiatives to curb leakages and boost deliveries.

Such initiatives include gold mobilisation exercise, the setting up of gold service centres across the country and adopting the Responsible Mining Audit Initiative.

As a way to mitigate the challenges, the Government set aside US$5 million towards capacitating small-scale miners and another US$5 million that was channelled into the establishment of five gold service centres.

A gold service centre is a one-stop shop that offers technical services to miners, access to milling, access to capital and a ready market for the commodity for small-scale miners.

The gold service centre envisages a holistic approach to service provision in terms of technical support, transport, milling, on-site technical guidance to the miners, laboratory services as well as buying the yellow metal extracted by the producers.

The Government also launched the Responsible Mining Audit Initiative through which the Government will increase oversight over all mining activities in the country and will not condone malpractices.

Mines and Mining Development Minister, Cde Zhemu Soda, recently said the Government would continue to implement measures aimed at bolstering production of the yellow metal in the country.

“Gold mobilisation exercise continues to be one of the initiatives to spearhead the growth of the gold mining sub-sector and its main purpose is to boost gold deliveries to FGR and also minimise leakages.

“The exercise is an audit to account for all stages of the gold production process in order to ensure transparency and accountability, thus decreasing illicit gold mining activities,” he said.

Minister Soda attributed decreased gold output to poor mechanisation in the artisanal and small-scale mining sector and lack of geological reports to access the resources within mining locations.

“Access to capital is a major challenge to most artisanal and small-scale miners. This is because most small-scale miners have limited assets to use as collateral.

“As a way to mitigate the challenges, the Government set aside US$5 million towards capacitation of small-scale miners and another US$5 million into the setting up of five gold service centres,” he said.

Minister Soda said one of the requirements of the Mines and Minerals Act is that mines should employ a mine manager who is a qualified engineer.

This, he said, is on account that most of the artisanal and small-scale miners do not have the technical skills to engage in safe mining methods.

Meanwhile, Gold Miners Association of Zimbabwe chief executive officer, Mr Irvin Chinyenze, recently said the plummeting in gold output was a result of a number of issues including the election which saw production becoming limited during the campaign period.

“One of the chief factors leading to that sharp decrease in gold output last year is largely to do with the elections. “Remember last year we had elections and generally business somewhat goes down during the election season whether it’s because people are involved directly in terms of campaigning or there is uncertainty that comes with the elections as people will not be certain of the post-election environment.

“I wouldn’t really comment authoritatively on why that happens, but I know for a fact that if you review our election years, you realise that output in the mining industry always goes down by some percentage,” he said.

On the other hand, Mr Chinyenze said the issue of capitalisation remains in the spotlight in the mining industry.

“Mining is capital intensive that’s why you see some fly by night investors come in and disappear within two or three months of having invested into the sector.

“Its capital intensive when you want to do it properly; to that end we have got very little by way of lending institutions that have favourable terms and obviously when we say ‘favourable’, we are talking of interest rates.

“Our economy generally when we look at interest rates, they are very high so as miners we don’t have enough room within which we will be able to borrow,” said Mr Chinyenze.

The issue of collateral which is within the terms and conditions of the Banking Act, among other statutory requirements, was also limiting the small-scale miners to borrow as they cannot declare their mines as collateral.

Economic commentator, Mr George Nhepera, said the bulk of the mining firms, mainly small-scale miners have conventionally trailed behind in setting up modern mining technologies with capacity to bolster their production while providing relief in cost cutting.

“As part of the solution, we need a coordinated effort between the Government and mining companies to ensure we improve on our investment climate, especially in getting sanctions removed, which are hindering access to cheaper sources of finance from the international capital markets.

“Our domestic financial markets alone cannot fully support the mining sectors, especially when our local currency is yet to achieve a ‘real price discovery level’ that is acceptable to all stakeholders in the country,” he said.

Mr Nhepera said another innovative proposal to be considered in the short to medium-term is to establish a “mining bank” similar to what has happened in the agriculture sector.

“In my view, if mining is part of our growth strategy, then we need a well-structured mining bank with capacity to issue both loans and bonds on the international market for onward support of the mining sector.

“I am sure our regulators, the Reserve Bank of Zimbabwe will find it good in the public interest to issue such a licence to any interested investor to set up such a mining bank in partnership with the Government,” he said.

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