Gold Sector To Contribute Robustly To The Targeted US$12 Billion Mining Sector Revenue By 2023

  • Sandra Maziwisa

The Reserve Bank of Zimbabwe (RBZ) announced gold delivered to Fidelity Gold Refiners rose 55,5% in 2021 as compared to 2020, but analysts and observers feel the increase means more to the Zimbabwean economy.This will contribute immensely to Mines Minister Winston Chitando’s USD $12 billion economy by next year.

In a statement early this month, RBZ Governor Dr. John Panonetsa Mangudya applauded the country’s small and large-scale gold producers for delivering more gold in 2021 as compared to 2020.

“The Reserve Bank of Zimbabwe wishes to express its appreciation and gratitude to the country’s small and large gold producers for having delivered a total of 29 629,61kg of gold to Fidelity Gold Refinery (FGR) in 2021, a 55,5% increase from the 19 052,65kg delivered in 2020,” the statement read.

Large gold producers delivered 11 159kg to FGR in 2021, while small-scale producers contributed 18 470,61kg.

“The bank also commends the government for the Gild Incentive scheme introduced in May 2021, which has had a significant positive impact on gold deliveries to FGR.

“It is projected that the quantum of the country’s gold exports in 2021 will increase beyond the 29 629,61kg when the gold component in the platinum group metals is eventually included on the tally of gold deliveries to FGR,” Dr Mangudya said.

As such, economists said the 55% increase in gold deliveries to Fidelity Gold Refinery in 2021 at 29,629.61 (62.3% from the small scale artisanal producers and 37.7% from large scale producers) is associated with the measures adopted to rein in smuggling and side marketing, including the introduction of the Gold Incentive Scheme in May 2021, which witnessed robust growth in deliveries to Fidelity Gold Refinery since June 2021.

Harare economist Dr Godfrey Kanyenze, said the measures included a review of the gold trading arrangements where gold producers who deliver gold quantities above their average monthly deliveries were entitled to a retention level of 80% on the incremental portion of the gold delivered, instead of the existing retention levels of 60%.

“Large scale producers who qualify for the 80% retention threshold on the incremental portion were entitled to directly export gold equivalent to the incremental portion to enable them to secure funding in the form of gold loans to enhance their gold production.

“These measures resulted in the deliveries from the small scale artisanal producers returning to a dominant position that is close to the percentage contributions of 2019 (63%) and 2018 (65%),” he said.

Commenting on the significance of this much improved performance Dr Kanyeze said, it was estimated back in 2020 that the country was losing on average US$1,5 billion in potential revenue each year through gold smuggling, dwarfing the US$800 million official Fidelity Gold Refinery export earnings per annum.

He also said plugging these leakages will therefore enable the gold sector to contribute robustly to the achievement of the targeted US$12 billion mining sector revenue by 2023.

Economist Victor Bhoroma added that the impact of these improved deliveries to the economy is on increased export earnings & improvement in our balance of trade.

“It means smuggling may be declining & that its best to ensure Gold producers have a say in the marketing of their commodity just as it should be the case in all our exports,” he said.

Another economist and ‎RBZ Monetary Policy Committee (MPC) member Persistence Gwanyanya said, response to the gold incentives has given small scale miners the zeal to produce more and the timeous payments has reduced smuggling of the precious mineral.

“ The impact of increased deliveries to our country is on increased revenue, local currency stability and job creation is likely to increase,” he said.

The Government intends to establish new gold centers following the sudden increase in output.

In August last year, the cabinet approved proposals for the establishment of over 20 gold centers across the country by mid- 2022.

Accordindingly memoranda of understanding will be signed with four investors who have been identified for the purpose of setting up the gold mines.

The investors will own 100 percent equity in the centers, while those operate joint ventures with the Ministry of Mining Development will fully fund the operation of the centers in return for a 90 percent equity stake.

Some of the gold centers are expected to be established in Makaha, Odzi, Mount Darwin, Shamva, Mazowe and Silobela.

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