THE Chamber of Mines Zimbabwe has proposed an upward review of the foreign currency account (FCA) allocation to the mining sector to cover rising production costs.
Through its gold producers committee, the Chamber of Mines has said in a report to be presented to the Reserve Bank of Zimbabwe, seen by Business Chronicle, that its members may be forced to suspend operations due to foreign currency shortages that have left them with inadequate finance to cover production costs.
“While appreciating the recent review of producers’ allocation of export proceeds (30 percent for gold and platinum 35 percent in Nostro FCAs), these retention thresholds are no longer adequate to cover production costs, a majority of which have become dollarised,” said the chamber.
“If this situation is not addressed, a majority of (gold) mining houses’ whose going concern have been undermined, may find it impossible to continue in production.
“In order to restore viability we are proposing an upward revision of the FCA allocation to mineral producers in line with the actual US$ costs that are obtaining in the market.”
The chamber said most mining companies’ total cost to income ratio ranges between 70 percent and 95 percent.
“This situation will be reviewed as and when the situation is brought back to normalcy. Gold producers have a unique challenge as their Nostro FCA accounts are yet to become operational, and appeal for your intervention to speed up commercial banks and Fidelity Printers and Refiners to operationalise.”
Zimbabwe’s gold sector has maintained a bullish trend this year with the miners pledging to produce up to 100 tonnes of the yellow metal per annum if given adequate support by Government.
The miners have demanded improved efficiency when receiving payment for their deliveries among a chain of incentives.