Related News

Vietnam and Thailand lead trade growth as Asia resists economic downturn

Trade digitalisation already delivering real business benefits, report finds

Global mining giants commit to digital transformation of bulk shipping

TDB extends US$10mn line of credit to support Zimbabwean exports

BHP and China Baowu transaction ‘first of many’ for MineHub

Zimbabwe’s top gold producers are warning of widespread mine closures by September, as an increasingly hard currency strained central bank remains unable to fulfil its foreign currency obligations to mining firms.

Officials at leading gold miners Falgold and Rio Tinto say the Reserve Bank has failed since April to remit into their foreign currency accounts (FCIs) the 50% worth of production that is payable in forex under the government’s export support scheme

This has left mining houses unable to fund the importation of essential inputs to keep production up, the miners say.

Falgold managing director Andrew Beattie says his group has failed to secure the release of revenue for 82.6kg of gold, amounting to US$446,000, deposited with Fidelity Refineries, a subsidiary of the Reserve Bank of Zimbabwe , which under law holds sole right to purchase and export the gold.

“The delays could decrease gold production to critically low levels, which in turn might result in the premature closure of the group’s mines if the situation is not rectified immediately by payments being made timeously,” Bettie warns.

Production at Falgold in the half-year to March was within targets of 63.42kg a month, making profits of US$739mn but working costs shot up 123% on higher power and fuel costs. Load shedding by power utility Zesa pushed mines further down the shaft, and according to Beattie, these problems “could lead to the suspension of all mining operations by the end of this financial year”.

Falgold’s financial year ends in September. The company owns Dalny Mine, Golden Quarry and Camperdown Tribute, while the once profitable Venice Mine has since been placed under care and maintenance.

Under government’s export support plan, exporting firms are required to remit half their earnings to the central bank, while the remainder is held in a special fund from which companies have to apply to meet their hard currency needs.

However, Zimbabwe’s negative foreign currency position has continued to deepen, leaving the central bank unable even to import the special material required to print bank notes, which are in short supply for the third straight week, in a bizarre and deeply embarrassing reminder of the country’s continuing slide into economic ruin.

Rio Tinto chairman Eric Kahari says the industry, in crisis three years ago after world forward selling and the global disposal of the metal by central banks, would have been in an improved position had the export scheme been efficient.

“Disappointingly, the frequency of payment for the US dollar has been slow and erratic such that operations are once again under threat from suppliers, including Zesa, who are, unwilling to provide necessary supplies on the off chance that Zimbabwe gold miners may at some stage be able to pay for them. An urgent improvement in this situation is necessary or the already fragile formal gold mining industry may suffer further damage,” Kahari says.

The Rio Tinto chief adds the company’s Renco Mine, in Masvingo had suffered a 12-day shutdown in January because of a shortage of explosives, a direct result of the central bank’s payment delays.

An official at the country’s largest gold mine, Ashanti ‘s Freda Rebecca mine in Bindura, which suffered a power shutdown for non-payment a fortnight ago, says he was aware Chamber of Mines officials were keen to meet the RBZ over the matter to stave off what he called “an impending catastrophe”.

This could however not be ascertained from chamber officials themselves, although chief executive Dave Murangari has been quoted recently as saying his industry was under strain from load shedding, among other problems.