Zim gold monopoly ‘must go’
Gold mining investors are pressuring Zimbabwe to change a law forcing producers to sell their output to the central bank, which part pays them in local currency that’s worthless outside the country.
That law is making it hard to raise capital for investment projects, according to B2Gold Corporation and Caledonia Mining Corporation, which are considering acquiring assets in Zimbabwe.
B2Gold chief executive officer Clive Johnson said the Canadian company has held talks with the government about changing the rules to unlock investment.
While mining investment is key to rebooting Zimbabwe’s collapsing economy, the nation suffers from an acute shortage of dollars. As the rally in bullion generates more interest in the industry, the government is “weighing its options” on whether to grant investors gold-trading licenses, said Deputy Mines Minister Polite Kambamura.
“The ability to handle gold sales is critical to a company like ours,” said B2Gold’s Johnson. “It’s an issue that would have to be clarified first for one to buy some assets and build some gold mines.”
Zimbabwe currently forces gold miners to sell their bullion to Fidelity Printers and Refiners. It pays them 70% in dollars and the remainder in local currency.
Payment delays of up to two weeks by Fidelity Printers and Refiners have impacted on producers, according to Chamber of Mines of Zimbabwe CEO Isaac Kwesu. Existing mines require $400 million (R6.2 billion) in fresh capital, the industry lobby group said.
Gold output in the southern African nation plunged 30% in the first 10 months from a year earlier. Exports, which the nation relies on for most of its foreign-exchange earnings, slumped 23% to $697.7 million, according to the Reserve Bank of Zimbabwe.
To justify building new mines, Jersey-based Caledonia would need to take charge of its gold sales, said CEO Steve Curtis, whose company is interested in buying one of Zimbabwe’s largest gold operations.
“Those are the conversations the authorities have to get their heads around.”