GOLD DELIVERIES PLUNGE 29PC:

GOLD deliveries to Fidelity Printers and Refineries (FPR) for the first half of the year plunged 29 percent to 12,3 tonnes compared to the same period last year on the back of power outages and unreliable supply of diesel for producers.

Large and conventional mining companies power their machines using both electricity and diesel, while small-scale miners mainly use diesel and observers say the increase in power tariffs approved by Government on Thursday last week might be panacea to the power challenges.

This year’s gold deliveries figures, as provided to this publication by FPR, are a far cry from record breaking returns registered last year that saw the state buyer receiving 33,2 tonnes of the yellow metal.

The first six months of 2018 had seen miners delivering 17,273 tonnes.

While FPR were not immediately available for a comment on the cause of plunging deliveries, a source within the buyer’s gold department who interacts with the miners on a regular basis, said the biggest challenge was the unavailability of power.

Government has thus responded with haste and effected a power tariff hike that will see ZESA Holdings charging competitive rates and enabling the power company to mobilise essential resources for energy supply. The power tariff hike also comes in light of business representative groups having called for ZESA to review upwards the cost of power so as to cut on crippling power cuts that are stretching up to 16 hours per day in some instances.

If immediately effected, this could breathe life into Government’s 2019 gold delivery target of 40 tonnes.

Presenting a $10,85 billion Supplementary Budget and 2019 Mid-Term National Budget Review Statement on Thursday, Finance and Economic Development Minister Professor Mthuli Ncube said the power gap can be covered through imports in the short term.

“In the short term, power supply deficit can be met through power imports and hence it is urgent that Government capacitates ZESA to mobilise requisite resources through appropriate and cost recovery tariffs implemented through a differentiated scale,” said Minister Moyo.

“Therefore, Government has approved the following electricity tariff measures for immediate implementation: The electricity tariff for non-exporting businesses be increased from an average of ZWL9,86c/kWh to an average of ZWL45c/kWh (approximately USc5/kWh). The electricity tariff for domestic consumers be increased from an average of ZWL9,86c/kWh to an average of ZWL27c/kWh (approximately USc3/kWh), which is subsidised, ”Minister Ncube said.

“The electricity tariff for agriculture consumers will be increased from an average of ZWL9,86c/kWh to an average of ZWL27c/kWh (approximately USc3/ kWh), which is subsidised; maintain the tariff for ferrochrome smelters and other miners at US$0,067/kWh and US$0,0986/kWh, respectively, and ensure that the resources are ring-fenced in a special account solely for purposes of importing electricity and ZESA be allowed to bill all other exporters and foreign currency earners in foreign currency and ensure that the resources are ring-fenced in a Special Account solely for purposes of importing electricity.

“The responsible ministry and the Zimbabwe Energy Regulatory Authority (ZERA), will give the necessary implementation details,” he said.

A source within FPR’s gold department told this publication that the power gap is the main reason that most producers are pointing at as the cause of decreased output.

“There is the issue of power, which you are aware is affecting the whole country particularly as it relates to industry,”said the FPR official on condition of anonymity as he is not authorised to speak to the press.

“The mining sector has not been spared from load shedding despite most of them paying in hard currency because there is generally a shortage in the economy. This explains why you have seen industry pleading with Government for a hike in electricity tariff with the hope that this will then guarantee supply,” he said.

Addressing a breakfast meeting in Harare on Monday, Zimbabwe National Chamber of Commerce (ZNCC) chairperson Mike Kamungeremu, said the private sector is amenable to paying a cost reflective power tariff of up to the equivalent of US$0,14 per kilowatt-hour.

“Industry is okay with tariff increase even to US$0,14 per kilowatt-hour. We need it because we need constant supply of power. Our expectation is if the tariffs go up we have guaranteed supply of power,”the ZNCC chairperson told a breakfast meeting on Monday.

“We cannot continue operating on generators as indicated. If you run your business using your generators, you will be using US$0,30 to US$0,40 per kilowatt-hour,” he said.

There is general consensus among industry players that the new power tariffs are likely to see stability on the market and firms start functioning again.