Gold production takes a knock, small miners still dominant

ZIMBABWE’S gold deliveries declined by 14,7 percent last year to 30,1 tonnes compared to a record high of 35,3 tonnes realised in 2022 official figures show but small scale miners still dominated volumes in the production of the precious mineral.

Gold is the country’s major foreign currency earner whose output was this year projected to reach 40 tonnes last year having missed the same projection in recent years largely due to factors such power supply challenges.

In 2019, stakeholders in the gold sector set themselves a 40-tonne target, which is yet to be achieved due to a cocktail of challenges including smuggling of the mineral and intermittent power supplies that affected production.

Latest statistics from the country’s exclusive buyer of the metal, Fidelity Gold Refinery (FGR), indicate that of the 30,1 tonnes delivered last year, small-scale miners who traditionally produce the bulk of the gold, again last year maintained the momentum producing 18,7 tonnes.

In 2023, primary producers who are the large-scale miners delivered 11,4 tonnes.

In an interview, Gold Miners Association of Zimbabwe, Mr Irvin Chinyenze, attributed the plummeting in gold output last year to a number of issues including the election that saw production becoming limited during the campaign period.

“One of the chief factors leading to that sharp decrease in gold output last year is largely to do with the elections.

“Remember last year we had elections and generally business somewhat goes down during the election season whether it’s because people are involved directly in terms of campaigning or there is uncertainty that comes with the elections as people will not be certain of the post-election environment.

“I wouldn’t really comment authoritatively on why that happens, but I know for a fact that if you review our election years, you realise that output in the mining industry always goes down by some percentage,” he said.

On the other hand, Mr Chinyenze said the issue of capitalisation remains in the spotlight in the mining industry.

“Mining is capital intensive that’s why you see some fly by night investors come in and disappear within two or three months of having invested into the sector.

“Its capital intensive when you want to do it properly; to that end we have got very little by way of lending institutions that have favourable terms and obviously when we say ‘favourable’ we are talking of interest rates.

“Our economy generally when we look at interest rates, they are very high so as miners we don’t have enough room within which we will be able to borrow.”

The issue of collateral which is within the terms and conditions of the Banking Act, among other statutory requirements, was also limiting the smallscale miners to borrow as they cannot declare their mines as collateral.

In a separate interview, economic commentator, Mr George Nhepera, said a majority of the mining firms, particularly small-scale miners have traditionally lagged behind in putting in place modern mining technologies with capacity to upscale their production and at the same time, provide relief in costs cutting measures.

“This explains the low production we are now experiencing as a country at a time we desperately need foreign currency to meet our high import bills.

“As part of the solution, we need a coordinated effort between the Government and mining companies to ensure we improve on our investment climate, especially in getting sanctions removed, which are hindering access to cheaper sources of finance from the international capital markets.

“Our domestic financial markets alone cannot fully support the mining sectors, especially when our local currency is yet to achieve a ‘real price discovery level’ that is acceptable to all stakeholders in the country,” he said.

Mr Nhepera said another innovative proposal to be considered in the short to medium-term is to establish a “mining bank” similar to what has happened in the agriculture sector.

“In my view, if mining is part of our growth strategy, then we need a well-structured mining bank with capacity to issue both loans and bonds on the international market for onward support of the mining sector.

“I am sure our regulators, the Reserve Bank of Zimbabwe will find it good in the public interest to issue such a licence to any interested investor to set up such a mining bank in partnership with the Government,” he said. Meanwhile, the Government through the Ministry of Mines and Mining Development last year launched the gold mobilisation blitz across the country with a view to improve deliveries of yellow metal to FGR and minimise leakages.