Zimbabwe is missing out on gold's rally

HARARE - Gold might have rallied to a record high above US$2 070 this year, but policy missteps by the Zimbabwean authorities saw the country missing out on the uplift.

Zimbabwe, which has an ambitious plan to grow the mining sector's annual earnings to US$12 billion by 2023, has a target of a US$4 billion contribution for gold.

The target would mean improving on its 2018 record gold earnings of US$1.3 billion, achieved from deliveries amounting to 33.2 tons.

Such plans are, however, under serious threat amid the government's failure to pay miners.  Zimbabwe's sole gold buyer, Fidelity Printers and Refiners (Fidelity), which is owned by the Reserve Bank of Zimbabwe has, since 2018's record output, experienced a slump in both gold deliveries and earnings. In 2019, the country earned US$946 million from the delivery of 27.6 tons of bullion.

The downturn in output has continued this year, notwithstanding that gold mining was declared an essential service during the Covid-19 lockdown period.

According to figures released this week by Fidelity, gold deliveries for the nine months to September slumped to 14.7 tons from 20.8 produced for the same period in 2019.

Deliveries for the three months to September were the year's lowest quarterly outturn down 17.4 percent previous quarter.

The month of September outturn paints a gloomy picture after official deliveries plunged 50 percent to 1.4 tons from 2.8 prior year comparative. Last month, Home Affairs Minister Kazembe Kazembe said Zimbabwe was losing at least $100 million worth of gold every month due to smuggling.

Finance Minister Mthuli Ncube has reiterated that "smuggling remains a challenge.” Critics, however, have blamed the fact that payments being made in the unstable and shunned local Zimbabwe dollar. – FIN24. from the