- Significant Gap: With only 17.2 tonnes of gold produced in the first seven months of 2024, Zimbabwe faces a daunting task to reach the 40-tonne target
- A staggering 22.8 tonnes still needs to be produced in the remaining five months
- Unrealistic Expectations: The government's 40-tonne target for 2024 is based on unrealistic expectations, 7-month output highlights the impossibility of meeting the target
Harare Zimbabwe's government continues to set ambitious gold production targets, but the reality on the ground often falls short.
While the country achieved its highest gold output of 35 tonnes in 2022, the subsequent target of 40 tonnes for 2023 was missed by a significant 10 tonnes.
The ambitious 40-tonne target for 2024, set without addressing the challenges that hampered production in 2023, appears equally unrealistic.
The first seven months of 2024 have yielded only 17.2 tonnes, leaving a daunting 22.8 tonnes to be produced in the remaining five months.
Kuvimba typically targets 80,000 ounces of gold production annually which sometimes falls short. This year, Caledonia is aiming for a range of 74,000 to 78,000 ounces, while Padenga is targeting between 80,000 and 85,000 ounces.
Even with these combined efforts, and factoring in the embattled RioZim, these producers are unlikely to surpass 6 tonnes of gold within a year (producing over 1000 kgs each in the next five months).
This is also the same with small scale miners who contribute largely to Fidelity.
This makes achieving the remaining 22.8 tonnes needed to reach the 40-tonne target in the next five months practically impossible.
Several factors continue to hinder Zimbabwe's gold production. Increased electricity tariffs, now accounting for 20% of mining costs, are a major burden.
Global economic fragmentation has highlighted the need for government intervention, particularly in reducing taxes on miners. In FY2023, Caledonia Mining Corporation paid over US$19 million in taxes, a significant amount given the country's economic environment.
Reducing taxes could pave the way for increased production.
To reach the 40-tonne target, Zimbabwe would need to produce an average of 4,560 kg of gold each month for the remaining five months.
This would require a dramatic increase in production from both small-scale and large-scale miners, at least a 1000kg increase from July's output, something that seems improbable given the current challenges.
Small-scale miners, while they delivered 2,343 kg in July, are unlikely to achieve a consistent increase of over 3,000 kg per month.
The government needs to shift its focus from setting unrealistic targets to addressing the fundamental issues hindering gold production. This includes reducing electricity tariffs and providing tax incentives to alleviate the financial burden on miners.
Investing in power generation and transportation infrastructure is crucial for supporting mining operations. The country loses a minimum of 200 million in gold revenues to smuggling annually according to official statistics.
This figure doubles or even triples if we use unofficial estimates. Strengthening border security and implementing stricter regulations could curb gold smuggling.
Consistent and transparent policies will attract investment and boost confidence in the sector.
Until these issues are addressed, Zimbabwe's gold production will continue to fall short of its ambitious targets, leaving the country with a glimmer of gold rather than a full-fledged gold rush.
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