Gold deliveries to Fidelity Refinery decline 22pc
ZIMBABWE’S gold deliveries declined by 22 percent in February to 1,85 tonnes compared to the 2,38 tonnes realised in January, weighed down by significantly reduced output from small-scale producers.
The small-scale miners normally account for about 60 percent of the country’s total bullion output.
Contrary to the norm, large-scale producers delivered more to Fidelity Gold Refinery (FGR) last month compared to their small-scale counterparts.
According to FGR, primary producers delivered 988,7 kg, which translates to 53 percent of the total for the month under review.
The small miners accounted for the balance of 47 percent of the yellow metal output at 864,3 kg, representing a 31,76 percent decline from 1266,51 kg in January.
The 1,85 tonnes of bullion delivered by small miners in February represents a 2,2 percent year-on-year decline from the 1,89 tonnes they managed for the same period last year.
Gold is Zimbabwe’s single largest export by value, followed by platinum, together they account for over half of the country’s export revenue.
Although February saw a decline in production, gold deliveries have been growing over the past years, particularly, among the small producers following the decriminalisation of artisanal mining.
The decriminalisation of artisanal mining stimulated deliveries from the smallscale miners’ producers who hitherto sold their bullion on the black market or smuggled it out of the country.
Improved payment terms, which saw the miners paid at almost the equivalent of the international price, also incentivised deliveries to FPR, the country’s sole authorised gold buyer.
Sales to FGR normally decline during the rainy season (December to March) owing to high rainfall, which affects accessibility to the small miners’ pits as a result of water logging and wet ground, which makes mining with unsophisticated equipment difficult and unsecured mines dangerous.
FGR has forecast gold deliveries to grow substantially in 2024 driven by new gold mining projects earmarked for this year.
Mines and Mining Development Permanent Secretary, Mr Pfungwa Kunaka said the shift in the FGR payment modalities for gold miners resulted in the shift by some producers to lithium, which hampered production.
“The shift in FGR payment conditions deterred deliveries, in about three weeks we had noticed significant declines in deliveries, but that is now sorted.
“We have also witnessed a trend where small-scale miners are rushing to lithium mining, given that it is easier to extract, but the slump in lithium prices has seen them return to gold mining,” said Mr Kunaka.
Young Miners Foundation (YMF) chief executive officer, Mr Payne Kupfuwa shared similar sentiments saying the dip in deliveries to FGR could have been caused by the change in payment terms where miners were no longer receiving 100 percent USD.
“As you know Fidelity used to pay gold deliveries 100 percent in United States Dollars, but they (FGR) had reverted to paying 75 percent USD and the remaining in local currency, this could have affected gold deliveries in February.
“The situation has since been corrected and miners are now receiving their 100 percent payment in US dollars,” said Mr Kupfuwa.
He also noted that the campaign against using disused mines to curb fatalities had also reduced potential gold output from the sector.
The mining industry is projected to play a pivotal role in attaining the country’s vision of an upper middle-income society by 2030 as enshrined in the National Development Strategy 1 (NDS 1 2020 -2025).
The Government is working on growing local gold production through the resuscitation of closed mines, opening new ground for pegging, and capacitating small-scale miners. In contrast, a gold development policy will be crafted.
The Ministry of Mines and Mineral Development recently announced that it had availed US$5 million for the development of artisanal and small-scale miners through the Mining Industry Loan Fund (MILF).
Despite an expected plunge in general mineral prices, gold prices have remained elevated.
In February, gold prices remained above US$ 2 000 per ounce and reached US$2 120 an ounce on Wednesday, a figure that ranks amongst gold’s all-time high prices.