Govt defiant on FY19 gold target amid uncertainties in the sector


    Harare – Minister of Mines and Mining Development Winston Chitando has expressed optimism that the country is on course to achieve the 40 tonnes gold delivery target in 2019, despite economic headwinds contributing to a slump in gold production.

    Gold which is the country’s largest foreign currency earner raked in US$1.2 billion last year with deliveries to Fidelity Printers and Refiners (FPR) reaching a record 33,2 tonnes up from 24,8 tonnes recorded in 2017.

    A harsh operating environment characterised by currency challenges where the local money RTGS$ continue to lose value to the US$, unfavourable payment methods with government offering an unfavourable 55 percent forex retention threshold to miners for gold delivered to FPR, and late payments for gold delivered is hampering gold production.

    Gold deliveries to the country’s sole buyer (FPR) over the first four months of the year decreased by 16 percent to 8.6 tonnes compared to 10.2 tonnes delivered in the prior 2018 period.

    In that same regard, it is increasingly believed that a large chunk of gold is missed through side marketing as miners seek to sell their produce to lucrative markets than government is offering.

    Last week, the country’s leading gold producer Metallon Corporation served the government with a legal lawsuit for US$132 million for failing to pay for gold produced.

    With the economy showing no signs of improving coupled with a rise in inflation and the recently announced power cuts which could stifle production in critical sectors such as the mining industry, government faces a mammoth task to achieve the 40 tonnes target this year and the ambitious annual gold delivery target of 100 tonnes by 2023.

    Speaking at a press conference held in the Capital on Monday, Minister Chitando said “we still remain on a situation where we’re targeting 40 tonnes, there were some measures which were announced by the Reserve Bank to try and address the competitiveness of the sector and further measures along those lines are to be considered.”

    “But the 40 tonnes target is what we are working on and we will continue to review what has to be done to ensure that we achieve that target.”

    About a week ago, RBZ through FPR introduced a gold support price of US44 000 per kg and US$1 368.55 an ounce aimed at solving production challenges affecting miners and increasing deliveries of the yellow metal.

    The economy among other issues is bleeding from lack of confidence with government often caught offside on its policy pronouncements and promises, it still remains to be seen if gold delivery targets upon which hopes for economic revival is largely anchored upon will be achieved.

    Equity Axis News


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