Fidelity gold monopoly challenged
FIDELITY Printers and Refineries’ monopoly in the buying and marketing of the country’s single biggest foreign currency earner, gold, has come under the spotlight with Parliament recommending the liberalisation of the industry.
The recommendation was made by Parliamentary Portfolio Committee Chair on Mines and Mining Development Edmond Mkaratigwa when delivering an analysis on the mining sector’s requirements in the 2020 budget.
FPR is the country’s sole legal buyer and marketer of the yellow metal, but producers are on record bemoaning the monopoly and blaming it for providing fertile ground for inefficiencies that have in turn benefited the black market to the detriment of the economy at large.
In his presentation at last week’s parliamentary retreat in Victoria Falls, Mr Mkaratigwa said his committee had been inundated with complaints from gold producers who want to see the end of Fidelity’s monopoly as is the case in many other gold producing countries.
He noted that some producers had complained that Fidelity is in some cases taking up to four weeks to pay for deliveries a situation that leaves miners vulnerable and unable to pay their suppliers.
“Large scale producers are not pleased with the monopoly by Fidelity Printers as the sole buyer of gold,” Mr Mkaratigwa told the pre-budget consultation meeting on Friday last week.
“When the country had a liberalised market in 2012, the industry attracted capital interest and managed to boost investor confidence as they were now getting timely payments on gold sales.
“What we are saying is not an invention of the wheel, in many other gold producing countries, the marketing of gold is liberalised with banks and other institutions participating.
“The current monopoly is breeding inefficiencies within Fidelity and the black market is capitalising on these, for example we are told in some cases Fidelity is taking up to four weeks to pay for deliveries and the miners are saying this is unacceptable.
“So our view is that there is need to liberalise the marketing of gold. Fidelity Printers should not remain the sole buyer of gold in the country in order to attract investment into the industry,” he said.
Gold leakages to the black market is one of the biggest drawbacks bedevilling the mining sector locally.
Market watchers say that some producers, especially those in the small-scale and artisanal mining sector, end up channelling their produce to the black market due to the inefficiencies of the state buyer.
Government needs to move in to curb these leakages if set target of 100 tonnes per year by 2023 up from just over 33 tonnes in 2018 is to be achieved.