Forex retention threshold review, life line for gold miners?

  • Retention threshold now at 70/30 from the previous 55/45
  • Small scale buying agent to be paid in cash at a flat price
  • FPR and the National Gold Monitoring Teams are enhancing surveillance to ensure legal sale of gold

Harare- Fidelity Printers and Refiners (FPR) has announced an upward review of the gold foreign currency retention threshold, a move which could alleviate some of the challenges players in the mining sector have been facing.

In a press statement issued by the firm, gold producers shall with effect from the 26th of March be paid under a 70/30 payment arrangement scheme which will see 70% of the gold sale proceeds being paid in foreign currency and the balance 30% in local currency at the ruling exchange rate into the producer’s ZW$ account.

Small scale gold buying agents and artisanal producers shall be paid in cash at a flat price of forty-five USD per gram of fine gold.

This is an upward revision from the previous 55/45 retention which had been in use since early 2019, an arrangement which has been said to be the major cause of side marketing in the sector as miners sought to achieve better forex revenues through selling their gold illegally.

Side marketing, coupled with power cuts and lack of equipment by small scale miners was blamed for the 17% decline in gold output in 2019.

The move to review the threshold upwards comes at a time when the mining sector has faced a number of challenges due to the low forex retention which include demand for forex by equipment suppliers for miners who hire pumps, jackhammers among other things and the need to pay for milling and transport charges in forex.

Miners have also bemoaned their failure to access adequate fuel which is easily accessible in forex, instability of the local currency due to the exchange rate among other problems.

Large scale buying agents are required to have a mining operation producing a minimum of fifty kilograms fine gold per month to qualify for an FPR agency permit.

Small scale gold buying agents will have to enter into an Agency Agreement with FPR which contract shall clearly spell out the terms and conditions under which the agents shall operate.

FPR and the National Gold Monitoring Teams are enhancing surveillance to ensure that all gold is sold through FPR in line with the country’s regulations.

Gold is one of Zimbabwe’s biggest forex earners, raking in US$1.3 billion in forex receipts in 2019.

Government is working towards achieving a US$12 billion mining industry by 2023 and if the increased forex retention results in improved production in the mining sector then this can be seen as an advancement of the goal.

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