ZMF welcomes new gold retention thresholds
Harare (New Ziana)-The Zimbabwe Miners Federation (ZMF) has welcomed the recent review of gold retention thresholds by the Reserve Bank of Zimbabwe, saying it was long overdue.
Under the new arrangement, large scale gold producers will now be paid 70 percent of their gold sale proceeds to Fidelity Printers and Refiners (FPR) into their Nostro Accounts while the remainder will be paid out in local currency.
FPR is the country’s sole gold buyer and operates under the purview of the central bank.
Previously, miners were paid 55 percent in foreign currency with the remainder was paid out in local currency.
Small scale gold buying agents and artisanal producers will be paid in cash at a flat price of US$ 45 per gram of fine gold.
In a statement, ZMF president Henrietta Rushwaya said they appreciated the recent review in the gold trading framework by the RBZ.
“ZMF is of the view that this review was invariably long overdue and is a relief from the previous framework of 55/45,” she said.
While welcoming the development, Rushwaya however said the fixed price of US$45 was announced at a time the world price of gold was now at around US$54.8 per gram, representing 80 percent of the world price.
“With the world price of gold expected to continue bullish and further increasing on the back of global economic risks arising from Covid 19 pandemic, which promotes the attractiveness of gold as a safe haven, the price paid to small scale miners will continue to shrink as a percentage of the world price,” she said.
She said the unwanted consequences of the price distortions would be widespread side marketing and leakages as small miners sought better margins from unregistered buyers offering attractive packages.
“The sustainability of such a trading framework is also questionable when the price of gold is coming down, for example to prices lower than the US$45 a gram,” she said.
Rushwaya said the ZMF was of the view that it would not be practically possible for the FPR to continue paying the fixed US$45 given the current liquidity constraints in the economy.
“ZMF believes in a gold trading framework that provides a win-win situation between FPR and the gold miner which minimizes or eradicates the discrepancy between world price of gold and local price of gold. This framework curtails side marketing and gold leakages while at the same time promoting delivery of gold to FPR,” she said.
She said a ratio framework as was the case with large scale producers was recommended as it enabled scientific tracking of mineral prices.
Gold earnings of US$4 billion per annum are expected to anchor the achievement of the government target of a US$12 billion mining sector by 2023.