Zimbabwe’s YTD gold output up 41% powered by firm gold prices

By Almot Maqolo
HARARE – Compared to the 13,16 tonnes delivered during the same period in 2021, gold deliveries to Fidelity Printers and Refinery (FPR) increased by almost 41% in the eight months leading up to August 2022, reaching 22,3 tonnes. With only four months left in the year, deliveries would need to average roughly 3.18 tonnes per month until the government reaches its revised target of 35 tonnes this year. However, given that annual purchases have averaged 2.8 tonnes per month, this appears reasonable.

Small-scale miners produced more than two tonnes, delivering 2.3 tonnes, up 13.4% from July and 18.28% from the previous year. They have delivered a total of 14.7 tonnes in 2022, compared to 8.7 tonnes the previous year, coming very near to the aim of three tonnes per month. Primary producer deliveries increased to 1.1 tonnes from 0.965 tonnes in July and one tonne in the corresponding month of the previous year.

The recent uptick in the performance of the gold sector has been fueled by favorable commodity pricing trends on a worldwide scale since last year. The government’s goal of 9.5% mining sector growth for 2022 is expected to be supported in large part by the yellow metal. In his mid-term review and supplemental budget for 2022, Finance and Economic Development Minister Professor Mthuli Ncube stated that the government has set aside US$10 million to create gold centers in each province.

This is done to improve the efficiency of small-scale miners with the eventual goal of producing three tonnes of gold per month. The Reserve Bank of Zimbabwe (RBZ), on the other hand, underlined that it is enabling a lending facility to enable both new and current gold mining operations in order to capacitate production. Since then, it has vowed to keep the advantageous incentive system in place and to advocate for laws that encourage investment in the gold mining industry.

By year’s end, it is predicted that Zimbabwe’s overall foreign exchange earnings will reach US$7.3 billion, driven by rising mineral revenues from the boom in the price of mineral commodities as well as rising agricultural and manufactured exports. Primary producers, however, claimed that unfavorable profit retention policies, insufficient electricity supply, a lack of recapitalization funding, and other factors continue to hinder them. Primary producers continue to have the biggest challenge in accessing and allocating cash.

Primary producers claim that increasing exploration and production costs have hurt profit margins and made investors hesitant to invest in new projects, particularly those from developing companies. Since last year, the gold sector has been buzzing with activity, and it is now beginning to see the results of these activities, with more than 10 large gold producers making different infrastructure and production-related upgrades.

Basically, a lot of initiatives have led to a substantial upturn, including Caledonia’s launching its central shaft (project) this year and expecting its production to reach 80 000 ounces this year, which would be a record. Freda is also stepping up its production. Major industry participants have also taken action to prevent the smuggling of the yellow metal.

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