The Sunday News
BOUYED by the continuous increase of gold deliveries at Fidelity Printers and Refiners, the Government is considering ways of resuming trading the yellow metal on an international gold exchange market from which the country can derive comparative advantage to turnaround its mining sector and the economy as a whole.
Mines and Mining Development Minister Mr Walter Chidhakwa said the ministry was satisfied with the increase in gold deliveries at Fidelity Printers and Refiners further stating that measures to ensure the growth of the sector were being put in place.
He said this in an interview with Sunday Business on Wednesday on the sidelines of the Mine Entra exhibition at the Zimbabwe International Trade Fair exhibition centre.
“We are happy that gold particularly from the small-scale miners has been on the upward trend and that is a result of the work carried out by the Gold Mobilisation Committee.
“The team actually goes out to look at the milling companies to see whether they are remitting all the gold that has been milled at their facilities to Fidelity Printers,” Mr Chidhakwa said.
The Gold Mobilisation Committee consists of the parent ministry and the Ministries of Finance and Home Affairs as well as the Reserve Bank of Zimbabwe.
“We don’t think we now enjoy the full compliance, we have done something but we still feel that we have improprieties within the system and we have now fine-tuned our system.
“We have provided more resources to them (Gold Mobilisation Committee). We are buying new cars for them and strengthening the team so that it is able much more regularly to go out there,” Cde Chidhakwa said.
He said companies, which continue to sell their gold informally, risk being shut down.
“I want to give a warning to those companies that continue to sell their gold outside the system that the system will catch up with them and when it does we will not hesitate to close them down,” Mr Chidhakwa.
Gold deliveries from small-scale miners to the Reserve Bank of Zimbabwe subsidiary, Fidelity Printers and Refiners, went up by 100 percent in the first quarter of the year.
Cumulative national deliveries of the yellow metal to Fidelity Printers and Refiners were 5,2 tonnes as at the end of April 2015.
Small-scale miners say they were confident the 20 tonne mark in gold production will be reached by year end following Fidelity Printers and Refiners’ scrapping of the five gramme minimum acceptance for the mineral.
Mr Chidhakwa said his ministry in consultation with the Ministry of Finance and Economic Development were exploring ways of ensuring that the country trades its gold on another lucrative international gold exchange market than to solely rely on seeking re-admittance into the London Bullion Marketers Association (LBMA).
Before 2006, gold produced by both small-scale and large-scale miners exceeded 15 tonnes.
During the time, Fidelity Printers and Refiners was the sole buyer and refiner of gold and an accredited member of the LBMA.
This was largely so, as the gold output realised by the country exceeded the 10-tonne annual threshold required to maintain membership with the London Bullion Metal Exchange (LBME).
Under this arrangement, gold produced and refined in the country was directly exported at the international gold prices obtaining at the LBMA, without any middlemen or intermediary.
This, notwithstanding gold output declined to levels below 10 tonnes in 2007, on the back of the general contraction in economic activity.
As such, Zimbabwe could not maintain its position as a member of the LBMA, therefore the country has been exporting gold through South Africa for refining resulting in loss of revenue.
“The issue of whether we will go back to the LBME is a matter of choice because the LBME is not the only gold exchange. We can look at other exchanges. What we are looking at is a gold exchange that enables us not just to market gold but enables us to use that track record to borrow money internationally and if the LBME offers us those opportunities I am sure the Ministry of Finance and the RBZ will be looking at that,” Mr Chidhakwa said.
There are more than 40 gold markets around the world, however, the four major important international gold exchange markets are LBME, America Gold Market, Zurich Gold Market and Hong Kong Gold Market though LBME market prices have a greater influence on the world gold market price.
Chamber of Mines president, Mr Toendepi Muganyi said through trading its gold on an international exchange market, the country was likely to get real value from its mineral.
“It gives the Zimbabwean government the liberty to market its gold at any competitive market and maximise benefits from its minerals,” Mr Muganyi.
Zimbabwe Miners Federation chief executive officer Mr Wellington Takavarasha said the country tends to benefit from selling its gold direct to an international exchange market than to rely on a third party.
“If we start trading on an international exchange market that will mean we will be making direct sales. We will no longer be relying on a third party like what we are doing with the Rand Refiners. Through a direct linkage we can get morning and moon prices of which we are disadvantaged from under the existing arrangement,” Mr Takavarasha said.
