The Sunday News
Dumisani Nsingo, Senior Business Reporter
ARTISANAL and small-scale miners’ representative body, Zimbabwe Miners Federation (ZMF) says there is a need for Fidelity Printers and Refiners (FPR) to consider paying miners for gold deliveries in tandem with prevailing international prices so as to avert the side marketing of the yellow metal.
In a statement ZMF president Ms Henrietta Rushwaya said FPR’s recently reviewed gold trading framework was a welcome development but hinted that the payment of a flat fee of US$45 per gramme for gold delivered by small-scale gold buying agents and artisanal miners was not prudent.
“While the review is a welcome development, the fixed price of US$45/ gram was announced at a time the world price of gold was at around US$54.8 per gram, representing almost 80 percent of the world price. With the world price of gold expected to continue bullish and further increase on the back of global economic risks arising from the Covid-19 pandemic, which promotes the attractiveness of gold as a safe haven, the price paid to local small-scale miners will continue to shrink as a percentage of the world price,” she said.
Ms Rushwaya, further stated that the latest payment was likely to culminate in gold leakages.
“The unwanted consequences of the above pricing distortion are widespread side marketing and leakages as small-scale miners seek better margins from unregistered buyers offering attractive prices,” she said.
Ms Rushwaya also questioned the practicality of the new trading framework in the event that the international gold price was to fall.
“The sustainability of such a trading framework is also questionable when the price of gold is coming down, for example to prices lower than the US$45 per gram. ZMF is of the view that in that situation, it will not be practically possible for FPR to continue paying the fixed US$45 per gram (which will be technically a price support scheme) given the current liquidity constraints in the economy,” she said.
Ms Rushwaya said there was a need for FPR to come up with trading framework, which suits both parties.
“ZMF believes in a gold trading framework that provides a win-win situation between FPR and the gold miner which minimises or eradicates the discrepancy between the world price of gold and local price of gold.
“This framework curtails side marketing and gold leakages while at the same time promoting delivery of gold to FPR,” she said.